Senior Housing Solutions with Brandon Schwab #23

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Senior Housing Solutions with Brandon Schwab #23

Bill Fairman (00:00:04):

Hello everyone and thank you for coming to the really big show. You sounded really excited about that. I’m Wendy Sweet. Bill Fairman. We’re with Carolina Capital Management. By the way. I have to get this in real quick before I forget, please like, subscribe. We have other videos, archives somewhere where whatever device you’re looking on, they’re going to be somewhere above or below the screen. Yes. So we have a great surprise.

Wendy Sweet (00:00:34):

We do. And you know what? I’m really excited about this. One of the things that is so cool about what we get to do for a living is we get to belong to different masterminds. So in these masterminds we are coupled with other people that are like incredibly smart. They blow my mind, I, and you know, we’re, we’re just blessed to meet the top, top people in real estate across the country and we get to meet with them quarterly and then we just have a relationship outside of those meetings too. We do business together. When we’re in town together, we, you know, get together and have dinner. I mean it’s, and we do business together. It’s just a great opportunity to get to know people and see what other people are doing. Right.

Bill Fairman (00:01:22):

Yeah, and I always steal this quote from Glenn Stromberg, not the smartest person. I’ve never had an original idea in my life. I just know a lot of smart people and I copy what they do. Nothing wrong with that. Right. And that’s why you get into these, these mastermind groups. That’s exactly right. So, our friend Brandon Schwab. He’s in Chicago. Well I don’t want to say Chicago. He’s in Illinois. I don’t know exactly how close and he’s in a very cold place. Oh yeah. Is it pretty close? Oh yeah. Close. Yeah. Brandon is in the senior living space and as we know, I know personally that we’re an aging population. The baby boomers are, of course, I’m on the very tail end of that. And so the two biggest populations we have in the United States are baby boomers and the millennials. And so there was a big gap between their loose, there’s poor gen X or is it going to have to take care of both of them? Brandon is in a space that is definitely, and there’s definitely a real estate opportunity. So Brandon, thank you so much for joining us today. That is so absolutely. Thank you. All right, so I have to ask one question. White Sox or Cubs? Cubs, come on easy choice. Before we get started with what you are doing. I know family is very important to you, you’re a baseball coach for your kids. Yeah. This gives you an opportunity to spend extra time that you wouldn’t normally if you’re working in a regular job, right?

Brandon Schwab (00:03:11):

Oh yeah, true. Back before I was able to get into this business, I had a business that I thought I owned, but at the end of the day, that business kind of owned me. So I was putting in 50 to 80 hours and it took until, Jeffrey turned about five years old before, I just can’t keep doing this anymore because all of the hours get to you. And at that time I was taking home $200,000 $300,000 per year. So I thought I was doing things good. But if you don’t have that time to actually be in, do different things, you can have all of those dollars and they don’t add up to anything. That’s right.

Bill Fairman (00:03:55):

Yeah. And you know, most all of us have chosen the real estate space to get our time back because that’s the one thing you, you can’t get back. Reality. You can’t get that time back. And yeah, family is most important and not being a slave to your income, highly paid professionals. Is very, very important as well. So again, we’re here with Brandon Schwab and hit one of the companies entities that he runs is Shepherd Premier Senior Living. So give us a little background or overview these projects that you’re working on.

Brandon Schwab (00:04:36):

So, I got first exposed to the elder care business when I was about 25 years old. My grandpa was about 85 and he was in a 200 bed place and we were in there and it was a type of place where it’s got those little pull cord. Thanks. And it was a place that I’ll tell you didn’t have a very good odor. Anyways, going into it. But after he had to have, we, we were able to pull this button and I thought after you rolled, pulled up button in that people would come like book and over to be able to, to just help you. And 5, 10, 15, 20 goes by and I’m getting like piss, like where are these people to help him because he is 85. Those places they just don’t have the proper care team to keep up with everybody.

Brandon Schwab (00:05:35):

And I kind of find, I found out at a very kind of early age that these places are built to give awesome care. So fast forward to 2014 about 10 years after that I got exposed to a home. It was by Tampa actually and it had a five bed home and it was completely the opposite of everything I have ever seen. We pulled up to it and I go, Kelly, text your dad. Where are we at? So Kelly’s dad actually plays the piano at the old folks’ home, 328 times per year for 35 bucks. Wow. Every time I am able to go down there, it’s kind of like you got to go to his show. Well I found out that he tells the just same jokes over and over and that killed it for me because I’m like, is there anything else I’m able to do that I don’t have to go to the show?

Brandon Schwab (00:06:30):

Well, we pull up to this house and I’m like, text your dad, where are we at? And at this time, you know, I’ve been doing homes for about four years. I was kind of at that point in our business where I was kind of confident, almost borderline kind of arrogant that I had it all figured out. I had 23 homes. I was bringing in passive income of about 5,400 each month. I kind of thought that if I just kinda kept on going, so I pull up this house and I felt dumb cause I didn’t know what the hell this was, be able to go in there and I kind of do the whole like arms cross thing and I go in there and I’m like, what is this place? These people were, it was just totally different and I grab it, the girl in charge and I go, Hey, what do people pay to be here?

