GI163: Residential Assisted Living Investing with Loe Hornbuckle

Loe Hornbuckle is the CEO and founder of Sage Oak Assisted Living and Memory Care which is a boutique assisted living company with 5 locations in Dallas along with two ground-up Assisted Living developments in Texas and Louisiana.

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Announcer:
Welcome to the Global Investors Podcast, a show that focuses on helping foreign investors enter the lucrative US real estate market. Host, Charles Carillo, combined decades of real estate investing experience with a professional background in international banking to interview experts in all areas of US real estate investing. Now here’s your host, Charles Carillo.

Charles:
Do you have money sitting in the stock market? And you’re worried about it or worse. You have money sitting at the bank, not keeping up with inflation. My name is Charles Carillo, founder and managing partner of Harborside Partners. And since 2006, I’ve been investing my money and my family’s money into income producing properties. These are real assets, real properties with real addresses that produce real cash flow. At Harborside Partners, we provide passive investors who love real estate with a turnkey investing solution. If you want to put your money to work in real estate, but can’t find deals, don’t have the time to get funding in. The last thing that productive people want to do is manage real estate. We find the deals. We fund the deals and we manage the tenants, the termites and the properties. Partner with us at investwithharborside.com. That’s investwithharborside.com. Go to investwithharborside.com. If you love real estate, you like the idea of passive income and believe that income producing properties will appreciate over time. Go to investwithharborside.com. That’s investwithharborside.com.

Charles:
Welcome to another episode of the Global Investors Podcast; I’m your host Charles Carillo. Today we have Loe Hornbuckle. He is the CEO and founder of Sage Oak Assisted Living and Memory Care which is a boutique assisted living company with 5 locations in Dallas along with two ground-up Assisted Living developments in Texas and Louisiana. So thank you so much for being on the show though.

Loe:
Yeah. Thank you so much for having me.

Charles:
So give us a little background on yourself. Both personally and professionally prior to getting involved with real estate investing.

Loe:
Yeah. I’m from from Louisiana dog lover. I like to play a little poker from time to time and some other hobbies. I, I shoot long range. So, you know, with thousand 5,000 yards, it’s kind of something I do for, for fun and single with no kids. So, you know, it’s nice cuz the company’s my baby. So I get a chance to kind of spend some time there, you know, professionally before you know, getting into the assisted living business. I had a very natural transition. I ran a car dealership, so it’s very natural to, you know run a car dealership and then take care of people with dementia. It’s just, there’s no steps in between. It’s just a very, very typical journey. Right. So yeah, I read a card dealership for about 12 years and really learned a lot about, you know, relationship sales cause I was mostly on the finance side of things and so my primary job was, you know, going to lenders and trying to convince them why certain papers should be bought.

Loe:
Maybe even though it didn’t fit in their sort of normal buying criteria, you know, get favors done, you know, build those relationships. And so that, you know, I learned a lot about your relationship sales, you know, cuz there’s part of cars, that’s transactional. Right? You sell some car. Yeah. You know, you try to get ’em to come back in three or four years, but again, it’s a transaction, but when you’re talking to the same lender every day over and over and over again, it’s much more of a relationship. And so I think that really kind of set the stage cuz assisted living’s like that. Right. You get a client in and you sort of maintain that relationship. You know, getting investors for assisted living is a relationship management business. So yeah, that’s kind of my professional background, my personal, background’s not that interesting cuz you know, I don’t have a bunch of, you know, a bunch of pictures of kids to hold up and by my wallet to show to you, but I got a good dog. So that that’s good.

Charles:
<Laugh> so when how did you choose real estate as your investment vehicle going from this financing background you had in in car sales?

