Buy an Assisted Living Facility in Memphis, TN

The Memphis Market for Assisted Living

Memphis has a population of roughly 629,000 with a median household income of $51,211. That income figure sits well below the national median, which matters for private-pay assisted living. Most facilities in this market lean on Medicaid reimbursement to fill beds, which means revenue is more predictable but margins are tighter than in higher-income metros.

Tennessee's Certificate of Need (CON) law creates a meaningful barrier to entry. New assisted living capacity requires state approval, which limits supply and protects existing operators. For a buyer, that is a structural advantage baked into any licensed facility you acquire.

There are 54 assisted living listings in this market pulling from national data, with asking prices ranging from $150K to $25M. The $150K end typically represents distressed or very small facilities. Deals above $5M fall outside the SBA 7(a) maximum and require a different capital stack, usually conventional financing or equity. The actionable SBA window sits between roughly $500K and $5M.

Deal Economics: What the Numbers Look Like

Here is what a median-priced deal looks like under a standard SBA structure:

• Asking price: $1,500,000
• Annual cash flow: ~$339,000
• Implied multiple: 3.7x
• SBA loan (85%): $1,275,000
• Seller note on full standby at 0% interest (5%): $75,000
• Buyer cash equity (5%): $75,000
• Total equity injection (10%): $150,000
• Approximate annual debt service at 10.5% over 10 years: ~$165,000
• Estimated DSCR: ~2.1x

That 2.1x DSCR clears our 2x target comfortably. These are rough estimates based on market data. Actual terms depend on individual qualification and lender.

The seller note structure matters here. We achieve full standby (zero payments during the SBA loan term) on more than 90% of Regalis deals. That standby treatment is what allows the seller note to count as equity toward the SBA's 10% injection requirement.

If you are looking at SDE figures from broker listings, apply a 15% to 50% discount to approximate real cash flow. SDE strips out the owner's salary and personal expenses, which overstates what the business actually generates for a new owner paying market-rate management.

What to Look For in a Memphis Assisted Living Deal

Licensing is the first gate. Tennessee requires a license through the Department of Health for residential care facilities. A change of ownership triggers a new license application. Confirm that the current facility has no open complaints, deficiencies, or enforcement actions with the state. A clean survey history is worth paying for.

Payer mix is the second thing we examine. A facility running 80%+ Medicaid has low revenue variance but thin margins. Private pay beds generate 2x to 3x the revenue per bed in most markets. Ask for at least 24 months of actual payer mix data, not projections.

Staff is the third variable. Assisted living operates on razor-thin staffing ratios and Tennessee has minimum staffing requirements. High certified nursing assistant (CNA) turnover drives up training costs, increases survey risk, and signals management problems. Request 12 months of payroll records and compare headcount to licensed capacity.

Real estate adds complexity. If the facility owns its building, the SBA loan can include real property. If the operator leases, confirm the lease term extends well beyond the SBA loan maturity, or the deal becomes structurally risky for a lender.

Local Considerations for Memphis Buyers

Tennessee has no state income tax on earned income, which improves net returns for owner-operators. The state does assess a franchise and excise tax on business income, so factor that into your pro forma.

Medicaid reimbursement rates in Tennessee have been modestly rising but remain below the Southeast average. If you are underwriting a Medicaid-heavy facility, model conservatively and confirm current rates directly with TennCare rather than relying on broker representations.

Memphis sits in Shelby County, which has a relatively high poverty rate. That demographic context means private-pay demand is more limited here than in Nashville or Knoxville. The trade-off is that acquisition multiples reflect this, and the 3.7x median here would likely be 4.5x to 5x in a higher-income Tennessee market.

Frequently Asked Questions

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

The median asking price is $1,500,000 based on current national data applied to this market. Prices range from $150K for distressed small facilities to $25M for large licensed communities. Most SBA-financeable deals fall between $500K and $5M, with the median deal requiring $75,000 in buyer cash at a 10% equity injection.

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

Yes. Assisted living facilities qualify for SBA 7(a) financing up to $5M. The standard structure is 85% SBA loan, 5% seller note on full standby at 0% interest, and 5% buyer cash, totaling a 10% equity injection. Deals above $5M require conventional or equity financing outside the SBA program.

What cash flow should I expect from a Memphis assisted living facility?

Median cash flow is approximately $339,000 annually based on current listing data. That figure should be verified against actual tax returns and bank statements, not broker-provided SDE. Medicaid-heavy facilities typically show lower verified cash flow than private-pay operations of similar size.

How long does it take to close an assisted living acquisition in Tennessee?

Most acquisitions take 90 to 120 days from signed LOI to close. Tennessee's change-of-ownership licensing process adds time and should be coordinated with the SBA loan timeline. Buyers should expect the state licensing review to run 30 to 60 days and plan accordingly.

What is the debt service coverage ratio I should target for this type of deal?

Regalis Capital targets a 2x DSCR as the baseline for assisted living acquisitions, with 1.5x as the absolute floor when synergies are clearly identifiable. A median Memphis deal at $1.5M asking price and $339K cash flow produces roughly a 2.1x DSCR under current SBA rates, which is acceptable. Deals below 1.5x DSCR require re-pricing or structural adjustments before we would recommend proceeding.

Considering an Assisted Living Acquisition in Memphis?

Regalis Capital's deal team reviews 120 to 150 deals per week across the senior care and healthcare services space. We handle sourcing, due diligence, SBA lender placement, and negotiation from start to close.

If you are evaluating an assisted living facility in Memphis or anywhere in Tennessee, start with a free deal assessment. We will tell you whether the deal makes sense and what the capital structure should look like before you spend money on attorneys and accountants.