Brandon Schwab (00:07:19): Like 1500 or 2000 each month? And this girl gave me the dirtiest look I’ve ever had in my life and, she didn’t even answer me and just kind of went and just kind of kept on going. So it was like Kelly Kelly, what was that? So I was able to talk to her dad. I got that girls phone number and I was able to call her. The girl goes, Brandon, I thought you were just joking because they begin at 5,100 per month. Well going home, I’ve got two kids and they tend to hit every other exit like the whole time going home. So it’s typically the 22 hour trip. But for us it’s like a 28 hour trip. I had 28 hours to like think, drew and I could not figure out how her expenses were any higher than $15,000 per month.

Brandon Schwab (00:08:13):

Cause I had figured out her total income was about 25 and I’m adding 20%, 30% onto all of these items. And so I’m coming up with 12,000, 13,000 and as I figured out that that home, with five people in it outperformed all 23 of our homes back home two times a month. Wow. I’m like, what am I doing? This is a great business. And then I was able to go home, right. Because I thought that Hey, they are probably all over the place and I just have to go and find them. Well our County is 308,000 people. Right. And they didn’t have any in our entire County. And of the 12.2% are just 65 or older. So there’s 40,000 people and there isn’t any of these homes there. So I was in charge of investment club. We had about a 100 to 110 people in it and I got up in front of all of them and I said, Hey guys, I’ve got 23 homes.

Brandon Schwab (00:09:15):

I’ve got people in all of them who’s interested? Now those people thought I was crazy. What is he doing? Brandon’s gone crazy. I got out of that business and I had about $500,000 and I just got in. I bought our first house in a town of 800 people Bill, 800. Wow. And but it was a 4,800 square foot, one for property and it was on the MLS for 500,000 we put an offer for 250 all cash and bought it. Wow. And then I proceeded over rehab the heck out of this building. Okay. Because, yeah, if you were able to get it early, that’s the thing you do is put $550,000 into a $250,000 house. Told them good idea. Right? That’s what I did. So I open it in 2015 I filled it in February of the 17th. It took me a bit of time to get it fully occupied, but for the past three years we’ve had a just 98% occupancy.

Brandon Schwab (00:10:28):

Wow. And we just had this, this house appraised in 2008 for 1.8 so I put 800,000 in. It is appraise that 1.8 million, but it is appraise for that because I’ve got 10 people in there paying an average of about 5,500 each month times 10 that’s 55,000 with expenses of $30,000 per month. So even if you take out an empty bed, so if you take out a 10% factor for open beds, your gross income is still 50,000 so they gave me this appraisal because this house is clear and $240,000 per year. Now if you were able to go buy this house, it’s in a town of 832 people. So I said, alright, our goal was only to earn 10,000 passive income because I was thinking that if I had 10,000 passive income, I could coach his baseball team and do all these cool things and kind of have everything covered, right?

Brandon Schwab (00:11:30):

So when our first house doubled it, I was kind of like, Oh-oh, because people kept calling and I’m like, okay. So we had to open up home two, and then home two turn into three and then four and five and all in five years later I’ve got almost 80 beds. And I’m like, Oh goodness, I, so I have an actual operating business now. Wow. So that’s kinda how I was able to get into it all because we went to a five bed home, but it did begin that I got exposed to kind of the ugly under belly of the out care business. That really isn’t very pretty anybody that is able to hear this don’t get old. And if you do, don’t be poor because yeah, if you go to these places that are funded by the federal government, the average caregiver to resident is one to 15 to 20? Wow.

Brandon Schwab (00:12:27):

It goes up to about one to 30 to 50 so if you think you’re going to get very good care in those type of atmospheres, you are kidding yourself. Right. And when our grandpa who is dear to us was able to go to a 200 bed place, I kind of got exposed to it at an early age and it is, do you guys know Frank Curtain from EOS? Absolutely. So it took, okay. He’s an awesome, he’s an awesome, awesome guy. He was able to help us put us in place and he came out to a couple day event and he began poking and prodding, to why I opened up this business and I was able to answer it. But he just kept going and digging and digging and digging. And it took me to a point where I literally busted out into just tears because it took me back to a day that I pushed down deep and it was back when he was in that place because I was able to go get him people to help him.

Brandon Schwab (00:13:33):

Right. I can’t say I did it very politely, but I did it right. But I, after I identified like, Oh my God, like I acted in a fashion where I was trying to help him because I was trying to be a good person to go get help. But at the end of the day I wasn’t really kind of those two gales. And I wonder what he didn’t get a day or two after. Did he get taken care of well or did he get kind of kind of the back burner treatment? Because I was a jerk. You know, like all those things just came to me and busted out into tears. Like that’s the point of us doing this business is I think back that if I could have given him in a different opportunity to be in a place to get awesome care, I would totally do that. But at that time I didn’t get that in art and cheese.

Brandon Schwab (00:14:29):

Our country today has a bunch of these big buildings, 200 plus beds that the average caregiver has to care for 20 people and these caregivers are getting 10 bucks an hour. How much do you think they can actually care for before they just get overwhelmed? Or the absolute thing that could happen is as it gets overwhelmed, you know, bad things happen. You know, people get hit and it’s, it is easy to be better than all of those places. Our business jumped into it and our policy is we aren’t going to have any caregiver have to oversee any more than five people in all of our homes. And as you do that, they get great care and if they get great care, they don’t die. And if they don’t die, there isn’t a huge turnover. It is just good business. I mean, our business today took advantage of a Bluetooth technology that will text in iPad when the adult diaper has to be, has to be changed.

Brandon Schwab (00:15:35):

So a big cause of a problem is they would be in these adult diapers for hours, four or five hours, their tissue breaks down and as they turn in a terrace, it gets infected. Right? We can be better than all of that. And that’s how our business got going. And of course, our first house, you know, I put 500 grand into it, but today I am thrilled that I did because it, it appraised out at 1.8 million. And we just, that helped open up doors to open up other homes. You know what I mean?

