Do Well by Doing Good, Memory Care Residential Assisted Living with Loe Hornbuckle
Today you’ll learn about doing well while doing good with memory care residential assisted living investing. Our guest Loe Hornbuckle is an experienced memory care real estate investor, founder and CEO of Sage Oak Investment Group, and pioneer of Capital with a Cause. Loe is a force for good in the investing world, dedicating significant energy to improving the lives of those around him, from residents in his properties to caretakers and employees to investors in his deals.
Check out this interview to learn more!
“You can marry investing, making a return, but also creating positive returns on society.”
“When you're talking about taking care of people, you have to have a strong line.”
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Loe Hornbuckle is founder and CEO of Sage Oak Properties, a residential assisted living real estate investment firm.
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Loe Hornbuckle 0:00
So I'm all for leverage. I'm just saying the cash flow from assisted living facilities that are run properly when you have scaling when you have the things you need, because again, there's challenges when you get those things that sometimes can make sense to do those things on lovers. that's not true very many other real estate subclasses.
Welcome to passive wealth strategies for busy professionals. Today, our guest is low Hornbuckle, he is a residential assisted living investor. Today, we're going to talk about how you and others can do well, while doing good. By ethically investing in memory care, residential assisted living facilities.
In this discussion, we get a lot into the impact that a good residential assisted living operator can have on individuals, their residents, and their families and on society at large, we get into the future of residential assisted living, and how necessary is going to continue to be how much it's going to grow over the next decade to two decades, as the baby boomer generation gets older and starts to use those services. Even more.
This is a great discussion, if you want to learn about how you can do well with your investments, while doing good for society, and having a positive impact on those around you. Without further ado, here's Low, low. Thank you for joining us today.
Loe Hornbuckle 1:32
Thanks for having me, Taylor,
happy to talk with you. We've been Facebook friends for a while. I've been watching what you do and what you post online. I was looking forward to talking with you. do we want to start with capital with a cause? Do we want to start with your assisted living investments? Where is your priority right now?
Loe Hornbuckle 1:54
Yeah, I mean, I think they're really interchangeable for me. then I think some people might have mentioned this, just living Pete, capital for a cause, or capital with a call, excuse me is something that I think is just a natural pairing with raising capital for business that helps people improve their health outcomes, improve their quality of life. we can start with the assisted living piece.
I know you've had others on the show talk about assisted living. feel free to ask me on baller more different questions. you can kind of get a little bit different take on the topic.
Yeah, so I mean, we've talked about on the show, we had Jean glory on to talk about the residential assisted living business model, kind of at a high level, that was one of the early episodes, and you're somebody who's out there doing it.
So can you tell us more about the niche in residential assisted living, that you invest in, because even though it's a, it's a fairly specific investment, it has residential assisted living has some pretty distinct silos or business paths that business types within it? So what are you doing? And so I
Loe Hornbuckle 3:04
think the first thing is, is that I always kind of tell everybody, I don't think residential assisted living is a real estate business. For most people. It can be if you buy a facility, and then you lease it to an operator, essentially, you're in the real estate side of business, but I think potentially number of the profits that come from assisted living, really, it's a service business that has a real estate component, that makes any sense. the vast majority of the success or failure of the business is going to come from the operational side, not necessarily from the real estate piece.
it's a very rewarding business, you can help a lot of people, it's also a difficult business, I mean, your take care of people 24 hours a day you've got staff, healthcare workers are not the easiest to find in the world right now.
Especially in America, we have a shortage of healthcare workers. so you're kind of, you're kind of at this point where there's some challenges to the business fair warning, you definitely have moments where you're very, very happy that you got into the business, because all the people you can help.
There's also some periods of time where it can be stressful, and being in being in a healthcare related business this open 24 hours definitely has its has its challenges. so I'm always mindful to talk about that, if you think about getting into the space, the best way to be involved. one of the best ways to be involved, in my opinion, is to you can invest in other people that are doing all the hard work for you. there's probably opportunities to pick someone who's raising capital for the projects, and you can give them, give them capital and let them deal with the three and phone calls. the no call no show from staff, but that'd be their problem.
All right. yeah, I like the sound of that, because I like investing in apartments, and maybe things that are, I don't know, less. It's still important, but it's another level, when you're taking care of grandma and grandpa that is clearly at its own and
Loe Hornbuckle 5:12
in the multifamily business before. there's definitely an operational level in multifamily. a good property management company or good management team can, can improve properties are the last struggling. But if we're going to say then apartment is 80%, location, pricing strategy, and building and 20% operations assisted living is probably the reverse, don't maybe it's 20%, building 80% operations.
There's definitely a big gap between the operational component of multifamily and there are assisted living or dementia care, something along those lines. what it means is that the operational team takes that much more words I've been a situation before where I bought a building, it was empty, and filled it in a couple of months built the same building, I really did, I put maybe $10,000 in capital into a million dollar project, it wasn't a capital problem, it was operator problem.
So you can have a good operations, you can definitely there's a lot of people in this business that get reputations for turnaround artists, they just know what the problem is, and they go to solve the problems. Because it's definitely a it's a personality driven, build a good team, cast compelling vision, and really understand what it is that your clients want to find a way to give it to me.
So, I mean, there's a lot of upside, when you can buy an underperforming asset and improve it. as far as your specific work within residential assisted living, you work with dementia care.