Loe:
Yeah, I mean I’ve always been fascinated by real estate. I think there’s a lot of elements of real estate that really spoke to me. So I started real estate investing in 2007, so I worked the cardio ship until the end of 2013. So for about six years I was in real estate kind of as a side gig, kind of getting educated on real estate at one time in Shreveport, Louisiana, I think we had about 75 or a hundred doors. But you know, unfortunately the Shreveport economy is not great. So you know, some of the reasons why real estate makes a lot of sense, I was just guilty of, I was busy professional and I was investing where I could control the deal. I think that ultimately benefited me because I learned a lot you know, kind of self-managing and I don’t think I could have done many of the things I could have done if I hadn’t self-managed cuz ultimately we are the operator of the assisted living and memory care.

Loe:
So where you see a lot of investors, you know, come outta California, for example, you know, they’re, they’re accustomed to third party management, third party management. And a lot of times when you’re in a small town or when you’re in a, you know, market where there’s not a ton of talent, you, you manage things yourself. And so there’s obviously some benefits that come from that. There’s some headache, there’s some pain or whatever, but you know, on the other side of that is, you know, you know how to manage property, you’re comfortable touring tenant, you’re comfortable dealing with tenant disputes, you’re comfortable, you know, in my case, you know, resolving family concerns or, you know, making certain that you’re meeting expectations, things like that.

Charles:
Nice. Okay. So give us a little background on what your firm’s current investment strategy is. What are you looking for and what areas and markets.

Loe:
Yeah. So we kind have two companies. I mean, I know we talked about SJO today, so essentially say joke is the the brand and the operations company for the assisted living and memory care business specifically that we also have a company called good horn capital. I’m the horn of, of the good horn. And my name’s always second. I never, I figured that out all my company’s my name’s second. I gotta work on that. I need a new manager, but regardless so we’ve got good horn capital. That’s our, our sort of private equity type of firm and we raise money for all types of deals. We really focus heavily in the Texas market. We have a project in Louisiana, maybe some subsequent projects in Louisiana, but they’re very close to the border with Texas. So we I’m from Louisiana.

Loe:
So we feel like we know that area very well. You know, we really believe in focusing on need products. So we really try to focus on products that we think you know, people have to have, people have to have housing, obviously, you know, the healthcare aspect of assisted living and memory care, strong believers in that. So, you know, we, we, we mostly stick into the housing play, so we’ll, we’ll we’ll develop or flip subdivisions. We’ve done some paper, lot asset deals. We’ve also you know, done some apartment development some built to rent townhouse communities. So right now we’re really focused on housing. Just that assisted living in memory care is a subset of housing, right? So it’s taking care of a specific subset of a group SOS. Jo’s kind of our passion changed the world business and then good horn capital supports SJO and that mission. But it also will raise money for other projects that we think kind of fit our sort of recession resistant criteria because at the end of the day, people always need places to, you know, live and work and, and play.

Charles:
So assistant living is is not something like a topic we’ve covered with much detail on the show. Are you able to explain the investment play with residential assisted living? I think with other it’s it’s not as, I guess it’s good cuz it’s a niche that’s not as sought after or as popular, I guess is like multi-family or some other ones where it makes perfect sense. Cause people can kind of see that most people probably don’t have experience with assisted living yet in their life. So yeah, let us know kind of how that works and what the investment play is that you’re looking for when reviewing an asset.

Loe:
Yeah. I think it’s probably better to think about it instead of a real estate play. It’d be no different than if you bought an HVAC company, right? So if you bought an HVAC company, you have to, you have software, you have to manage people, you’ve gotta train people, you know, and oftentimes if you buy a HVAC company, you have a warehouse, maybe have a distribution center or whatever the case may be, same thing with plumbing. So really it’s a service business. Mm-Hmm <affirmative> that has a real estate component. And so you know, there’s been a lot of people over the years that have kind of, you know, there’s a lot of real estate investors in my opinion that are looking for that next thing. And so there’s been a lot of people that have kind of spoken about assisted living to real estate investors.