Bill Fairman (00:16:13):

Yeah. But I wanted to ask you was about Frank when you were going through those questions and I wanted to let everyone know that EOS stands for the Entrepreneurs Operating System. And if you’re a small business owner, you should read the book traction by Gino Wickman. And this is what Frank helps you implement and I’m assuming when he made you break down in tears, he was doing this to try and figure out what your mission statement, your big why.

Brandon Schwab (00:16:43):

Oh yeah, yeah, yeah. We brought him in because our business, in order to open up a whole bunch of these homes, we had to have a very tight policy, planned, operate, all of these homes and Arnold team felt that EOS was the best plan for us to open and to put into action to grow our business. That can be an actual operating business and he did such a great job getting things boiled down because it is easy as you own a business, things are kind of always up here. It’s hard to like boil them down to like this is our plan. We are going to do X. And by him coming in it greatly, exponentially helped us open up other homes. And if I didn’t do that, I don’t know if I could really duplicate all of these homes quite as easy.

Wendy Sweet (00:17:40):

Yeah. He did that for us three years ago and literally within one year it tripled our business and we were thrilled and we still go by it every day and it’s changed everything for us.

Bill Fairman (00:17:54):

The main thing with EOS is if you want it to be scalable, it has to be duplicatable because you have so many different operations, they’re not all under one roof and it’s very important for you to have that and that’s going to get me to my, my next question. So how passive is this for you? Do you have to hire all the nurses and staff for each place? How do you go about doing all that?

Brandon Schwab (00:18:25):

Very good question. I am working about 30 hours each week. I get to, I have coached Jeffrey’s baseball team for the past four years. Travel baseball is pretty crazy because you’re gone like often. Okay. Then we played 75 games last year and I’m very passive that I get to go do all of those things. One of the things that I did early on is, is I did partner up with two people that have a combined health care experience of us 75 years. They kind of operate our day to day business. And I get to focus on, to purchase homes, build homes, bring dollars in. I operate our expansion plan, but I have a team of people that they get to kind of operate and it is key to have a very good team. And our team between just those two have about 72 years of experience. And then they have built their own team under them to give them, they’re tying back as well. So yeah,

Wendy Sweet (00:19:31):

That’s another thing you know, that EOS does is it helps you figure out, you know, that team and the right butts in the right seats. I love all of that. So, and that’s great information. One of the things I’d like to do though is to go back to your big why, and I think this would probably be a great time to look at the video of testimony of how you’re changing other people’s lives.

Bill Fairman (00:19:55):

Right? So let’s show this video now.

Speaker 1 (00:20:05):

We walked in and saw it was more home living instead of facility. Yeah, the smell was clean. The smell was, I mean it, it just, the Aurora and the room was wonderful. You know, the nurses were nice, the staff was amazing. They, they just, I felt that they were really amazing and I think that was the difference. Everybody was so friendly when we first walked in. It was like, Hey, how are you doing? Hi. I mean, it was great. When you walk into the facilities, you don’t get that right. Because I was so exhausted with home care. You know, my sister was so exhausted with home care. We saw our deck. Well, I mean, she saw my dad, but we got to be daughters, you know, for the first time we got to be daughters for Maria, for our dad. I was there more at Shepherd’s [inaudible] house because I was so exhausted.

Speaker 2 (00:20:57):

I was just like, okay, it’s your turn. But we knew that we could go visit him and we would have to worry about getting him out of bed, you know, because the staff did all that and yeah, we could sit by and talk to him, hug him, love on him. Um, even the other residents loved on him and I said to my sister, I wish we would’ve done this even sooner to be honest with you, because it was nice being his daughter coming there and just being able to sit, you know, have lunch or dinner cause we could come anytime, you know, the doors were open, you know, we had keys. I can’t say enough good things about Sheperd to be honest with you. Me either. It was fantastic. It’s five by five all the way.

Speaker 3 (00:21:36):

I can just say that makes me feel, safe, yeah. Yeah. That’s, not only comfortable but safe, I don’t have to worry.

Speaker 4 (00:21:57):

You always say that, everybody is so nice. You always say she’s so nice, so nice. Yeah. You like say, Oh, food’s so good. Right. The food’s so good. Oh great. Yeah. That’s why I’m so fat. Okay. Yeah. All right. It was just perfect. I mean, it’s like a home. It is a home. It’s not a facility. It’s like a home. Everybody’s family to each other here and everybody loves each other, the residents and it’s, it just, it’s just great. I wouldn’t have it any other way. No other place. I’d rather be. It’s good.

Speaker 5 (00:22:43):

My son found this place. He said, ma, I got a really nice place for you, it’s just like home, yeah, yeah, yeah. But it was, and it is, I enjoy it. Okay. And I can go out anytime I get a ride to go. You’re not confined. It is nice. And they keep doing something all the time, fixing up in some way. The beds are comfortable, the nights are nice and warm and very happy.

Speaker 6 (00:23:24):

What I don’t worry about anything. I, you know, the kids can drop in anytime they want to. And everything from nice and I don’t have any questions. I just sit and read, do my own thing and I’m relaxed. And I go to bed at night happy. So I’m just doing fine.