Loe Hornbuckle 6:50
Now, so right now, 32 of the 40 beds that I have are dementia care. I do a lot of teaching and coaching or about dementia care all over the country. But I'm developing some mixed properties that have both assisted living and dementia care. when those projects are done by foot of bed, and actually closer to 50/50, I'll probably have because my next couple projects are pretty big. they're they're kind of like two thirds to three quarters assisted living to dementia care, because that'll kind of numbers our up a couple hundred, as I have about 100.
I really like what Medicare has to offer. But I think anytime you're in this space, if you can, if you can be more things, more people so having the base model assisted living, having kind of a luxury assisted living, and then having kind of a dementia care product, it's good positioning in the marketplace, because now you can capture budgets that range in a $2,000 range, you can capture people with different demographics, different needs, maybe think about it, the really beautiful part about residential assisted living, or these small, truly, your ability to be able to change anyone's house to beat a niche.
So if I'm well connected with a local synagogue, they say, Man, we really love what you're doing.
We need a Kosher house, can you do that? Well, they can, they can fill number of beds necessary to make it worthwhile. we can certainly do that. That's an example. Right? So you can have it be along any number of things you can think about maybe you do a house for people that have traumatic brain injuries, and your average population is 30 or 40 years old.
Right now you have people that are younger, get into a car accident, and they go to a traditional rehab, traditional assisted living, and they're looking around and the average age is 87. they have a hard time relating if you get immersed, if you're 27, you get a motorcycle wreck, probably not going to enjoy being in a house with 1587 year olds, maybe you will.
But, but it's good to have that choice. so, the cool thing about the smaller settings is that you can do that very easily. You can you can you can rise to the occasion to the different to hands there that are in the marketplace, it is very difficult to with a big building. Because if you build 100 bed facility if you're going to go after a niche, it's gonna be a really big nation and market because 100 beds is totally different than filling eight or 10. Or
Yeah, so I had never thought about the angle of say somebody it gets it a young person that gets in a motorcycle accident might need to go to a memory care facility. That's an interesting point. I mean, from the outside, I wouldn't have thought about that, or the the kosher house, I mean, again, would have never would have never thought about that.
Loe Hornbuckle 9:34
What it's it's beyond just that I mean, you think about you know what Jimmy Buffett's Margaritaville. I mean, he's built an entire either, or building a Margaritaville facility and Austin's place me a bunch people like listen to Jimmy Buffett all I know. I mean, you could, you could do this. I mean, the other day I was I was telling the story to somebody and they said what I've always wanted to do was 1am College Alumni.
You go to a college town, and you build an assisted living facility that's Penn State centric, or University of Michigan Center at the University of Texas centric and so you can end if you think about it, a lot of times, we will compare assisted living to dormitory style living for seniors. that's a great it's like, back in college, again everything centered around games, the possibilities are endless. It really all boils down to it. First key is what's your, what's your marketing situation?
who do you have the intention of who you have influence over and who that happens. if you if you find that you have there's one or two people in the entire city that control most of the traumatic brain injury cases, and they're struggling to find a place to go, if you appeal to that person and can cast a unique selling proposition. you can certainly do that.
The possibilities are endless, you can do it around you could do it around country of origin what we're gonna have a house that serves on Korean food gets the newspaper in Korean the thing I like about this business, and what's really powerful about it is that you can, if you if you focus on service, and you're creative enough, and you can basically, always make yourself unique. Your uniqueness is limited only to your imagination and to what exists in the marketplace. and the college town and it was kind of amusing to me, because we think about most major cities, they'll have a sports bar, this theme for a team not represent a local city.
So you go to Philadelphia, there's going to be a Dallas Cowboys Sports bar, or a Dallas Cowboy fans can go to a bar and enjoy the game and not listen to bills fan, offense to Eagles fans, you're kind of annoying Philadelphia, and I'm sure you think we're going to and that's fine as a sports word. But if you think about that, like think about like, you could have a Texas a&m alumni in Austin, right? So the point is, is that you can really, you can anything you can carve out in the space you can do, because there's people that need care, there's people that have needs, and if you can build a lifestyle around that care, you can do that. Dementia Care, if you really think about it, it's just a subset of that, right.
So there's assisted living us as general population, and there's people that have cognitive impairment. Now dementia, there's 105 different types of dementia. are like 110 hours a lot, we only know we only really talk about like five or six, because that's the vast majority of cases. But you could have a you can have a particular house that's really well specialized and treat people to have the symptoms of Lewy body dementia. in your caregivers know what it looks like. you know what to expect, because people that have impulse control, versus someone that has memory issues, versus someone that's totally docile and sort of has more forgetfulness, those people are not going to be treated the same way.
Right now we have them all on kind of one community under the umbrella term memory care dementia care, physician, you think about that, you can really, you can take this to a place where you can get really, really detail if you want. that's really powerful in any business, because you can appeal to whatever the market says you should appeal to. you just have to understand it, and you have to have connections in that marketplace. It's a very powerful place to be. you could also put it, I mean, just imagine you're running along and doing assisted living for 10 years.
Let's say they start building a bunch of assisted living facilities around you start having less, less more and more competition, and you start struggling more and more to maintain your senses. Nothing stops you from doing a little bit of money, redoing the house and a certain thing. then using that as a unique selling proposition and going after the people that are rolling stones fans, for example.
