Buy an Assisted Living Facility in Houston, TX

Why Houston's Assisted Living Market Is Worth Watching

Houston is the fourth-largest city in the country with a population of 2.3 million, and Harris County is one of the fastest-aging metros in Texas. Adults 65 and older are the fastest-growing demographic segment in the region, and the demand for licensed care facilities continues to outpace supply.

There are currently 12 active assisted living listings in Texas at the state level, with Houston representing a meaningful share of that inventory. That is a thin market. When inventory is low and demographic demand is structurally growing, the buyers who move with conviction tend to win.

The Deal Economics Are Unusual, and That Cuts Both Ways

The average multiple here is 1.6x cash flow. That is low. Across most service businesses on SBA financing, you typically see 3x to 5x EBITDA as the standard acquisition range. A 1.6x number either means the business has distressed operations, license risk, staffing problems, or the seller priced it aggressively to move.

Asking prices in this market range from $158,900 to $25,000,000. That spread tells you almost everything: this is not a commodity market. A small six-bed residential care home and a 50-bed licensed facility are both "assisted living" in listing nomenclature, but they are entirely different businesses.

Median asking price sits at $595,000 with median annual cash flow of $293,582. That implies a pre-debt cash-on-cash return that is hard to find in most industries.

How the SBA Financing Structure Works Here

SBA 7(a) is the most common financing vehicle for acquisitions in this price range. At $595,000, a typical deal structure looks like this:

Asking price: $595,000 SBA loan (80%): $476,000 Seller note (15%, full standby): $89,250 Buyer cash (5%): $29,750

The 10% equity injection is structured as 5% buyer cash plus a 5% seller note on standby acting as equity. Full standby means no payments on the seller note during the SBA loan term. Regalis Capital achieves this structure on more than 90% of deals we close.

At current SBA rates of approximately 10% to 11%, a 10-year loan on $476,000 carries annual debt service of roughly $75,000 to $80,000. Against $293,582 in annual cash flow, that produces a DSCR of approximately 3.7x. That is well above our 2x target and comfortably above the 1.5x floor.

These are rough estimates based on market data. Actual terms depend on individual qualification and lender.

One important caveat: assisted living facilities involve real property or a licensed business with regulatory complexity. Lenders will scrutinize this deal harder than they would a laundromat or auto shop. License transferability and operator certification requirements vary by facility type and bed count under Texas HHSC rules.

What to Look for Before You Make an Offer

Low multiples in care-based businesses are often a flag, not a gift. Before you get attached to the deal economics, verify the following:

Licensing and regulatory standing. Texas HHSC licenses assisted living facilities and conducts unannounced inspections. Request the last three inspection reports. Any Class A deficiencies are serious. Multiple citations in a short window signal a management or staffing problem that will become your problem.

Occupancy rate and census stability. Most residential assisted living facilities break even around 70% to 75% occupancy. Target facilities running 85% or better. Ask for a 24-month occupancy history, not just current census.

Staffing model and key-person risk. In smaller facilities, one administrator or care coordinator often holds everything together. If that person is leaving with the seller, you are buying a staffing crisis on top of a licensing obligation.

Payer mix. Private pay is far better than Medicaid for cash flow predictability and margin. Heavy Medicaid exposure compresses margins and adds billing complexity. Ask for a detailed payer breakdown.

SDE discount. Most listings report SDE, which is broker-friendly and typically inflated. Expect to discount listed SDE by 15% to 50% to approximate real post-overhead cash flow. The $293,582 median cash flow figure in this market should be treated as a starting point for your own verification, not a guarantee.

Frequently Asked Questions

How much does it cost to buy an assisted living facility in Houston?

Asking prices in the Houston and broader Texas market range from $158,900 to $25,000,000. The median asking price is $595,000. The right number depends heavily on bed count, license type (Type A vs. Type B under Texas HHSC), occupancy, and whether real estate is included in the deal.

Can I use SBA financing to buy an assisted living facility in Texas?

Yes, SBA 7(a) loans are available for licensed care facility acquisitions. The buyer must meet lender qualification requirements, and the business must show at least two years of tax returns with verifiable cash flow. Lenders will closely examine the license transfer process and inspect history before approving.

What is a good DSCR for an assisted living acquisition?

Regalis Capital targets a 2x debt service coverage ratio as a baseline and will not take a deal below 1.5x without compensating factors. At $595,000 with median cash flow, most Houston assisted living deals come in well above 2x at standard SBA terms, which is a strong signal on paper. Verify the cash flow before relying on it.

What is the difference between Type A and Type B assisted living in Texas?

Texas HHSC licenses assisted living facilities as Type A (lower acuity, residents capable of self-preservation) or Type B (higher acuity, residents requiring evacuation assistance). Type B facilities carry more regulatory requirements and higher staffing obligations. Both types are SBA-eligible, but lender appetite for Type B is sometimes lower due to operational complexity.

How long does it take to close on an assisted living facility acquisition?

A typical SBA acquisition closes in 60 to 90 days from signed letter of intent. Assisted living deals often run longer due to license transfer timelines with Texas HHSC, background check requirements for new operators, and additional lender diligence on the care model. Budget 90 to 120 days for planning purposes.

Thinking About Buying an Assisted Living Facility in Houston?

Regalis Capital's deal team reviews 120 to 150 acquisition opportunities per week. We help buyers source, evaluate, structure, and finance acquisitions like this one, from initial deal assessment through close.

If you are seriously considering an assisted living acquisition in Houston or anywhere in Texas, the first step is running the real numbers on a specific target. Start with a free deal assessment here.