Speaker 7 (00:23:47):

Biggest things that she say. She’s looked after 24 hours a day by people who care about her as though she were their own family. You can’t ask for better than that. The staff here is just superior. The relationships that you guys make with our loved ones, with my mom, I can’t tell you how much peace of mind it gives to me because you guys are doing what I’m not able to do. I can’t be with her 24 hours a day.

Brandon Schwab (00:24:22):

Sheperd Premier, is a home where I cannot imagine anywhere else that my dad should be. It’s a small community family that it’s not like a facility where it can get lost in the daily occurrences. He participates. It’s a home and he loves it. I love it. I wouldn’t want him anywhere else. If you are not sure where to put your family member, if they can’t live at home by themselves, stop in and see Shepherd Premier first, then go visit another place you will make up your mind right away it’s just at home and loving feeling. You’ll make up your mind right when you see it.

Bill Fairman (00:25:17):

Okay. Another question that I had for you, Brandon, is that the time, the market timing that we have right now, one of the issues that we have with the baby boomers and the millennials are that the baby boomers tend to live in the McMansions, right? The millennials don’t want to live in those McMansions out in the suburbs. They want to be through the town closer to, you know, work play and public transportation and that type of thing. So I’m thinking it’s a great opportunity to find those types of properties that are large enough on larger tracks of land where you can take these, what would’ve been McMansion. Now obviously you’re not going to get the bigger homes in the subdivisions that have homeowners associations included, but there’s plenty of homes out there that are on several acres that don’t have any of those restrictions that you can convert into these homes. Right?

Brandon Schwab (00:26:17):

Oh yeah, definitely. So there’s kind of two different pieces there. As they opened up back in 2014 I found that there was a bunch of these homes out there that were on the MLS for 200 300 500 plus days. And what I found is those owners were open to very big cash offers that are off of their asking price or a thing that I also found is I get very good at giving the owners of carry back dollars. In fact, five of our first just six homes I got the owners to carry back in our highest rate of interest was 1.5% so I did offer them a full price offer, but I figured as I got five to 10 years, it was better off that I didn’t have to pay all of that juice, but I took the upfront $500,000 that I had an I could put that into a couple of different homes and, and that’s a huge benefit is there were all these big homes that are out there that these towns can’t figure out what to do with.

Brandon Schwab (00:27:23):

I mean our biggest home is 18,000 square feet. That as it hit the MLS, it was for 2.5 million. It dropped to 1.5 I put it a offer for them to carry back. They didn’t take it about one year later, I bought it for $750,000. Wow. So, but it’s 18,000 square feet. Taxes on it are $41,000 per year. So there are these big homes that people aren’t going to, they’re going to go purchase those homes just because those taxes are 3000 plus each month. But for our business, we are going into this property. I bought it for 750 we are investing $1,085,000 into it. But this house as is appraise for 2.2 million and after fully occupied it appraise by Cushman and Wakefield for 4.8 Million. So I’m going to put 1.8 into it, but the banks are going to appraise it 4.8 afterwards and they’ll give me 80% of that to take out cash.

Brandon Schwab (00:28:40):

So there are opportunities to take these big giant homes. I’ve done that for the past five years and I have got some awesome homes. But going forward it’s hard to duplicate that because it’s hard to duplicate counting on finding these oddball homes. You know, like our biggest is 18,000 after that it’s 13,500 I’ve got one that is 7,300 then I’ve got three of them as they bought 5,000 so they don’t have a whole bunch of these homes all over the place. So we have just transitioned at the end of this past year going into 2020 of buying dirt and just building because that’s going to give us a Duplicatable asset that I can put all over. Right.

Wendy Sweet (00:29:31):

So as a lender, my first thought, you know, as you’re talking, I keep thinking, how was he financing all of these? Can you, can you share with us a little bit about your, is it baby boomers opportunities? Yeah. Real estate investors get involved passively and show us what you’re doing with that.

Brandon Schwab (00:29:50):

Definitely. So a thing that I am able to do with that is at first I had to be very creative or I had to get the owners of carry back. I would say a bulk of the overall cost open up these homes and then I would bring in private investors to cover the dollars to fix up each home. So 300 to 500,000 is kind of our average of each home, but I have to bring those partners in and those partners are going to help us in in a thing that I’ll do is I’ll give them a part prep and a part equity, so they’re actually investing into the LLC as a partner, but they would get dollars being able to come to them each month. They’ve got very good IRRs. They are very happy.

Brandon Schwab (00:30:40):

In fact, a bulk of our investors, most are dentists, dentists, orthodontists probably fund 85% of all of our deals, but so our first 80 beds I would typically get the owner to carry back financing. That’s about 75% of the overall costs and then the dollars to fix up, which is 25% I would bring private dollars in. As we have kind of grown bigger, our deals are getting bigger. We bought five acres of land that we are going to build three properties on it or three of those homes, just 16 beds. Each total of 48 beds is what our business calls. One pod of homes in Pod of homes is going to be three homes on a particular parcel. I do that because of this. The RN gets to oversee all of those homes and they don’t have to go very far, so a thing that I found here building brand new properties is there is Betterly backed financing programs through HUD that has 10 to 20% down and they will give you 3.8% financing during the building period.

Brandon Schwab (00:32:02):

That will auto convert into a 35 to a 40 year perm at 3% or under. That’s amazing. In a fixed rate? It is. Yeah. It’s a 35, a thing that all of that is happening is the federal government gets that beginning in 2020 through 2035 the population of folks 65 and over is going to be greater than everybody else for the first time in our country’s history. Is that going to ever happen in, and that’s because the baby boomer population of folks born in 46 to 65 after world war two is such a huge population that they are, they are controlling a huge percentage of our country’s capital and they are typically getting done with their 40 year career and it’s their parents that are beginning to break down and they’re turning 80 85 and they have to have care. So a thing that’s happening is the federal government is getting back behind this business model.