Loe:
I think it’s kind of backwards. You know, if we’re looking at a, a percentage, you know, it’s an 80, 90% service business and it’s a 10 or 20% real estate business, it’s much more HR heavy, you know? So for example, in, in apartments, if you have a thousand doors you might have what, 30, 40 employees, if you have a thousand beds in assisted living, you’re probably gonna have 500 to 750 employees. Wow. So a very different, different kind of experience. So I don’t really think it’s a real estate play. Yeah. There’s certainly ways to make it a real estate play. The most common way to make it a real estate play is you partner with an operator. So there are plenty of operators out there that you know, lease their buildings. It’s very common on a big institutional level companies like, well tower will go in, buy buildings, build them, build them to the operator specifications, lease them to the operator on a triple net basis.

Loe:
And the operator, you know, retains whatever’s left over after expenses from, from collecting rents rents from clients. So it definitely can be a real estate play. That’s not the way we do it, we own and operate. So we love the real estate tax advantages. We obviously wanna control the real estate. We wanna design the real estate to kind of beat our, our purposes. We, we don’t do assisted living and memory care this in, in a traditional way. We have kind of a niche play that we like to do on it. And that’s really kind of our signature. We don’t really deviate from that in any way. So we don’t buy existing facilities. We develop our signature product because we believe it’s the superior product and superior way to deliver care to people that you know, are so vulnerable.

Loe:
Right? We talk people about dementia that they can’t be their own advocate. You know, people that are needing assisted living often have mobility problems. Sometimes they’re, they’re vulnerable to have, you know, medical conditions like, you know, congestive heart failure, kidney failure, things of that nature. And so you know, because of that you know, we, we really, we think the building is, is an extension of operations. Mm-Hmm <affirmative> and, and so, you know, there’s definitely a real estate play to be made, but, but frankly, you know, when real estate investors, what asks me, what’s the best way to get in the business. My answer is always invest passively with someone that knows what they’re doing. You know, and it’s just, it’s just too operationally heavy, you know, and I, I think what you realize is, is there’s a lot of, you know, there’s obviously a lot of multi-family investors that are their own operators.

Loe:
There’s quite a few, if the property manager has a problem or an issue, they have no idea how to fill a building, right policy, procedure, you know, what to look for to hire in a maintenance guy. For me, that’s very scary. I never want to be investing in something that I don’t think that I could personally or with my team going and solve the problem. I don’t wanna be reliant on a third party. That’s definitely not gonna care as much about, you know, what we’re doing as as we would. So we really do believe in in-house operations when possible. You know, I don’t necessarily know that has to be the case and, and businesses that aren’t operationally intensive. You know, obviously I think there’s a lot of mom and pop people that run storage facilities very well, obviously industrial, some triple net stuff is, is certainly capable of being done that way. But in general, I think the more operationally intensive the business, the more you wanna operate it in-house because you can have quality control, you know, things like that.

Charles:
So the management has handled all by your, your operating company that kinda manages everything. So you take care of everything. You take care of hiring people in the facility. You’re taking care of having new clients com you know, move into the facility. So all aspects are handled by one by a company that you own.

Loe:
So, yeah, so the only thing that we don’t do in house is we don’t do architectural and engineering in house. We don’t do building in house mm-hmm <affirmative>. But we do capital raising in house. So good horn is kind of our capital raising arm. We do design and development in house through a, a good horn product good horn land holdings. And then once it gets operational, then ands, Jo course is involved in the design process and thens joke takes over operations. So we hire a general contractor to build our product. We have had partners as general contractors on deals so that we kind of had the effect, the effect of having it in house. But we’re in the process now of kind of transitioning into, you know, looking at HUD product. So there’s a similar to multi-family, there’s a, a great HUD product for assisted living in memory care.

Loe:
And so once you become a HUD operator and you find a HUD builder you’re, you’re kind of off to the races because one of the, the worst things about development, sorry, if you’re my dog in the background, she gets very excited about HUD financing. So she’s, she’s a smart dog. You know, the nice thing about HUD is you don’t have sort of some of the same personal recourse rules, you know, anytime you develop something, you know, in your early stages, as a developer, you’re kind of all in, on every deal. You know, there are some non-recourse products they’re not widely common, but the vast majority of development products projects that you do initially. Yeah. The developers often all in, right. They’re putting up their net worth every time. Like I’m betting on this, I’m betting on this, I’m betting on this is why developers often, you know, have incredible you know, incredible success when, when they are successful is, is because they’re taking, you know, big risks, you know?