Yeah, those Rolling Stones fans really are getting up there and years. Now, I'm just
Loe Hornbuckle 13:45
the Rolling Stones themselves are getting up there.
Loe Hornbuckle 13:50
But yes, I mean, yet, you can actually see him. I'm using a lot of a lot of real estate examples. Because the point I want to make is, is that again, your your unique selling is for the future industries where your unique selling proposition is limited only to your imagination. There's just only so many other businesses that are like that. the cool thing about this business I mean, and you can find something you're into, I mean I know how many people that are older knit.
I'm not into knitting, but I mean, if I hire to caregivers that were into knitting, and if I hired managers that understood the knitting market, then we can have a house to sell awesome things for grandkids every day I'm saying like, you can do that. that's the really cool thing about it is as long as you can understand that nice, you can speak to it.
So I think one of the from the passive investing standpoint, one of the struggles that a lot of people have when they're looking for assisted living opportunities, residential assisted living opportunities, is just getting in the first place. Because if you're out there trying to passively invest in real estate right now, we'll stick with the real estate example. Even though residential assisted living by your description is not necessarily real estate investing. You want to invest in multifamily right now, you can go find the multifamily syndicate or pretty easily, whereas residential assisted living, from my perspective, it's a little bit harder to find those people.
You guys are just quieter, I think is what it is.
But where are the say, Where are the good residential assisted living syndicators right now there? There's OUU, raising your hand on the live stream? But broadly, I mean, where can we find you guys? Where are you hanging out? Where can we meet you? Where do we meet the best ones?
Loe Hornbuckle 15:34
So, so one of the things that attracted me about assisted living initially, and I'll answer the question, second, I haven't forgotten, one of these attracts me about assisted living, the first place was, I thought, This is my one chance in life, to not follow a trend but be headed. I'm always I'm always the guy. a lot of times in real estate, I think I was accidentally done money, a lot of times, I'll always let something happen for two or three years, and I would come in at the tail end.
I think a lot of people do that, right. the sort of most investors invest at the end of the cycle and then they get beat down. it's the ones that have vision and courage, they're investing in the depths of recessions and problems. so right now, assisted living really will talk about the baby boomers and the silver tsunami, all those things.
Well, the oldest day when we're 74, right, 7475, the average person lives in systems 87. The baby boomers are not really interacting with the system living yet, they're not really a part of the story. so you're really able to be ahead of the trend.
So one of the reasons why I decided to really focus part of becoming an operations company, is the very thing you mentioned. I don't know of many people, personally, that are both working on operations, and also in the capital raising, they're almost always fully firewalls or two separate companies, or whatever the case may be, we're kind of a unicorn in that capacity.
Now, nothing, there's nothing that are out there just to talk to a lot of people that are doing development and raising capital and doing operations. the interesting thing is, is that we're in the process of building on out.
Jean and I are working together on a company called family legacy homes, and the goal of that company will be to create a fund that will actually raise investor money, and then we'll fund projects that we can worthy. obviously, Gene has access to students and can spend a lot of time with people gets an opportunity to vet people in a way that's part of replicate organically. that's one thing that's kind of happening.
I mean, I think the other thing is, is that residents, so assisted living is not very old, and assisted living started in 1983. it's a new business, residential assisted living strangely, probably predates assisted living, because if you think about it, people used to board at board and care homes back in the day for a long time sofa, a woman got windows, and she found herself in his hole one of the ways you might make money as she would have strangers come into your bed breakfast dollar, if someone was sick, and living at home and help take care of them.
That's a model has been around for I don't know how long hundreds of years, maybe thousands. This is residential assisted living as it's been created. It’s kind of an old business, but it's kind of coming around again. I think the idea of making residential care homes into businesses, Gail, and you can run like a business, which you're able to do a great job, take care of your customers, but also create a big enough company work and run in the background. It's not owner centric.
I think that's relatively new. so I think that you're going to really see all that stuff starts to change.
One of the reasons why I've sort of gotten into my focus now is on planned care home communities, some people call them a cluster development. But I like playing care home communities, because I can have all the scaling of a big building with 80, or 90 beds and all the things that come with that, I can avoid all the negative outcomes of long hallways, cafeteria style dining, on home, like feel, and I can I can create small intimate atmospheres but all on one campus, the advantages that Joel model is, is multiple. one of the number one things that it really working to solve is in a campus design, I can have
Loe Hornbuckle 19:22
something that is very difficult resistors will it's very easy for me to get access to financing. if you go to a bank for residential assisted living, sometimes they say, Hey, is this a house? Is it a business?
do you have a track record and kind of go through that dance, when you're doing a campus, it definitely is going to trade exactly the same as a big building. Right, because it's a it's multiple communities on one campus. now all of a sudden, you get access to more traditional commercial financing. it now when your deal trades in the marketplace Am I traded at seven or eight cap, whereas residential assisted living my traded a 15. you can kind of see how it might be advantageous from a disposition point of view, to sort of develop enough scaling, you can solve those problems.
Truthfully, when big money wants to get into this space, and it's always pouring in. But let's be honest, the amount of money that's going to flow to senior housing next 10 to 20 years is going to be very big. the bigger you are, if you have 1000 badge or fit hundred badge, 2000 beds you're not necessarily having to look for them, they're looking for you because they say hey, we know this company that owns jewels, 2000 beds, let's give them a call, and see your exits become a lot different. those those big companies big insurance companies and hedge funds and private equity groups, they can afford to overpay, because they have access to cheap capital, they have access to systems and processes and teams. so they usually come in, and they usually pay over market value for something because they make it up on operational efficiency.