Brandon Schwab (00:33:10):

If you build brand new, and there’s a few benefits, a Bob building brand new, particularly that it’s an A class asset, particularly when you’re going to take dollars back out. So our very first homes, they were built in 55 I had a few home built in the 80s I one house in Harvard that was built in 18 like 65 or something. I mean don’t ever do anything that old that was okay. But the home built in the 80s when the bank appraise them, they gave me a 10% cap rate on our house that was built in the 50s they gave me a 13.5% cap rate. Wow. And it still appraise for 1.8 million. But the brand new bills is where it gets kind of exciting because the cap rate that those trade at is between 5.5 and about 8%. wow, that’s terrific. So if you get that cap rate on a pod of homes, which is about 48 beds, our projections is after a 10% vacancy factor, that pod, that pod collectively, and that total project cost is about eight to 8.2 there’s $1 million we’ll be able to after expenses and a 10% vacancy factor clear on $100,000 per month.

Brandon Schwab (00:34:44):

And if you figure that out per year divided by a just 6% cap rate, you’re talking about a $24 million project that a bank would give you 80% so the investors are able to get that, that Hey, if they invest into these pods, I do have to come up with 20% of 8.2 so I’ve got to come up with $1.6 million per pod, but our business can’t expand without going big box. You know, all these 200 bed buildings, they put up all these, a average 200 bed building in our area. The cost of build is about $55 million. I can build three pods, which is 144 beds for 23 or $24 million and they still have that homey feeling? That’s yes. If I can pull up a picture of this, what it basically is guys is a Avenue where we can have a property that has three homes on it that are kind of back to back.

Brandon Schwab (00:35:56):

Here’s a picture of it. So, so, so I’m right here. Okay, for those of you who are listening only, this is really pretty. Yeah, you’re missing out. That’s amazing. So this, so this project here is a total of 12 acres. The parcel on the right side is going to be two pods and a office. Phase two is an additional pod that’s on 4.53 acres. So our business can get to the total big, the total bed count of 144 without giving up the very cozy feel. In fact down here, if you look, our buildings are 8,851 square feet each. So it’s beautiful. They are pretty big. But I’ve got three by your places. I got two on the inside, one on the outside courtyard, followed by a covered pergola with tables underneath. So we are going to have these buildings back to back to back, fully fenced off so they can go outdoors without having any chance of being able to get hurt.

Brandon Schwab (00:37:19):

So this project to build brand new, I can easily duplicate this throughout the country easier because I can just buy dirt and built, compared to our first project. It’s hard to count on finding an 18,000 square foot property. And if anybody’s able to actually, see this here is a picture of our very first home. From the outside of your, this is a average home. He did build a office onto the back of his house in 2005, but as you pull up to this house, it doesn’t feel very big. Yeah. It looks like a regular home. That’s nice. But it looks like a regular home. Yup. And that’s in a town of 800 people. Versus our brand new or this 18,000 square foot house. I mean this house was built by the people who founded just they founded the phone company. Just Motorola. Oh wow. So they had, they had dollars and they put it in and dated every cool thing possible. It has an indoor pool. It is an indoor pool that is gigantic. I mean it’s a crazy, crazy house. If anybody’s interested. I have got the page with all of it, the details down below. But or else you can go to Baby Boomer Opportunities with an S cause there is a bunch of opportunities. So is our page where what we basically have is be able to go there and look at any of our current offerings.

Brandon Schwab (00:39:16):

You’re able to create your own account through IMS and, We’ll have a link below the video as well. And for those of you who are just listening on the podcast, it’ll be in the show notes. Our five year plan though guys, is to put 30 homes in each of these MSAs.

Wendy Sweet (00:39:36):

So there’s smaller towns, well the actually these are bigger towns. Are you sticking within the bigger towns or you go into the suburbs or smaller towns that are just outside. So I’m seeing Chicago, Detroit, Minneapolis, st Louis, Cincinnati, Cleveland, Kansas city, Columbus, Indianapolis and Milwaukee. Are you sticking with the larger towns or are you kind of going around the outside suburb area?

Brandon Schwab (00:40:04):

Good question. We are definitely going to go burbs. We are going to go to the outer burbs but we’re going to go to the outer burbs where they have the population but they also have the dollars to pay for this because all of these homes are are 100% going to be private pay, but typically these MSAs are going to have the dollars, the big companies there too that there are going to be people that are going to be in the area when folks are able to get older. They do. They go either where it is awesome outside, which is they would go down there, Florida, Arizona, California, all, all of these beautiful places. Right? Or they go where their grandkids are at. Absolutely and that’s what’s incredible about our own background here is there’s a ton of elderly that are here that just aren’t going anywhere despite it being cold and terrible half of our year.

Brandon Schwab (00:41:11):

But the other half it, it is pretty good. But to answer your question, this is our five year plan is we are going to put 30 homes or 10 pods per MSA. So there’s a pretty big need for us to either partner up with people or also if anybody’s on here is a potential building partner I don’t have to own everything, I’m perfectly fine if a person’s going to build us a asset in and I would pay that each month. They can collect a good cash flow of eight to $12,000 per month by being a building partner per pod. Wow. And then there’s also other benefits that I’m going to have the option to purchase it. And then I would also give equity as well. So our goal here is, is to help duplicate our brand new build plan. A thing that I am also testing on Bill is the idea of going urban. How cool would it be if we took this idea here? But if we duplicate it by putting these buildings on top of each other and then test it out in a downtown area. Yeah. How cool would that be? As long as the elevators work. Long as the elevators work. Absolutely.