Loe:
So so we’re in the process of kind of moving toward that, that kind of HUD product. But to answer your question, I, I think you know, there’s a lot of people that shouldn’t be, you know, there are a lot of people that shouldn’t be landlords. There’s even more that shouldn’t take care of people with, with dementia and mobility impairment. You know, you can’t be solely profit driven. You have to have a, a greater mission or a greater cause on what you’re trying to do. Otherwise you’re, you’re eventually over a long timeline or get exposed by the marketplace. You know, nobody wants to have their mom or dad taken care of by somebody that’s only focused on the bottom line, because if you’re focused on the bottom line, you can, you know, serve crappy food for a period of time. You can cut staffing, you know? Yeah, sure. Falls go up and, you know, whatever, but that’s just a bad mentality. So you really gotta be focused on quality and quality control. And then, and then obviously hope the market pays you for your quality product.

Charles:
So what type of returns can passive investors expect with or investors in general expect with assisted living properties?

Loe:
Yeah. So, I mean, it’s gonna vary widely. I mean, obviously you have it since we’re, you know, so, I mean, there’s, there’s plenty of awesome existing projects that are value ad plays. You know, there’s plenty of plenty of assisted living and memory care facilities that could be upgraded. That’s not the business that we’re in since we’re in the development side of the business. A lot of times we’re targeting, you know, kind of that that 2020 to, to 23 IRR is often what we’re able to see mind you, we’re often doing that over really long timelines. We’re very bullish on consolidation in assisted living and memory care. So think about mergers acquisitions and just sort of big plays kind of happening. So the oldest baby boomer is 77. Average agent assisted living varies about 83 to 87. So the people that are assisted living are not baby boomers really.

Loe:
I mean, you have some early O onset and you have some people that are, you know, maybe weren’t that healthy in their seventies that kind of make it, but in general, the avatar of the person in assisted living in memory care, they’re in their, they’re in their, you know, early to mid eighties. And so because of that if you think about you’re an institutional player you’re gonna wait until the wave is here before you start really jumping into the asset class. And, and so you know, there really isn’t a baby boomer play in assisted living in memory care right now in the baby boomer space. You’re, you’re sort of focused on independent living or lifestyle communities, retirement communities, things like that in which care necessarily isn’t, isn’t, isn’t provided. So, you know, we like 10 year horizons on assisted living and memory care. Mm-Hmm, <affirmative> just cuz we think that’s when the, the exit strategy and the multiples will be at their peak. Right. So I would say that assisted living is probably you know 10 or 15 years behind apartments in terms of cap rate compression in terms of consolidation, things like that.

Charles:
Interesting. So one question that I have that we heard a lot of during the beginning of the pandemic was how COVID affected properties in assisted living. So how has COVID affected your properties and what has changed over the past two years in your business?

Loe:
Yeah, so I mean, I think it’s it’s for, for us, it’s really been primarily the secondary impacts of COVID rather than the primary impacts. Our model has a built in it infection control advantage. So for example, we’ve been operating in Dallas since 2016, so we’ve been operating fully in Dallas all throughout the pandemic in Dallas. We’ve had one case of COVID brought in by a family to a resident. The resident did find we didn’t have any internal transmission. So the whole pandemic in Dallas, we have one case of COVID no resident deaths no resident hospitalizations even. And then in our lake Charles operation, which started in August. So obviously it kind of came down in the middle of the pandemic. And we had two cases of COVID no, no evidence of in-house transmission. So our model really lends itself very well to infection control.