We saw that happen in single family homes. we saw all these hedge funds, say we don't know how to manage single family homes or manage single family homes. often it's that you know what, you gotta figure it out or single by 2000. I'm going to marketplace. so we saw a lot of that. the last four or five years, we saw that kind of consolidation where you had these hedge funds being the number one landlord in different cities, and obviously the number one landlord all over the country. I think that's where assisted livings headed, I think there should be some consolidation, smaller levels and think you're going to see. what's interesting is every business that seems to have this baby boomer relationship has been gone through consolidation.
People think about assisted living, I had this conversation with a friend of mine, where he doesn't think that care homes can scale up mom and pop pharmacies. They've been getting bought up and consolidated. Think about mom and pop funeral homes bought up and consolidated. Very, there's very few standalone funeral homes anymore. They keep the family name, but they're owned by Big, big corporations. there's all these businesses that have been sort of mom and pop style operation in our homes. I think assisted living is sort of a natural evolution of that. so my anticipation is you're going to see money kind of poor into assisted living. it's definitely a good time to get into that space. Because if you're the gatekeeper, you hold inventory when market decides that it's time to invest in something that's a very powerful place to be.
Yeah, and you see, you're not just holding this inventory and sitting on it. It's very much a cash flowing business. you're making money just for the pleasure of holding the business in the first place.
Loe Hornbuckle 22:36
Yeah, I mean, the thing about assisted living kind of fasting is there are some assisted living projects that I've seen. That makes sense undelivered. Wow, I mean, think about how many apartments would trade without leverage I
Loe Hornbuckle 22:49
mean, it, it's very fun. It's not none, but it's close. there's not many people don't you don't want to let me go find something that I can buy for $20 million.
Loe Hornbuckle 23:01
6% cash on cash.
Loe Hornbuckle 23:04
It's just not people aren't put $20 million in like that. All the returns are based on being leveraged, I've seen care home deals that put a million dollars in and make 150,000 a year. you can maybe make the case that makes it Now obviously, to use leverage, then you can make those returns higher. I'm all for leverage.
I'm just saying the cash flow from assisted living facilities that are run properly when you have scaling when you have the things you need. Because again, there's challenges when you get those things that sometimes can make sense to do those things on levered. that's not true. Very many other real estate subclasses.
Yeah, absolutely right, there's going to be cash flow opportunities, and all kinds of stuff. There's obviously all the tax benefits of owning real estate, all the things associated with that. But for me, I think the really interesting thing about the business, like I want to I'm doing the business, because I like helping people I like the I like the challenge. I like helping people's situations where they've been in these situations where they're so terrible, and they think my life is over, I don't know what I'm going to do, mom or dad keeps falling and can't get my life back. we can solve that. for them.
It's a very powerful place to be in, then just thinking about this business, from a financial perspective, is what it looks like in 10 years, 15 years, 20 years, we're not even scratching the surface of what this business is going to look like. the retirement of the baby boomers that they were shifting into assisted living, have already cause wholesale changes globally. when they start interacting with assisted living and skilled nursing and memory care. I mean, it's hard to imagine generations so much bigger than the previous one.
Yeah, it's going to, it's going to change things a lot. I mean, one of my uncle's is retiring in a month, and he's 60. he's at the bar and maybe 61, I'm not exactly so we'll start interacting at
Loe Hornbuckle 24:53
some point with those sort interaction at some point with independent living or active adult is, potentially is what may, and the communities right now are sort of have an answer the question of like, how are baby boomers different? What do they want? No, apparently, they don't like the word senior. There's this whole like conversational brand, or space, the business that I'm in, I'm in the business of helping people that basically have to do something, this is not necessarily want transaction.
This is, I can't be safe at home, I can't meet my needs at home of cognitive impairment, my family can't take care of me. so it's a little bit different, because they're not making a decision out of a want, they're making a decision out of need, and they're picking the place they think is going to best meet those needs. That's very different than someone that 65 and says, I want to play golf and be with my friends.
So I need to find a community that checks off all the boxes, very different process, the buyer timelines, very different most Independent Living transactions, I think they like to take six months to two years on average just because you have to court them and they got to make sure you're like Coleman you gotta buy in wants to sit you own. Did you read the real estate, those are all components that are grappling with our business, it's a very quick turnaround, people are usually making a decision in the two weeks, because they're getting out of rehab.
They've got to find a place to stay. They've done something Unsafe at home, their family is totally worn out exasperated, me a lot of times what my business about is taking care of the resident. That's, of course, I'm the one but really what we're doing is we're giving the family their life back. Because kids are happy to help take care of their parents, but they've also probably got kids their own, they have their own life, they need some help. in the case of cognitive impairment or dementia, they're probably not qualified to interact with that person. They don't know how to get past all their when you when you're taking care of someone that you know very well. as memory loss, you can personalize a lot of things that are personal. it's not like if they love you enough, they're going to remember you. People think that people think, Oh, yeah, he knows it's me, because he loves me so well, no, that's his brain, her brain is, is dying dead in the area of memory, that doesn't matter how much they love you, they're not being agitated to you, because they don't love you, or have a medical condition. so it's sometimes best if you can kind of create an arm's length.