Bill Fairman (00:42:31):

That’s a good idea. You’re right. When you get into these larger MSAs and you have people that are used to living in the downtown areas, they may not want to go out to the suburbs and walk to their local deli or a coffee shop or whatever. Well, it gives them that opportunity and then their kids and grandkids might be living in those areas.

Brandon Schwab (00:42:55):

Yeah. And, and I think the, the other benefit of going urban is if we would focus on college towns, college towns, people love to be in kind of that downtown atmosphere. Right? But the college towns are a great place to be. So those are two, those are two opportunities going forward for us to target going urban of building these on top of each other that would be equal to a brand new bill.

Bill Fairman (00:43:30):

Excellent. So again, folks, we are with Brandon Schwab. He runs a senior living facility, a group of facilities, not facilities, Homes. Listen, I went to this class on electronics and it had to do with motorized shades and I was beaten over the head several times because motorized did not test well and to be automated, not motorized. So old habits. It’s so homey. It’s amazing, so name of Brandon’s company is Shepherd Premier Senior Living and then he also has for the investor the, that’ll be again so let me, let me make sure I’m clear on the investment opportunities as the passive investor they can invest and becoming part of the equity that is required for the banks to do the initial construction and then I’m assuming once the construction is completed then the bank will do a cash out refinance and the investor would have an opportunity at that point that to be cashed out or and or be able to stay in it as well. Isn’t it? Kind of how you’re looking at it?

Brandon Schwab (00:45:03):

That is, there is a couple of different tiers of our fund. Our fund does just very that the us offering equity isn’t going to always be offered. The piece of equity is only kind of temporary. Our fund is progressing towards a debt only fund, but today there is our top class which is the first five to million dollars of our fund does offer debt as well as equity, but that isn’t going to be here forever. We are our business as we are able to grow and, and end up borrowing a big time dollars, we have to bring our cost capital down and our upfront investors are very happy. They’re IRRs are going to be high teens, low 20s and as we grow in our borrowing bigger dollars, it’s harder to keep paying that. So if anybody’s able to hear this and if they are interested, definitely get in contact with us early and there is going to be opportunities for debt. There’s opportunities for equity and a thing that I think our business is very good on is offering a combination of kind of both debt and also equity. So each of these homes are going to be owned in their own LLC, but they would be actually partners in that LLC. And anything that’s great on that is you would get paid on the cash flow, you’d get paid the pref return. Once we refinance it, it would give you an opportunity to either kind of buy out or could give you an opportunity to keep in it. And then at the end there would be a final capital event in about 2030 or 2035 that we would sell the whole portfolio, probably to private equity family office type buyer who is going to be chasing the cash flow. So there’s four different avenues that a investor is able to get paid on. And oftentimes our pref investors get their first interest check back within 30 days. So yeah, they feel very good getting involved, you know, put eyes on something. But then at the end of the day they, they also would be able get that first check, you know, and then as the, the project gets open and operating and profitable, they’d be getting the dividend checks as well. So, and all of this is tracked through a portal called IMS where there’s a whole back office and it gives you the IRRs the cash and cash return. It’s all there. It’s a place for us to upload documents and plus who I’ve got a handful of investors that have invested in three or four different homes. So it will break down how all of your assets are doing here. So

Bill Fairman (00:48:08):

Excellent. Well, I would be remiss to say this, this is for educational purposes only. This is not an offer to buy or sell any securities. Please read your private placement memorandum before you invest. What was it, consult your attorneys. Yeah. And tax people and your mileage may vary. Yeah. Disclaimer, disclaimer. But yeah, I’m assuming that you have places for accredited investors and non or is it just all acredited?

Brandon Schwab (00:48:43):

We have two different funds. I have a 506b and a 506c that we are able to work with both full type of investors as in the additional bonus. If anybody has any comments or questions. I do have a online calendar that, so I could probably throw out there too. Yes. Brandon, it’s B R A N D O N, and then it is S C H W A Just go there, book 30 minutes. Anybody that’s on here, I will give you a free time to talk for 30 minutes on whatever you want as far as either additional questions, about our current opportunities. Awesome.

Bill Fairman (00:49:31):

And at the same time. At the same time, if you have people around the country that are used to building income producing properties for longterm tenants and they may want to look at this opportunity to use your model, you’ll do something franchise kind of a way.

Brandon Schwab (00:49:50):

We are actively looking for builder partners. So for us being part of these different groups coast to coast, I mean there are some powerhouses in there that have the ability to qualify for this better government program. That’s only 3.8% during bill that is going to convert to a 35 year to 40 year terms. That’s amazing. And we would execute and be the end anchor tenant long as we had the option to buy, add it pre determined price upfront. So, and I’m also looking for builders who can build us just one pod but like up to 10 pods. 10 Pods per MSA. So we don’t have to change our partners all of the time. So if anybody’s interested there, please talk. I mean I have kind of just felt that a bunch of people are chasing apartment deals today. Those are getting tougher and tougher to get into. I don’t think that they have begun to identify this asset class. Although this asset class outperformed apartment building, industrial office through the 2008 crash. Yeah. If you take the top commercial asset classes from 2005 through 2015 for 10 years, the average ROI on this asset class was 14% where apartment buildings, industrial, those all kind of average between eight and 10% so a top performing asset class that oftentimes people don’t feel that they have got the opportunity to get in bandwidth. They think that all these big investment trusts are building these big deals are 55 plus. If you have, a hundred or 200 or $500,000, that is just too hard to get in. But that isn’t true.