Loe:
There’s very few operators that could boast those kind of numbers. We’re very proud of that, but you know, when you have things like Texas, for example, had a, you know, like a four or five month visitation ban that’s gonna impact, right. There’s not, it’s a very uncompelling story of like, Hey, if you let your mom move in with us, maybe you can see her end of life cuz you can’t visit her otherwise. Right. So that really was the, the visitation ban was very difficult especially on, you know, on, on, on dementia residents, because, you know, they didn’t really understand, you know, some assisted living S could kind of grasp why I’m, I’m kind of waving at my children through a window or on FaceTime, whereas dementia patients sort of struggle with that pretty mightily and then beyond all that. You know, so I guess it would kind of like if you’re in a restaurant business, you know, it’s not necessarily that COVID, you know, obviously impacts a restaurant business and clearly impacts assisted living and memory care.

Loe:
But for us it’s really more, the secondary impacts, right? The government response to you know fears. So what we kind of see in Dallas is whenever the virus is raging things kind of slow down and then there’s this pent up demand. So we’ve had, we’ve actually had some of our busiest weeks and months ever in COVID and we’ve also had some of our slowest weeks and months in COVID it’s been very polarizing. So that’s been kind of the experience that we’ve seen. I’m in another market, that’s maybe a little different politically and it seems to not have any bearing with COVID. So in Dallas it seems like, you know, COVID cases sort of dictate, people’s kind of pausing moving, right. You know, like we don’t want movers coming in, we don’t want this happening. And then, you know, in other markets that hasn’t been a relation.

Loe:
So I think it’s gonna vary a lot just because if you think about it, if it’s really more for a lot of people, the secondary or tertiary impacts, you know, is it a blue state? Is it a red state? Is it a blue city? Is it a red city? You know what types of measures they’re taking. So I’m sure the experience in Florida is not the same in as is in California. Yeah. As it is in New York as it is in Texas. So that’s really kind of been our experience. Mm-Hmm <affirmative> it’s been devastating on the industry. I think the more, the, the bigger impact on the industry has just been the impact that COVID has had as it related to staffing. Right. Very labor intensive business. And so I think staff, I think you know, if you were to ask, you know, a hundred CEOs, they’re more worried about staffing or COVID, I think all hundred of ’em would tell you they’re more worried about staffing.

Loe:
Yeah. even though COVID played a role in that you know, I think that, I think that staffing is, is, is the greater challenge. And you even started to see kind of the CDC kind of you know, about I think it was about two months ago or so they, they kind of changed the isolation guidelines from 10 days to five days. Yeah. It was really funny on Christmas Eve, they actually floated a version of that for healthcare workers only. And they cited staffing concerns as being one of the reasons. So even the CDC kind of started to recognize, like maybe it’s more important for hospitals and, and long term care facilities and other healthcare providers to have adequate staffing than just like bullet proof COVID measures. Right. Because you know, there’s some risk, right? So if there’s a 98% chance that after five days that you can’t transmit, COVID, you know, fall on that guideline.

Loe:
Well, that’s still a 2% chance and with a very vulnerable population, but I think they realize that that staffing was probably more dangerous because when you have short staffing, you have falls, you have mistakes, you have burnout, you have all the things that kind of come with that. So, you know, obviously I think shorting those isolation times was important. Ultimately the CDC came out with those guidelines for everyone, but initially they came out for healthcare workers and I think there was maybe some pushback or blow back from, from folks that maybe didn’t really understand that. So yeah, just a little inside information about kind of how it, it kind of happened and went down in real time.

Charles:
Interesting. so I see, you know, for the, the business I like it cuz it’s recurring that you have, and I imagine there’s not much turnover it’s I think you, I would imagine you, would’ve less people moving assistant living locations of facilities versus moving apartments. Right. so other than that, what are the main benefits of investing in assisted living versus other businesses and, or, you know, real estate asset class, I guess you would say?

Loe:
Yeah. So I mean you know, I think you know, look, there are different types just like there are different types of apartments or different types of single family homes. There’s different types of assisted living and memory care facilities. The average day in assisted living is about 37 months. Mm-Hmm <affirmative> so if you kind of get somebody that’s very independent, they can kind of go through a progression with you. But you know, there’s also companies that cater to people that, that have a lot of needs, right? So we kind of focus on people that we call high acuity, meaning that they have they need a lot of TLC, they need a lot of attention. And so they’re a little bit on average, a little bit sicker than maybe a traditional assisted living facility or, or in people moving to memory care often, very late in the process.

