Help & User Guide

Property purchase price

The price paid to acquire the care home real estate. This is the Landlord’s core capital contribution and the starting point for the Landlord’s total project cost.

Option Agreement Amount

Option consideration paid by the Operator (e.g., for the right to purchase the property later). It appears as the Operator’s own “Capital invested / at risk” on the Year 1 side-by-side table, and it is automatically added to the leasehold improvement credit basis at buyback (see Improvement value (credit basis) below).

Renovation / remodel cost

Buildout dollars — enter them here only if the Landlord is funding the improvements. This amount is added to the Landlord’s total project cost, which raises both the rent (rent is charged on total project cost) and the property’s appreciation base at buyback. If the Operator is funding the buildout instead, leave this at $0 and enter the amount in “Improvement value (credit basis)” further down — that treats it as Operator capital to be credited back at buyback instead of raising rent.

Working capital

Sourced using optional bridge funding or from Operator-provided liquidity. Used for: deposits, licensing fees, consulting services, legal fees & services, zoning & local permit fees, pre-opening insurance, initial payroll, website development, marketing & advertising, furnishings & fixtures, outfitting resident bedrooms (specialized beds, dressers), and care management software during ramp-up to stabilized occupancy. For the best financial operating runway, keep 3 to 6 months of operating working capital in reserve. Treated as Operator capital — shown on the Operator’s capital invested / at risk line on the Year 1 side-by-side; it does not add to the Landlord’s total project cost or rent.

Beds / units

The number of licensed beds or units in the community. Drives revenue and headcount-linked costs (e.g., food).

Occupancy (stabilized)

The stabilized occupancy percentage used for the base-case Year 1–5 projections.

Private-pay rate ($/resident/month)

The monthly private-pay rate per resident. Year 1 revenue = beds × occupancy × rate × 12; later years apply the annual escalator on top.

Annual escalator (rent/rev/opex)

A single annual growth percentage applied uniformly to rent, revenue, and operating expenses in every year of the lease.

Lease rate (on total project cost)

Annual rent, expressed as a percentage of the Landlord’s total project cost. Base rent = total project cost × lease rate.

Mgmt fee to Operator (% of gross rev)

A fee the Landlord pays the Operator for managing the property, calculated on effective gross revenue (EGR). It reduces the Landlord’s net operating income and increases the Operator’s total profit.

Payroll & benefits, food/dietary, utilities, property insurance, liability/other insurance, property taxes, repairs & maintenance, marketing, admin/office, licensing/supplies/misc, capex reserve, and credit loss/bad debt. These are the Operator’s day-to-day operating costs, netted against revenue to produce EBITDAR (see glossary). Most are entered as flat annual dollar amounts or per-resident/month amounts, except payroll and credit loss, which are entered as a percentage of revenue.

Annual appreciation rate

The assumed annual growth rate applied to total project cost to project the property’s value at the 3-year and 5-year buyback dates (the “gross buyback price”).

These three fields size the loan the Operator would use to buy the property back from the Landlord at the end of the lease term: down payment (borrower equity, as a % of the net buyback price), interest rate, and amortization (years). Together they determine the SBA 7(a) loan amount and annual debt service shown in the buyback tables.

Improvement value (credit basis)

The dollar amount of improvements the Operator funded. The app automatically adds this to the Option Agreement Amount entered above to form the combined “credit basis,” then applies the Full/Partial treatment (below) to determine how much of that combined total is actually credited against the buyback price. This credit request typically needs to be documented with paid invoices, receipts, and payment source documentation, and may be subject to third-party construction progress inspection — and, if an Option Agreement Amount was entered, the executed option agreement and proof of that payment as well, since lenders review the full credit basis when approving purchase financing.

"Other" occupancy (flex column)

A user-editable occupancy percentage that becomes the 5th column of the Occupancy Sensitivity output table, in addition to the four fixed columns (your base-case occupancy, 75%, 65%, and 50%). Use it to stress-test any occupancy level you choose.

Credit treatment (Full / Partial)

Full credits the entire combined credit basis (improvement value + option funds) to the Operator at buyback, dollar for dollar. Partial credits only a portion of that basis, net of the depreciation haircut below — simulating that some of the basis has already been “used up” by depreciation and is therefore not recoverable at buyback.

Assumed accumulated depreciation %

Only used when Credit treatment is set to Partial. The percentage of the combined credit basis assumed to be depreciated, and therefore not credited back at buyback (effective credit = basis × (1 − this %)).

A snapshot comparing the Landlord and Operator in the first year at stabilized occupancy.