Take care of someone that has massive cotton, the parent is really hard to bring your baggage, the table.
Yeah, I can see what you're saying about this is going to be would you call it a silver wave or this is going to be a big silver tsunami, that's, that's even even bigger. But it's a it's also interesting to hear you point out they have baby boomers have different preferences than the last generation, then specifically, they don't like being called, they don't like the word senior.
I'm sure it gets far more detailed as to how these businesses need to market themselves to their residents. then also many, many cases, I can imagine, folks with cognitive impairments like you said, You're giving the family their, their their life back, essentially, you're marketing to the family. you're you're also serving the family in addition to serving the resident. how does that serving the family aspect? impact your business and how you market it? Sure,
Unknown Speaker 28:19
yeah, I mean,
Loe Hornbuckle 28:20
I would say the vast majority of the decisions, probably somewhere around 90%, are made for someone and not with him. Anything that very few of the residence, in our case, actually tour the facility they're going to move into, rather, it's their power of attorney, whether that be a family member, or guardian, or sometimes people are 85 years old, and they don't have a family and their next door neighbor, or their old high school friend, that's, that's helping them and you see all kinds of unusual configurations. it's great that someone's going to help them. But the bottom line is the best form of our transactions are made and done for the family. one of the things I really trained my team is, we have to be very careful, because we catch people and moments of grief. Know, that happens, often we catch people in extreme moments of guilt I wasn't adequate enough to take care of my mom or dad or my spouse enough to put them in a home, like guilt with that. We catch people in various states of denial someone might have a mom or dad has 105. they're there, they're approaching the situation, like they're gonna live another 30 years. I mean, it could mean, but it's not necessarily likely. so we see a lot of different statements, sometimes you will see people that are just as rational, and it's just clear out about a situation possibly can be, that's where most people that we run into, most of our clients are going through various stages of grief, guilt, and denial.
So a lot of what we have to try to do is just try to set realistic expectations. give them permission sometimes we spend a lot of time giving there's been tours where I spent maybe 54 minutes on the resident other hours talking about the wife who's upset, I mean, houses are tough, you really think about it, I mean, you've lived with someone for 50 6070, some cases, 80 years in terms of our clients with them, other people like, hey, we've never been apart for more than three days for the last 18 years. Wow. Like, and that happens. Then you sort of have this and it's less true now. But in 1940s 1950s, you had really clearly defined gender roles. You've got a woman, it's like, I've never, I don't know how to balance a checkbook, I don't even know how much money we have. on the flip side, you have a guy, he's like, never done anything for himself, except to go out and have a job. And, and he's never done anything domestically, couldn't tell you how to turn on the oven, for example.
You have these people that have been related to these very, very siloed gender roles and a lot of cases, and they've been in these relationships for for 80 years. while I don't want to use the word codependency, in terms of like a psychological term of baggage, they have very much become dependent on each other. that's why you see these crazy situations where people have been together for 80 years and spouse one passes away and other spouse follows. three days, you see a lot of that stuff. And, and so spouses can be very tricky to deal with. Just because, again, they're bringing that they're bringing a lot of the stuff to the table. so our job is to really understand it, not judge it in a short imagination, just understand what they're going through and and kind of give them permission, that's okay. it's okay that you have no training to take care of someone dimension, you feel like you've failed them, you haven't failed.
If you've done that, you've been doing this a lot of times for 567 1012 years, you've done a great job, but it's okay to take a step back, because there's some decent data to indicate that if you take care of somebody with dementia, usually die first. Wow. Yeah, so there's a lot of people that pass away, getting so much of themselves because if you're constantly in a state of stress, if you're constantly your body's constantly in fight or flight, you're always worried about something, can't go on vacation ain't work your job, you're just dedicated your entire life, I had a guy that his he basically learning to train themselves to be a light sleeper. telling his wife got up in the middle of the night, wake up with her.
He would routinely not get more than an hour, an hour and a half of sleep in a row where some noise or some sound or some worry wasn't causing the wake up and in that guy still had guilt. I'm like, man, you've been very dedicated man. I mean, it's okay to let somebody take the wheel for you from time to time.
Yeah, you're not Superman.
Loe Hornbuckle 32:42
Well, and it's very ingrained in this generation, right? It's the silent generation. so there's a lot of, there's a lot of expectations for people to suffer in silence. Yeah, we're great your first step to get help, as you can ask you,
I mean, this is very much a business that impacts everybody, and you meant the, the siloed gender roles, particularly if particular generation, I think the way I relate to that, and I encourage everybody to think about it for yourselves. My grandfather passed away earlier this year, he was 92, he lived a long life, he was very active, up until literally the month that he passed away.
In a way, my grandmother's still alive in a way that the gender roles that they lived within, she took care of the cooking and cleaning, and he took care of taking care of the farm and make going out and making money, and then he retired and everything. But if she had passed away first, and she's still alive, thankfully, she's doing well. But if she had passed away first, he would not have been able to take care of himself. in many ways, he doesn't know how to cook anything, no, or he didn't he, he didn't know how to do a lot of those things. somebody would have had to one of my aunts and uncles would have had to step up and help take care of him. that situation, and I'm sure I've worked for folks listening, we're live streaming on Facebook, and I've seen some of my, some of my friends tune in, and watch.
