By Steve Moran

I recently had a call with a young guy, an intern who is working with an investment company that is looking to acquire some senior living assets.

They created an elaborate matrix they were using to evaluate properties. Taking a look at things like market penetration, types of contracts they had, local market fundamentals, occupancy, and labor markets.

He asked my opinion on how they had weighted each item on the list.

It’s Not That Complicated

It was honestly a frustrating experience. While I appreciate the time, effort, and thought that went into their process — something an MBA would fall in love with — in my view, it overcomplicated a very simple problem. The overcomplication in itself would not be a problem as long as it led to wise decisions. But my fear was that the matrix could say a given asset was a good deal when in fact it was not.

2 Things

There are only two things that count when evaluating any property. The first is the executive director, and the second, the team supporting the executive director.

If you have a great executive director supported by a great corporate structure, you will have unbelievable success regardless of whether you are in a high-barrier-to-entry market or a low-barrier market. You will do well if you are in a high-end luxury market or a middle-income market. You will do fine in a brand new property or an aging property.

You will even do fine in a completely saturated market.

Baseline

This assumes some baseline conditions are met. That the property does not have so much deferred maintenance that units cannot be occupied or the property’s first impression is not a horror show. It also presumes that monthly fees are competitive in the marketplace and that you are paying a fair rate to your team members.

Supporting Your Executive Director

It is critical that the corporate support team must operate in a way that this great executive director can do the things they do best. It is possible to put a great executive director into a situation where they spend so much time doing paperwork, attending meetings, and filling out reports that they are ineffective. (More about this in another article. You can subscribe here.)

It is possible to take a great executive director and turn them into a terrible executive director. The flip side is also true. It is possible to take a middle-of-the-road executive director and turn them into an amazing leader.

The right leadership and the right market means a thriving community each and every time.