Quick & Easy Underwriting with My Calculator: Part 3 Guide
Oct 10, 2024
Welcome back to our series on how to underwrite an assisted living business! In Parts 1 and 2, we covered the basics of our underwriting calculator. Now, let's dive into the exciting part: looking into the future of your potential investment.
Check out the video too:
Why Future Projections Matter
When you're thinking about buying an assisted living facility, you need to know if it will make money not just now but in the years to come. That's where the "Projected Financials" tab in our calculator comes in handy. It helps you see what might happen to your investment down the road.
Using the Projected Financials Tab
Let's break down how to use this powerful tool:
Color Coding: Your Guide to Editing
First things first: look at the colors!
- Red cells have formulas you shouldn't change.
- Green cells are where you can put in your own numbers.
This color system helps you avoid messing up the calculator by accident. If you do make a mistake, just hit Ctrl + Z to undo it.
Key Numbers to Put In
- Money Sources: Enter how much money you're borrowing from the bank, how much you're putting in yourself, and if the seller is helping with financing.
- Costs and Empty Beds: Put in how much you think things will cost to run (like staff pay and food) and how many beds might be empty.
- Down Payment: Change this to see how it affects how much money you need to invest.
- Partners' Money: If you're working with partners, you can enter how much money each type of partner (general or limited) is putting in.
Cool Features to Check Out
- Tax Stuff: The calculator helps you figure out how much you might save on taxes.
- Income Guesses: Enter info about your beds and rates, and the calculator will show you how much money you might make each month and year.
- Loan Calculators: There are tools to help you figure out your monthly payments for different types of loans.
Planning for the Unexpected
One super important thing the calculator helps with is planning for surprises. It's a good idea to set aside some extra money (about two months' worth) just in case things don't go as planned.
Real-Life Example
Let's say you're looking at buying a 50-bed assisted living facility for $2 million. You plan to put down 20% ($400,000) and borrow the rest.
Using the calculator, you might find:
- Your monthly loan payment would be about $10,000
- If all beds are full, you could make $200,000 per month
- Your yearly expenses might be around $1.8 million
- After all expenses and loan payments, you might make a profit of $400,000 per year
But what if only 45 beds are usually full? The calculator would show your profit dropping to maybe $300,000. This helps you see how changes can affect your investment.
Wrapping It Up
Our underwriting calculator is a powerful tool for figuring out if assisted living is profitable. It helps you look into the future and make smart decisions about investing in this business.
Remember, good underwriting is key to finding great deals in assisted living. It helps you spot opportunities and avoid risky investments.
Ready to take the next step in your assisted living investment journey? We've got two great resources for you:
- Download our free Assisted Living Business Plan Checklist. It'll help create a solid business plan as you start your investing journey.
- Want more hands-on help? Apply to join our Assisted Living Investing Mastermind program. We'll guide you through everything from creating your business plan to finding the right property and getting your facility license.
With these tools and our underwriting calculator, you'll be well-equipped to make smart investment decisions in the assisted living industry.
Happy investing!
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