One of them in particular, her mother in law had dementia, and they were taking care of her up until she passed away, and it's terrible situation just impacts everybody. this is a way of investing. And, and, and truly and making money for sure. But it's a way of having an impact in society and having an impact on individuals' lives. yes, definitely, it's got a lot of appeal. For, from my perspective, but for a lot of people.
I know you've got some an initiative going on capital with a cause. You want to talk a little bit more about that, and specifically what you're doing to make an impact and Change the Equation little bit, but what does that mean to you? And what are you doing with capital with the cause?
Loe Hornbuckle 35:06
Yeah, I mean, from our perspective at my core I believe in, I believe that of all the economic systems and all the motivating factors in human society that capitalism plays, it plays an important part in that mess. That's probably my core, and I think something gets a little bit flawed. sometimes it can, doesn't go to an extreme.
So for example if you're an assisted living operator, and you don't have good motivations, and you're like, we gotta get we gotta get the net operating income up, well, you can cut expenses, well, what can we cut? Well, let's let's serve lower quality food, well, let's cut back on the staff. we really feel like we need three carriers during the day, but let's cut to one. we'll make it work for a little while.
Well, we got to have a mission to understands why you shouldn't do that. Now obviously, capitalists would argue, hey, if you do that, then you'll go out of business. Well, that's probably true. But we've seen countless examples where people's motivations and incentives sometimes can be a bit short sighted, your behavior theory tells us a lot about a person if great study or they did some research about this factory.
If something coming down a factory line is cancerous, but not hot to the touch, they struggle to get workers to wear gloves, because it's not hot, and so they don't think they need to wear on the other side, if something's not dangerous at all, but it burns your hand is called the touch, it's very easy to get workers to wear gloves. Well, if someone's hot or cold, you're probably going to burn the outside layer of your skin, but you handle something for 20 years in the factory, that's going to give you cancer much worse result.
So behavioral theory, we know doesn't really Wait, the long term as well as it should have, it's a reason why people struggle to eat well, and exercise and all those things are challenged players part of the deal. sometimes as a CEO, or as someone running a company, you can sometimes get so focused on I gotta make this quarter I gotta make this quarter I gotta make this quarter.
When you're talking about taking care of people, you have to have a strong line. so Capital with a Cause for me was really all about kind of marrying the idea that you don't have to make every squeeze every dollar every situation and then take whatever's left over invested charity, you can combine the two, and you create situations where your investments are the things you're investing in, create positive things for other people.
So if you can marry those two causes, you have what's called impact investing, you can make an impact and impact investing can be things like sustainable agriculture, it can be, in my case, investing assisted living to where you can improve the outcomes and quality of life for people that are especially in memory care, folks are very vulnerable members of society that can't be their own advocate.
You can marry investing, making a return, but also creating positive returns on society. That's what capital with causes all about. frankly, I'd heard of impact investing before, but I've always kind of been too much of a capitalist in terms of just being focused on what's the money look like, what's the money look like.
As I got into this business, totally changed me because I realized you can't always be focused on the money, you have to consider your residence, you have to consider your staff, sometimes even expensive money. so had a couple of investors when I was initially raising capital for the first time, and they would tell me, like, Hey I have other deals that I can invest in, but I'm investing in your deal, because I think it's going to be beneficial, if you want to tell you really care about them. I had one guy, he said to me, he said, Listen,
Loe Hornbuckle 38:39
I get why once I've lost $100,000, drilling for oil, I did not feel good about losing that money. He said, If I give you this hundred thousand dollars, and I lose the money, I hope you don't lose it. But if you do least feel like I was trying to help some people in the process. I started to realize that not wasn't anything I came up, my investors are just telling me, Hey, we do care about your mission, who cares we're trying to.
It made me realize that I want to create a forum and I want to create a place. so we're kind of working on building this group, where people that have deals that have a social component to them, can invest with investors who are not, who are not going to just invest in deal B because the IRR is 2%, higher, right? They may say, Hey, listen, delay might have a 2%, lower internal rate of return. But I think you're going to pause and impact the community, I think, positively impact that are in difficult situations.
For that reason, I'm going to invest because my spirit gets lifted by doing those things, that community gets made better off, or I know, when I went through in my grandfather had dementia there, I know what I was doing, my spouse had assisted living needs, and I saw the struggles and I saw the isolation and depression, and I saw what happened, how deadly falls can be.
If you can do something that can help prevent another family and save them from that pain in your investment makes more sense to me than a couple points are. that's really where that's kind of been born from is the idea that it's not all about how much money you make, um, it's a combination of making money and doing good for society kind of do good and do
well, at the same time. I like that. I like that a lot. I mean, this is an important cause. you he said it without saying this specific term, but the one that comes to mind to me is senior abuse. It's out there, it's real people are doing it, and it's tragic. I don't know, I don't know what else to say other than that. certainly applaud you for, for doing what you're doing. Yeah, appreciate that.
Loe Hornbuckle 40:42
and I would always say about that is, is most of the time, most of the time people get into the situation, should neglect Listen, it can, it doesn't matter how good of a facility you have, it can happen, period. I tried to wag my finger, that anybody that some other for sure has worked we're at Do you think it's really important is that where people get into trouble.
