DSCR Loans for Care Homes & Assisted Living Facilities

The Residential Assisted Living Investment Model

Residential assisted living (RAL) is one of the fastest-growing niches in real estate investing — and one of the most misunderstood by lenders. The model is simple: take a large single-family home (typically 4-8 bedrooms), license it as a care facility at the state level, and lease rooms to elderly or disabled adults who need help with daily activities.

Monthly fees per resident commonly range from $2,500 to $6,000+ depending on care level and market. A fully occupied 6-bed facility in a mid-sized metro can generate $15,000–$25,000 in gross monthly income from a property that might only have conventional rental value of $2,500–$3,500/month. That gap is the opportunity.

The problem: standard DSCR lenders see a single-family home and apply a residential rent comparable. That approach destroys the DSCR and kills the deal — even though the property is cash-flowing at 3-5x what a conventional rental would produce. Our care home program uses a specialized underwriting methodology that captures the real income of the asset.

How Care Home DSCR Underwriting Works

Our program solves the core underwriting challenge: separating the real estate value from the business operating value. The gross income of a care facility includes caregiver labor, food, supplies, and management — not all of which is attributable to the real estate. We use a methodology that extracts the real estate component and applies it to the DSCR calculation.

• Operator-leased properties — If you lease the building to a licensed operator, the lease income goes directly into the DSCR calculation — clean and straightforward.
• Owner-operated facilities — We apply an expense ratio to the gross facility income to isolate the real estate portion, then use that figure for DSCR qualification.
• Single-family home conversions — Properties being purchased and converted can often qualify using a projected income approach, pending licensure.
• Flexible DSCR minimums — Ratios are evaluated in context of the operator's experience, licensing status, and facility occupancy — not a one-size-fits-all threshold.

Loan Parameters

Frequently Asked Questions