Loe:
So they might have been diagnosed seven or eight years ago and, and now the symptoms have gotten to a place to where they need to do that. So you know, you, it’s very, it’s not uncommon to have residents live with you 5, 6, 7 years. You also have some residents that live with you for, for 5, 6, 7 weeks. Right. Because they move in very late. So I don’t know that there’s, I don’t know that’s necessarily advantage. I, I think in general, I think the first thing that kind of comes to mind is I really think this should be something that you do as a mission or a calling, you know, I, I don’t think, you know, I, I know I use example it’s like buying an HVAC company, you know, I mean, I guess some people would be like, look, my passion is cooling and heating people’s homes.

Loe:
That could be true, but you know, I think there’s less of a moral or ethical case when you’re, you know, taking care of someone when you’re giving them showers, when you’re taking them to the restroom, when you’re making sure they don’t get bed sores when you’re getting, you’re feeding them nutritious meals, when you’re making sure they’re engaged socially, you know, when you’re making sure that they’re getting engaged spiritually and all those things, I think that’s, that’s a much more intimate service than, you know, even being a plumber or, or HVAC or whatever. So I think the, the, the, the impact investing element, the sort of conscious capitalism element is certainly present there. You know, it’s definitely relationship sales, right? Not transactional. So you form these, you know, deep bonds and relationships with families over time, and you’re, you’re working together in a partnership to help take care of mom or dad or their spouse.

Loe:
You know, I think the thing that’s nice about it is that you know, it does have all the advantages of traditional real estate in terms of, you know, being able to use depreciation in other tax strategies to, to minimize tax liabilities. You, you have all, and then mostly, I just think that because there’s kind of a supply demand and balance of operators, there are not enough people to operate assisted living in memory care facilities that if you wanna become a thought leader you know, if you, if you find this to be your calling, you can become a thought leader in this space and, and pretty short time, you know, it’s, it’s very, it’s very uncommon for someone to be thought of as a thought leader in the apartment industry in five years, it’s, it’s uncommon, but it’s, it’s possible in assisted living.

Loe:
And so if you have a thousand beds, you’re probably a top 100 operator in assisted living and memory care. You know, if you have a thousand doors and apartments, you’re probably not a top 1000 operator. So, you know, it’s just a, it’s just very different in terms of the size and the scope of, of, of what the business is. So I think there’s quite a few advantages, but the main thing is, is that I wanted to do something that I felt good about. You know, and I wanted to, to help people. And you know, if I could figure out a way to earn a good living while taking care of people, I thought that would be a, you know, a really beautiful pairing of my belief in capitalism, but also the idea that, you know, we shouldn’t, shouldn’t be selfish all the time. We have to think of other people from time to time.

Charles:
So what are some common mistakes you see assisted living investors make, other than not having a real calling, as you say, for helping people at this stage of their life,

Loe:
You mean like past investors or do you mean like people that wanna be the opera?

Charles:
I would say either, I mean, whatever comes to mind you know, whatever you see that people,

Loe:
Yeah. So, I mean, assisted living, investing, I mean, I’m a, I’m a big believer bet on the jockey, not the horse. So people chase, project chasing projects is the number one mistake. You know, a great project with a mediocre operator is probably gonna fail you know, a, a bad project with a great operator can often do very well. I’m in the process of exiting a deal right now that didn’t go according to plan, but we’re doubling investors money. And I like to think that that’s in large part because we, you know, did what it took this property opened right at the very beginning of COVID. And you know, it was, it was challenging. It, it wasn’t that wasn’t in the plan. Yeah. And so, you know, when it’s hard to get the state out to come license you, and you’ve got all these sort of labor issues and the property really wasn’t conceived very well in COVID.

