FT. MYERS ELDERCARE (CASE NO. 9-898-041)
1. Has Dana done a good job researching his options?
While Dana did not consider the site potential of other property types, he did a good job researching his options for eldercare facilities. His analysis included regional analysis (comparing other cities and counties to Fort Myers), population trends, Fort Myers healthcare statistics, industry and competitor analysis (by viewing a consultant report), financing alternatives and financial analysis. Together, the information provided a thorough overview of his options within eldercare.
2. How do congregate care and assisted living facilities differ?
They differ in client profiles, ownership, elder decision to join, services, physical environment, pricing and financing needs.
Client Profile: Congregate care facilities typically targeted younger elders (average age 78) that were independent and more upscale. Assisted living facilities typically targeted older populations (average age 83) that were frail and needed assistance with two to four activities of daily living.
Ownership: Congregate care facilities have high entrance fees, which are sometimes refundable upon move-out or death, and are similar to buying a unit in a condominium. Owners also pay monthly fees that cover certain supportive services.
Elder Decision: While the decision to move to a congregate care facility is often a life-style choice, moving to assisted living facilities is often more often a “need driven” option for elders.
Services: Congregate care facilities typically have fewer services such as 24-hour supervision, one meal/day and concierge services. Assisted living facilities typically have more services, such as more meals, housekeeping, laundry and personal care services.
Physical Environment: Congregate care facilities are typically more like large residential condominiums, offering full size apartments with kitchens. Assisted living facilities are smaller residents with modifications, typically a smaller apartment with a kitchenette. Furthermore, congregate care units have a much higher level of finish in the units and in the common areas.
Pricing: While congregate care facilities are cheaper because they offered fewer services (price range $1,500 to $2,500/month), assisted living facilities are more expensive ($2,400 to $4,000/month).
Financing Needs: Since it would take close to a year to build after getting through the permitting and perhaps another year to sell out, congregate care facilities required short-term conventional construction financing. However, assisted living projects required longer term financing since they were more like rental properties than condominiums for sale.
3. What are the advantages and disadvantages of each of Dana’s options: selling the land, congregate housing or assisted living?
Land: If Dana were to sell the land, he would have to find another living arrangement for his parents and he would miss out on a lucrative business opportunity. However, the advantage would be cashing out relatively quickly with $850,000 after all commissions.
Congregate Housing: (Delays) If Dana pursued the congregate housing option, it would take longer to get any returns since he would need an additional year to sell the units. (Costly) Furthermore, the hard costs for congregate care facilities typically ran 20% more per square foot than those of assisted living facilities because of the more expensive materials, higher level of finish, more casework, larger kitchens and bathrooms and better appliances, plumbing and vanities and more elaborate common areas. (Feasibility) Additionally, it would be difficult to sell the units at the estimated prices and within the projected time frame since Fort Myers did not seem to have a strong upscale market. Hence, it was not clear that the Fort Myers market could support the required prices for congregate...