Where I do wag my finger at him is that when Southern comes clear, they don't take action as a company or famously, there's an old saying, it's not that it's not the act that gets us to cover up it's people that have bad things happen, they don't own it. and so our company is based on the premise that we're going to make mistakes, take care of someone 24 hours a day, turn 65 days a year, just go ahead and understand or make mistakes, and I got a couple people on my staff who are dotted a little perfectionist.
I'm like, “Listen, guys, you have to understand, if we put out a bad meal, if we do a poor job of cooking a meal, and the residents don't don't like it, if the family says hey, they didn't like it, it wasn't a very tasty meal. you apologize, fixes the variability and work on systems and process to improve it.”
Because there are places all over the country that are that are charging more money, and serving rice and beans is the only way all day every day and the caregivers are interested in all those things. it's To me, it's less about things like senior abuse, and more like apathy.
there are a lot of people that again, this business and their residents are numbers on a spreadsheet, people and I try to stay as connected to that part as possible, so that I can see the families for who they are, I can I can understand their stories for what they are. I mean, just imagine if people bring their life story with them. When those things ever happened, and it was a paradigm shifting thing for me was that I have this person whose family had and I forget which country but their family had survived, sort of a communist famine. so she just assumed anytime somebody like a smallish meal, it set her off, because it would take her down, this always going to starve to death. we serve relatively small meals and assisted living meals are good, but they're small, most seniors like you're on a 10 ounce steak that that's going to senior most senior need to three ounces, four ounces of steak until they're actually gonna eat. so for her, did convince herself that the small meals and so we were like me, and what is she talking about? And I sat down and I heard her story, it all made sense.
Because I mean, just imagine you see your family members go through or hear these stories coming to your family about the stamina, starvation, and your husband lives into assisted living facility that's serving a standard style menu like oh, my god, they're serving? they're serving prison prison prison sized food here like No, okay. what you're saying really is you want him to have bigger portions, so easy to fix. But we do need to understand her story because we need the context behind how she was feeling.
So we try to take the time to figure that out. realize that great book that I read about psychology friend of mine wrote it Dr. Psychology, basically just as though the theory that everybody is doing the best they can with the tools and that they have, though, there's very few people in the world that are just evil.
They're not, they're making the decisions that they think makes sense in the context of what they think is going on. if you can understand that, then you can kind of appreciate people for who they are. just understand that, like, Listen, if I have gone through the experiences you have, I might have a different outlook on life. Well, and so that's a, you need that for two reasons.
One, you have to have that we deal with people with dementia and memory loss and all those things because there, you've got to get in their world, they're never going to come to yours, you have to be able to understand what they're actually thinking. if you've got a guy that every day packs a suitcase to leave, an untrained person says where you going, you're not going anywhere you live here to put your stuff away.
Now you've got a cognitively aware adult arguing with a person that has a brain disease. Which one's crazy. Tell me. Now, the train person says, Hey, where you going? I'm going to school. Awesome. What are you going to school? I'm going today, what day do you think it is, is Tuesday, go you're going to school tomorrow, they'll have an idea that you're going to school tomorrow doesn't make sense to leave your luggage out by the front door because some of the trip over, take it back to your room and all the laundry tomorrow when the bus can make that process is needed.
Loe Hornbuckle 45:26
So you can understand why accepting people for who they are, is a very important part is living in dementia care, because you've got to get in their world, they're never going to come to yours.
That's not true families that can be if you bring 80 years of personal story and baggage with you emotional trauma and fears and pain and player very little I'm going to be able to do to fix that in a month or two. I've got to kind of understand where you're coming from figure out what your goals and expectations are and and do the best I can to build my company in my service around those needs for you. if I can't, I'll tell you go try to find a company that can.
Wow, quite the example. They that you gave of the gentleman the pack in his bag and leaving it by the door, and you know how a trained person handles it. we had a question here on the live stream that I want to make sure to get to it's very difficult we've been talking about but so long, it's right along your lines of experience. let's get into it. the question is, from someone who's sourcing deals, how can we find local operators? If we have a perfect house to sell or rent to them? For an assisted living operation?
Loe Hornbuckle 46:35
Yeah, so that's a good question. Um I don't think it's as I don't think it's as easy. most cities do have groups of people that are in assisted living space, and there are plenty of people that rent their homes. I've always kind of been of the opinion, I'd like to be on both sides want to be the real estate owner, operator, and the biggest challenge, so I don't know that I have a great answer for that question. Specifically, I think that's just networking.
My suspicion is that the person you're probably going to find it's going to be someone that doesn't come from a real estate background brother comes from a social worker on the nurse or an administrator, and I wanted to own my own business for a long time. so I'm going to do some it's not as capital intensive leasing offices less capital intensive, one thing I will give a piece of advice for is just to be prepared.
Emotional work is in the operations. be prepared that whatever structure you enter in with them just like if you hire a third party management company, say multifamily versus assisted living in a big assisted living, the operator gets a much bigger piece of the pie. They're often required to personally guarantee debt. As the operator most most assisted living deals, the operator may get points on the deal, because they're doing all the hard work and available all the challenges in the business.
So it's a bit different. obviously, seek and the best advice I can give you is you find somebody asking questions about what they want, what their goals are, and try to do something try to try to create a lease agreement or terms that create win wins, so you can understand what they want. I think too many people come from a background of, Okay, well, this is the way single family works is the way multifamily works.