Bill Fairman (00:51:48):

Have to mention your big health companies that are buying up all the hospitals and doctor’s offices there. They probably think they’re in competition with them as well as the fact that I think most people in looking at this asset class probably think there’s too much involved with the liability. Trying to figure out the managed care themselves and that type of thing. And this is a great opportunity to have someone who already offers that, that come in and partner with them. Yeah.

Brandon Schwab (00:52:23):

Our business has been here, done this for five plus years. We have gone through those upfront curves that it took us time. I put dollars in to our first couple of projects that I would do things different after I was able to go through that. So I, so our company has been able to build an absolute perfect building with all of those years of experiences. And then I also figured out how to occupy these beds, how to train our team. And I think we’ve also built a very good company brand base off the EOS, really that we’ve been able to duplicate that throughout. So that’s a good partner for anybody to partner up with. And a person that actually cares. If a person’s only chasing earnings, we probably aren’t going to be your guy. We are going to be people that our company will put additional dollars towards the our team offering care because I feel that’s the proper thing to do. One of the other KPIs I will toss out here because it’s a big deal for our businesses. Everybody that has ever passed in all of our homes has been able to tell you where they are going to go after earth and how they are going to get there. We care and those and that’s our top KPI that we are at 100% and that’s the type of care that is going to be offered in all of our homes. We aren’t just chasing earnings or because those, those type of companies put one care to every 20 people cause they really don’t care. They’re just trying to earn money that isn’t us. We aren’t going to ever, ever, ever do that in our biggest home. All ever have will be just 16 beds per home but we are going to build three of them to be 48 beds. I just had an offer for us to operate 158 bed building and I turned it down cause it that isn’t our overall plan.

Wendy Sweet (00:54:24):

Yeah it didn’t, doesn’t fit your model. Brandon I wanted to ask you a little question again and I know you’ve touched on a little bit about your team, cause you talked a lot about putting your team in place and making sure people are trained and you have that combined 72 years experience in the medical field. So I know that’s kind of the direction you’re going there, but can you give us a little more detail about how you do train people and to, to keep it consistent throughout all of your homes?

Brandon Schwab (00:54:56):

Definitely. So our team is going to, so our care in each home is going to be directed by a RN. So the RN is going to be a person who’s getting 75 to $80,000 per year. They are very good at everything that they do. They custom handpick their team. And our current team, we’ve got 85% CNAs who are training to become a RN. And then I’ve got 15% of them which are going to be caregivers that are actually trained, trained, but they have been able to display that they can handle everything that a person that is train camp. So our business is often trying to find people that have the proper attitude towards offering great care and that’s what we are trying to find first. But to, to answer your question, our whole team is directed by the RN the RN is in, is in each house every day.

Brandon Schwab (00:56:00):

But a thing that’s different in all of our homes is our RN gets to help teach people how to do things. Oftentimes in these bigger buildings, the RN has kind of taken attitude of Hey I am going to go do all of these different things, but they don’t teach people. They kind of like push ’em out and they go do it in this type of actual atmosphere. The RN is in each home for a buck, two and a half hours per day where they get to teach people and her whole job is to help teach in, to build up everybody on our team. That is in each of these homes with the idea that as we keep opening homes we can actually take our Enza came part of our overall system up.

Wendy Sweet (00:56:52):

Gotcha. Gotcha. And according to the testimonies that we got to see, it’s amazing how it really touches every single family, how important it is. Not only the person in there but to the families that are, cause you know we all have great guilt about not having our parents in our own home taking care of them. It’s, it’s, it’s a lot of work. They, you know, they need a professional in there to help them as well. And that sure takes a lot of the guilt off and the pressure off to see that your parents are in a place that makes them happy.

Brandon Schwab (00:57:26):

Definitely. Definitely.

Bill Fairman (00:57:27):

Do you see much competition from the, the bigger facilities that you call them, but I don’t call them, you know, for your employees, your staff or is it that are training them up and paying them well enough where you don’t have to worry about them being stolen by some of these larger medical companies?

Brandon Schwab (00:57:51):

Yeah. So our direct competition of the big box buildings typically pay 10 to $12 per hour. Our pay is $15 per hour. A base pay their differences, they have to care for 15 to 20 people for 10 12 bucks our employee turnover isn’t as high as those places. They typically turn their employees three times per year. It’s a very tough job. It is our biggest challenge in this business. I will be honest that it’s our biggest thing is we have to take care of them and we can give them a atmosphere where it feels like they are just caring for a person in their own family, so they have a hard time going anywhere else. Our biggest probably thing that causes people to go elsewhere is when they are taking their RN classes.

Brandon Schwab (00:58:51):

It’s hard to kind of do both at the same time because that’s a pretty big deal. Takes almost 30 hours per week just to do all of that. But it is great because they do end up coming back to us afterwards. So that’s probably our biggest challenge. A thing that our business is doing to help kind of balance that is as I’m building homes and a couple of our homes that are there today are 13,000 square foot home has a full unfinished basement with almost 10 foot ceilings that we are going to get a proofs for putting five to 10 bedrooms down there and we would be able to actually offer housing because there are a group of the caregiver that they don’t own their own home. They are in different people’s homes all of the time, so if you can offer them housing and food, you can get them to where they aren’t going to go anywhere else.