Loe:
But we’ve been able to kind of battle through all that. And so I think a lot of, you know, operators weren’t very good would probably fail in that spot. And so, you know, that’s kind of an example. So I think betting on the jockeys far more important and the horse so focused on the operator, not the project is, is the first piece of advice. The second thing is, is that I think the business is gonna undergo a transition with COVID kind of being the accelerant. There’s all kinds of trends that are happening in the industry. There’s a lot of dinosaurs roaming the earth in assisted living in memory care. And, and, and COVID was maybe the first meteor or impact that really impacted those people. There’s a lot of people with, with troubling balance sheets in the industry and that they don’t really have a good philosophy on how to do things.

Loe:
And, and, and there’s a lot of seventies, eighties, nineties build product that’s incredibly obsolete in today’s times. There’s a lot of, you know, model models of care that are incredibly obsolete, you know, bringing people to care for them and then saying, Hey, you caregiver, you take care of these 15 residents. That’s a lot, you know, it’s a lot to start to take care of 15 people. I mean, anybody on the show that’s ever had, a couple of kids can tell you take care of two kids, pretty complicated now multiply that time seven and a half and, and, and make ’em weigh 150 pounds on average. And, and you could imagine how hard it would be to be a caregiver. If you were assigned to take care of 15 people, you’re not gonna deliver a lot of care. You’re just gonna, you know, try to keep people from, you know, like a lot of times at night, you see these sort of dinosaur operators are like, look, we’ll give you 20 residents.

Loe:
You take this whole hall and your goal is to not let anyone die. Well, that’s not what people are paying for. They’re paying for. They want, you know, I wanna be changed. I wanna be checked on. I want to, you know, have food brought to me. I want to have, you know, I wanna be engaged. And so you know, when you see that happen in the marketplace this industry is very ripe for disruption. Mm-Hmm, <affirmative> maybe not from a technological perspective, but from a philosophical perspective. And so there’s been a lot of small to mid-size operators that have found incredible success in this business and have gone head to head with the, the Goliaths in the industry, you know, the big, you know, just imagine if you opened a grocery store and you put out, put a Walmart out of business, right. Imagine that, that seems crazy. It’s the other way around? Well, in our business, because it’s so service focused and so people based and so intimate, it’s not uncommon for a scrappy startup to, to, to cause problems for a Brookdale or cause problems for one of the, the big you know, big big, you know, top five senior housing providers.

Charles:
Very interesting. I had one question as well. Just kind of circling back a little bit was from the time, how do you find a location? Because you’re, you’re not buying anything that’s existing. Okay. So you’re, you’re, you know, you’re, you’re, you’re building it or you’re taking over something that wasn’t assistant living, making it. How are you choosing the market? And then how are you choosing how to really, you know work on that business plan or like really execute it and what to do with it?

Loe:
Yeah. So, I mean, some of the metrics are the same, so you obviously would love population growth. You’d love job growth. Not necessarily in the same reasons as you would to other things. Cause what happens a lot of times is let’s say you live somewhere and you relocate for a job and then your mom or dad needs care. It’s very likely you may have them move to, you know, cause someone’s in assisted living. It doesn’t necessarily matter all it can, but it doesn’t necessarily matter if they’re in the same neighborhood as they, they lived in because they may not have a lot of visitors. So usually the primary caregiver, child or spouse is within about 15 minutes of the facility. That’s kind of a good rule of thumb. You can, you can stretch that out if you have unique product, but you know, ultimately, so if someone moves for a job, sometimes mom or dad or the spouse follows and then moves into the assisted living facility.

Loe:
So job growth is an important thing to look at. You obviously want you know, you obviously want you know, older folks in general obviously, and then you obviously want you know, folks that can afford certain services. So there’s certain states where, you know $7,500 a month assisted living is no big deal. There’s some places where that would be, you know, top of the market. So that, that’s kind of obviously a consideration right now, our strategy we’ve kind of pivoted and just kind of realized that we’re just sort of really fortunate to be based in DFW. You know, DFW has so many secondary and tertiary markets that, you know, we’re, we’re gonna focus on building out the DFW market and really establish what we kind of think of as kind of a city base or regional powerhouse, you know, try to get to a thousand bed mark, you know, in the DFW area.