If you do it that way, you're very likely to make a deal that either doesn't pass the smell test for a good operator, or the only person that would say yes to it is an offer that doesn't know any better. you might be taken advantage of them. Or you might be basically self selecting that you only get bad operators because good operators is worth their weight in gold. can can can get a view anywhere. If they're going to give someone can fill an operating assisted living facility or memory care facility they can they can do anything they want within reason, because they're very hard to find.
So but yeah, look for some Look, there might be like, for example, Texas has access organization of residential care homes torch, and it's a state organization has local chapters, if you can find if there's some sort of assisted living association or residential assisted living Association. Yeah, they have meetings you can join, and you can innovation say I have a house that I think would be perfect, I'd love to hire an operator, that it's really going to be come back to just good old fashioned networking and
Loe Hornbuckle 49:14
figuring out who the right before and though I don't know that there's another good way to do it.
Other networking is a great scalar. Okay,
Loe Hornbuckle 49:21
this is one thing, most states do tell you where the license facilities are. what you could do is you go get a list of all the license facilities, and most states require you to list who owns the real estate than the operator are.
You can look for pretty obvious differences and companies that can be a clue, or you could and then what you're doing is you're calling in to say hey, looking for an operator to think of this project, would you be interested in leasing or coming to the third party management, all the existing operators in a certain area and ask them so I get calls often from Hey I got this house to sell or I found you because I went to the list on Texas.
All I'm just calling so it's, it's a little bit more targeted, cold call you are so you're not calling the phone book. You're just calling people that have a decent reason to be in this.
Nice. Okay, I like that. I like that. We're going to take a quick break for our sponsor. What is the best investment in real estate that you've ever made?
Loe Hornbuckle 50:19
I'm definitely the first care home that I built. it was a it's awesome, it was an awesome deal. not only that, I learned a whole lot but it's really really outstanding returns. That's an awesome project. Okay.
Yeah, I mean, I can see in that business, you have low rents, but a lot of your costs for equipment and things I mean, they're going to be fixed and AC unit costs, what an AC unit costs, no matter where you are. you need to have enough growth rents to have enough rent leftover after you pay your debt, to pay for your new AC unit to keep going with my example, or you had equipment and stuff like that.
Loe Hornbuckle 51:34
I mean, I can deal with that. But I mean, the stuff that always bothered me was just I think sometimes two people are kind of on the margins, body financially, you'll see situations where you'll have a four bedroom house with one bathroom or something because that's just how you do it. And, and you don't have eight adults in the house.
You're just going to whether you whether you have no one no bad intention at all, you're just going to destroy now, it's just not eighth, eight adults sharing the space of that size, use one restroom, gonna take to believe cause a lot of unnatural wear and tear the property. it was definitely eye opening learned a lot from that,
Loe Hornbuckle 52:13
definitely learned a lot about that about and my investment philosophy, like,
Good to know. Last question, my favorite one, what is the most important lesson you've learned in investing?
Loe Hornbuckle 52:27
So that's interesting, I think for me, it's really to invest in what you know. I think anytime you can sit down or talk to clients, that you more intuitively understand because that's your background, or that's your, that's your income level, or you're talking to clients where you're speaking the same vernacular it's always helpful so if you're an educated person, if you can somehow create situations where the person on the other side of the desk could use an educated person, you've just got a real play with country people and probably interact with people from the country's going to work out really well for you.
I think for me, it's invest in things that and invest in things that you can intuitively understand, because you spent time with them. if you're, if you're scared, you're scared of water, probably don't invest in Island vacation homes, because you don't really understand the lifestyle.
So I just recommend people invest in things they understand. that's, that's been helpful for me is when I can invest in things where I can really understand the clientele because I've gone through the same thing, or because they remind me of my family, or whatever that can, that can allow me to be more effective with my clients, as opposed to not really understanding the conditions that someone's going to another side of the table.
So I appreciate everything today, residential assisted living, particularly the the memory care, it's definitely compelling, definitely compelling. I think you have a great angle on it, or a great way of looking at the business. I appreciate you sharing that and being out there. if folks want to learn more, if they're interested in passively investing, where can they get in touch with you?
Loe Hornbuckle 54:10
Absolutely. If you're looking for something for your family and you're in a different state or city feel free to reach out to me, I'll try to connect you to resources, just investing related. If you just need to talk about assisted living here, feel free to give me an email, the best way to find me is my email is LOE first in low. then my website is at the thesageoak.com.
Or you can go to the SEO com there's an info tab and click that and that'll come right to me and people can get information about either investing in or how to start a residential assisted living, I connect you to some resources there or just hey, I'm trying to find a place for mom in Kansas City. give me a call and I got some I my network, I'll refer Yeah,
pretty cool. Once again, I appreciate you taking some time to talk to us and be being out there and being a force for good in the world.
Loe Hornbuckle 55:02
I really appreciate having on the show a lot of fun.
It was my pleasure to everybody out there. Thank you for tuning in. I hope you enjoyed the discussion. If you are enjoying the show, please leave us a rating and review on iTunes. Big help helps other people learn about the show, you know someone that could use some passive wealth in their lives.
Please share the show with them and bring them into our little tribe of investors. Once again, thank you for tuning in. I hope you have a great rest of your day and a great week and we will talk to you on the next one. Bye bye.
Loe Hornbuckle 55:32
Thank you sure