Question 1

What is included in an assisted living feasibility study?

Accepted Answer

An assisted living feasibility study evaluates whether a proposed senior care development is financially viable and capable of servicing its debt. It includes demographic and age-cohort demand analysis (65+, 75+, 85+), competitive supply assessment, acuity-based revenue modeling by care tier, staffing and labor cost projections, state licensing and regulatory feasibility, construction cost benchmarking, and a ten-year pro forma with DSCR, IRR, and sensitivity analysis. Formatted for SBA, USDA, HUD 232, or conventional lender review.

Question 2

How much does an assisted living feasibility study cost?

Accepted Answer

Fees typically start at $5,600 or more, depending on facility size, number of care levels, regulatory complexity, and lender scope. Smaller residential facilities (6–20 beds) in well-documented markets tend lower. Large communities with multiple care tiers, CCRC campuses, or Certificate of Need states fall higher. MMCG provides fixed-fee proposals with no hourly billing and a 50/50 payment structure.

Question 3

How long does an assisted living feasibility study take to complete?

Accepted Answer

Standard delivery is 2–3 weeks. Expedited delivery within 3–5 business days available for an additional fee. Multi-level projects (AL plus memory care plus skilled nursing) or CCRC modeling may require additional time. Commission the study before finalizing site acquisition, ideally 60–90 days before seeking financing.

Question 4

Why do SBA and USDA lenders require a feasibility study for assisted living projects?

Accepted Answer

SBA classifies assisted living as special-purpose property, triggering independent feasibility requirements. USDA B&I explicitly requires studies under 7 CFR Part 5001. Assisted living carries unique risks: state-specific licensing, acuity-dependent revenue, labor-intensive staffing, and Medicaid waiver payer mix. Self-prepared business plans do not satisfy lender requirements.

Question 5

How much does it cost to build an assisted living facility?

Accepted Answer

MMCG database benchmarks: $278–$354/SF for mid-level, $359–$452/SF for high-level communities. Per-unit development costs average ~$317,400 including land, construction, soft costs, and FF&E. A typical 60-unit facility requires $15M–$25M total development capital. Hotel-to-AL conversions reduce costs 15–25% versus ground-up.

Question 6

What demographic data is analyzed in an assisted living market study?

Accepted Answer

Analysis centers on age-qualified population (65+, 75+, 85+ cohorts) within the primary market area (5–10 miles suburban/urban, 15–25 miles rural). We assess household income distribution, acuity prevalence rates, and penetration rates (~1.4% nationally). Five- and ten-year projections from Census/ESRI data evaluate whether demand trajectory supports stabilization.

Question 7

How do state licensing requirements vary for assisted living facilities?

Accepted Answer

Every state defines assisted living differently. California uses RCFE classification. Florida and Texas use ALF with Type A/B subcategories by nursing level. Staffing ratios, administrator qualifications, physical plant requirements, and medication protocols vary materially. NCAL documented 15 states updating ALF statutes between July 2023 and July 2024. Our studies include jurisdiction-specific regulatory analysis.

Question 8

What is a Certificate of Need and do I need one for an assisted living facility?

Accepted Answer

A CON is regulatory approval required in certain states before adding healthcare beds. Requirements vary: some states require CON for all senior care, others exempt AL but require it for skilled nursing, many have eliminated CON entirely. Active CON states include North Carolina, Virginia, and Connecticut. Our studies identify CON applicability and evaluate approval timeline and probability.

Question 9

Can I use an SBA loan to build or acquire an assisted living facility?

Accepted Answer

Yes. SBA 504 provides fixed-rate financing via 50/40/10 structure (50% conventional, 40% CDC debenture up to $5M, 10% equity). SBA 7(a) up to $5M for acquisition, renovation, equipment, and working capital. For smaller residential ALFs (6–16 beds), SBA can cover the full project. USDA B&I provides up to $25M for rural communities under 50,000 population.

Question 10

What occupancy rate does an assisted living facility need to be financially viable?

Accepted Answer

National stabilized AL occupancy averages ~87.7% as of Q4 2025. Break-even typically falls 65–75% depending on staffing, debt load, and efficiency. Lenders evaluate DSCR (1.20x–1.25x minimum) rather than occupancy alone. Our studies project month-by-month lease-up through stabilization (18–24 months) and stress-test DSCR under multiple scenarios.

Question 11

How do you determine market demand for a new assisted living facility?

Accepted Answer

We use penetration rate methodology: calculate age-qualified population (75+/85+) in the PMA, apply income filters, divide by existing and planned supply. Penetration below ~1.4% suggests unmet demand. We also analyze competitive occupancy, waitlists, referral patterns, and move-in/move-out trends for independent validation.

Question 12

Is it feasible to convert a hotel or motel into an assisted living facility?

Accepted Answer

Hotel-to-AL conversion is a growing pathway. Hotels share structural characteristics: individual rooms with bathrooms, commercial kitchens, common areas, fire suppression. Costs run 15–25% below ground-up. Key evaluations: ADA gaps, room size adequacy (AL needs 250–400 SF), corridor width, handrail requirements, nurse call systems, and zoning change from hospitality to residential care.

Question 13

What makes assisted living feasibility different from memory care, skilled nursing, or CCRC feasibility?

Accepted Answer

Each care type has distinct economics. AL is primarily private-pay (82%+) with acuity tiering. Memory care requires secured environments and higher staffing, commanding 20–30% rate premiums. Skilled nursing operates under Medicare/Medicaid with CMS oversight. CCRCs require actuarial modeling across the care continuum. Multi-level facilities receive independent modeling per component.

Question 14

What financing programs are available for assisted living development in rural areas?

Accepted Answer

USDA B&I guaranteed loans up to $25M with 60–80% guarantee for communities under 50,000 population. USDA Community Facilities loans/grants support senior care as essential community service. HUD Section 232 mortgage insurance available regardless of location. Rural communities face acute AL shortages and USDA recognizes senior care for preferential financing.

Question 15

What are current cap rates and investment returns for assisted living facilities?

Accepted Answer

MMCG benchmarks: Class A AL ~7.0% cap rates, memory care 9.6%, skilled nursing 11.2–12.2%. Senior housing transaction volume reached ~$16.3B in first three quarters of 2025. Operating margins exceeded 25% in mid-2025, highest since 2018. AL is the most sought-after segment, cited by 50% of investors in the JLL 2025 survey as primary acquisition target.

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