Brandon Schwab (00:59:55):

That’s what I’m doing today that as I’m building those pods, one out of three each home in that pod is going to have a basement that’s about 4,000 square feet. Only for the idea to that by 2025 I feel that finding caregivers is going to be very difficult. We are going to help kinda take care of that issue before it is able to happen. There could be a point where we could have to import caregivers from overseas. That’s a potential plan B or C, but our goal is to keep the jobs here if we can, but if we cannot keep up because for those three pods that I’m building in [inaudible], which is directly on next to 5,500 homes that are all 55 plus, so I need 168 caregivers to keep from going into overtime. Wow. 168 caregivers. We are going to be giving jobs all over the place, which is great. However, to find a 168 caregivers is going to be interesting too.

Bill Fairman (01:01:11):

Well that’s one of the downsides of having a really robust economy, low unemployment rate, is that you have a smaller pool to choose from. That’s right. Because you’re at maximum employment in most areas. Illinois is probably one of the States that unemployment rate is a little bit higher than some other States, but that really has to do with, you know, the different industries and the different States. Every area is a little bit different but they’re still at record low unemployment everywhere

Wendy Sweet (01:01:48):

And maybe paying for their schooling would help you know in the future. Definitely some of the nursing schools as well.

Brandon Schwab (01:01:56):

We are going to have to be open to that. We are going to be into in paid time off we are going to pay for health insurance. I mean all kind of, all of those things are going to be part of our plan to keep it in house in the area, but if we cannot do that, we can’t have all these big awesome alms and people in them but don’t be able to keep up with actual caregivers so we are going to be very open to figuring out how to do that because our business is different because I have a bigger caregiver population that I have to bring in to keep up with that because as I build just 16 bed homes, I need three caregivers on for 15 hours per day.

Wendy Sweet (01:02:40):

Right. One of the things, the other things that you mentioned too is about how the people there, the, the, your residents that are living there, you’re teaching them, you know, where they’re going. So it’s a faith based and we’ve found, you know, with our company, we’re a faith based company as well. And you know, the one thing that we hear over and over again, I’m sure you’re probably hearing the same thing, is that it’s more important for them to feel like they’re part of a family too. And knowing that they’re not just employees, they’re part of a team, they’re part of the family. You know, we pray together, we, we encourage each other and lift each other up and you know, we truly care. That makes all the difference in the world.

Brandon Schwab (01:03:23):

Well, and too, a thing that I think is interesting is all of our homes, we cost some build farm tables that everyone can eat at a table together. That’s nice. We absolutely don’t have those tables with four or five people because I think what happens is they get into these little groups and they get a little bit cliquey. A thing that’s great on all of our homes is they get together, they kind of talk each day. They have the typical family issues that I think they typically have, but that is good for them and at the end of the day, it feels of the overall effort in the countless hours that are put into this business and also the countless dollars as well that it’s going towards a very good purpose. I mean, what else could all of us be doing here on earth, but to help people go to God’s, his purpose to help them find God’s kingdom is, I don’t know if it gets any better than that and our team doesn’t even really call them.

Brandon Schwab (01:04:38):

We’ve got actual 144 beds that are going to open. I only talk about it on these type of calls, but we picture everyone as a keynote opportunity because every bed is a opportunity that people ever come through and if we can keep our top KPI at to 100% we are going to be helping people in the final chapter answer those tough questions because yeah, at the end of the day people really don’t feel comfortable talking about all of that. But they do, when they’re getting closer to the end in those questions that come up, they’re very quiet. We are able to train our team to hear those questions and as they hear those questions, our partner Teresa is able to get that phone call, Hey, I think you need to come talk with, and that talk has been able to ensure that those folks that are in our homes in there, they get where they are going to go after earth and how they are going to get there. That’s a big deal to all of us and that anonimous comes before chase dollars because if you offer great care first the dollars will always come back. That’s right. That’s awesome. That is our overall plan and what we are going to keep on doing.

Bill Fairman (01:06:07):

Brandon, thank you so much for joining us. You have a great business model. I encourage people to go to your two websites to check them out. You have plenty of opportunity here for investors at different levels to get involved at something that is needed and it looks to me that it’s definitely scalable, throughout the different areas of the country and that’ll help the investors because you’re going to be geographically diversified as well, not just a single area. I know we ran you along. I apologize for keeping you on here for so long. You were very generous with your time.

Brandon Schwab (01:06:48):

I thank you guys for the chance to be able to come on here. This is a big deal. I have. I have thought you two have been awesome. When I joined collective genius over two years ago, I was like, I have got to talk with these guys. They are out there doing it. So I feel that this is an absolute honor for us to be on here and to take this time of yours. So thank you guys.

Bill Fairman (01:07:14):

Well your, your check is in the mail. Alright. So again, thanks for coming though. Those who joined us on the show. Thank you so much. Don’t forget you need to like us. You need to subscribe to the channel and again, for archive stuff, I don’t know what side of the screen it’ll be on, but they’ll, there’ll be a link as well. So can’t wait to see you next time. Y’all have a great day.

Wendy Sweet (01:07:43):

Hey, thanks so much for joining us this time. And if you really like this show, you’ll have an opportunity to see even more. You can choose up here, you can choose over here, you can choose down here, right. Awesome. Don’t forget to like and subscribe to our page and we look forward to seeing you again soon. Thanks.

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