Loe:
And then, and then, you know, ultimately I think you got a thousand beds in Dallas, it makes a lot of sense for a private equity firm or someone to come in and say, look, we don’t really understand your model. We wanna acquire you, you know, keep the leadership team in place, you know, pay you well and, and you can keep a legacy stake or something. So we, we think we’ll probably be targeted for acquisitions. So our strategy right now is secondary tertiary markets where we think there’s a supply demand and balance. So we’re not building in Dallas, we’re building in, you know, you know, Denton, we’re building, you know, we’re looking at opportunities in, you know, outside of Fort worth and, you know, outside of, you know, Frisco or prosper, you know, just McKinney, right? So these are places where, you know, there’s incredible population growth.

Loe:
You know, a lot of these cities are, are, are, you know, have 500,800,000 people. And they’re, and they’re 30 minutes away from Dallas. As a, as an MSA, I think Dallas DFW is an MSA is a third largest MSA or the fourth largest MSA in the country. It’s big. Right. But it just goes forever. Right. So it’s not, it’s kind of, it’s kind of not all together to dissimilar from LA. It’s just a very spread out, you know, kind of, you know, interconnected system of highways. And so, you know, but neighborhoods have kind of their niches and things like that. So people in McKinney don’t necessarily, you know, go to eat in Dallas and people in Dallas don’t necessarily go to the movies in Fort worth and, you know, things like like that. So essentially these are, these are basically a very big MSA with very local, you know, neighborhoods, communities, things like that. And so you kinda get down to the granular level, looking at zip codes and kind of seeing where there’s kind of supply demand I balance and, you know, we’ll let all the all the, all the people in New York you know, worry about building 20 story things in Dallas. And we’ll just be building our signature product in those secondary tertiary markets, you know, 45 minutes from the urban core.

Charles:
Very, very interesting. So how can our listeners learn more about you and your businesses loan?

Loe:
Yeah, probably the best place to go. I mean, obviously if somebody happens to be in the, the Dallas area, the lake Charles area, they wanna learn about some of their parents, they can go to the say joke.com. So T H E S a G E O a k.com. And that’s obviously our assist. That’s gonna be like a retail facing assisted living and memory care company. You know, if they wanna learn more about investing then obviously that would go to the good horn side of things so they can go to good horn capital G O O D H O R N, capital C a PT I T a l.com. So good horn capital.com and they can they can learn more about investing and we’ve also set up a little free giveaway. We can give ’em a copy of a book called the S joke story. So they get a good horn capital name and email address. We’ll, we’ll send, ’em a digital copy of the Sage joke story. I think learn a little bit more about kind of the founding of the company and kind of why we do what we do.

Charles:
Awesome. Well, thank you so much for coming on today. Looking forward to connecting with you in the near future and have a great rest of your week.

Loe:
Yeah. Thank you for having me. It was a fun show.

Charles:
Hi guys! It’s Charles from the Global Investors Podcast. I hope you enjoyed the show. If you’re interested in get involved with real estate, but you don’t know where to begin, set up a free 30 minute strategy call with me at schedulecharles.com. That’s schedulecharles.com. Thank you.

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Links and Contact Information Mentioned In The Episode:

GoodHorn Capital

About Loe Hornbuckle

Loe Hornbuckle of Dallas Texas, is the CEO and founder of Sage Oak Assisted Living and Memory Care. Founded in 2015, Sage Oak isn’t just another assisted living company, Sage Oak is “the boutique assisted living company” with 5 locations in Dallas and a total of 40 beds. Sage Oak provides small, intimate, home settings that allow those who need a little extra care to receive the love and dignity that they deserve.

Sage Oak also has two ground-up boutique assisted living/memory care developments in Texas and Louisiana totaling just under 300 beds with an estimated dollar value of 45mm dollars

For more about operations related to Boutique Senior Housing TheSageOak.com

Co-Founded GoodHorn Capital, a private equity firm focused on recession resistant assets like multifamily and build to Rent Developments.

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