Capital invested / at risk

Landlord = total project cost (purchase price + any Landlord-funded renovation — working capital is excluded). Operator = Option Agreement Amount + Working Capital, i.e., what the Operator has put at risk to date.

Year-1 revenue (EGR)

Effective gross revenue — the Operator’s revenue after credit loss/bad debt.

Year-1 rent

An expense to the Operator (shown negative) and matching income to the Landlord (shown positive).

Year-1 mgmt fee

Paid by the Landlord to the Operator — negative on the Landlord’s side, positive on the Operator’s.

Year-1 net profit

Landlord’s net operating income (rent received minus the mgmt fee paid out) versus the Operator’s total pre-tax profit (EBITDAR minus rent, plus the mgmt fee received).

Return on cost / margin

Landlord: NOI ÷ total project cost (a yield-on-cost). Operator: total profit ÷ EGR (a profit margin).

Rent coverage (EBITDAR / rent)

How many times the Operator’s EBITDAR covers the rent obligation. Lenders typically look for coverage comfortably above 1.0x — the higher, the more cushion the deal has.

The same metrics as the Year 1 table, projected across all five years of the lease with the annual escalator applied. Use this to see the trend over the full lease term, not just the opening year.

These two sections model what happens if the Landlord sells the property back to the Operator at the end of Year 3 or Year 5 — compare both to see how the timing of the buyback affects returns.

Landlord unlevered IRR

The Landlord’s annualized return based on: total project cost invested up front, NOI received each year, and the net buyback proceeds in the final year. “Unlevered” means it ignores any financing the Landlord may have used — it’s the return on invested capital alone.

Landlord equity multiple

Total cash received (NOI over the hold + net buyback proceeds) divided by total project cost. A multiple of 1.28x means the Landlord received $1.28 back for every $1 invested.

Landlord total profit over hold

The dollar version of the multiple above: total cash received minus total project cost.

Gross buyback price

The property’s projected value at the end of the hold: total project cost appreciated at your appreciation rate for 3 or 5 years.

Less: improvement credit + Option Agreement Amount

The dollar credit applied for the leasehold improvements and option funds the Operator contributed (see credit basis above). This lowers what the Operator has to pay to buy the property.

Net buyback price (Operator pays)

Gross buyback price minus the improvement credit — what the Operator actually pays.

Operator down payment (SBA 7a)

The Operator’s required equity injection, based on the SBA down payment %.

SBA 7(a) loan amount

Net buyback price minus the down payment.

Annual debt service

The annual loan payment (principal + interest) on the SBA loan.

Operator cash flow as owner

What the Operator would net that year if they now own the property outright: EBITDAR minus debt service (no more rent or mgmt fee).

Operator cash flow as tenant

What the Operator would have netted that same year had they stayed a tenant instead — their total pre-tax profit under the lease.

Cash-flow change from owning

Owner cash flow minus tenant cash flow. A negative number doesn’t necessarily mean owning is a worse deal — debt service is often front-loaded relative to a stabilized lease payment, and this line doesn’t capture the equity and appreciation the Operator now owns.

Down-payment cash saved by credit

How much less cash the Operator had to bring to closing because the improvement credit reduced the purchase price (credit × down payment %).

A side-by-side “what if” scenario: instead of the Landlord funding the renovation, the Operator funds it. In this preset, the Landlord’s basis is purchase price only (no renovation cost added), so rent is lower for the entire lease, since rent is charged on the Landlord’s basis. The table shows Year-1 rent, coverage, Operator profit, and Landlord NOI under this scenario, plus 3-year and 5-year Landlord IRR alongside the Operator’s cumulative profit over the same period — so you can compare who funding the buildout benefits more, the Landlord or the Operator.

Reruns the Year 1 numbers at five occupancy levels — your base-case occupancy, 75%, 65%, 50%, and the “Other” column you set above — while holding rent fixed at the Year 1 base rent (no escalation). This isolates the effect of occupancy alone, so you can see exactly how the deal performs if occupancy comes in below (or above) plan before you commit to it.

One row often surprises people: Landlord NOI still moves even though rent is fixed. That’s because NOI here is “rent” MINUS the “management fee”, and the management fee is a percentage of revenue (EGR) — which scales directly with occupancy. So as occupancy rises, the Landlord collects the same rent but owes the Operator a bigger fee out of it, which pulls NOI down. The relationship runs the opposite of what you’d expect: Landlord NOI is highest at low occupancy and lowest at high occupancy. Using this tool’s default assumptions (rent fixed at $140,100; 5% management fee):

This is why structuring the management fee as a percentage of revenue — rather than a flat dollar amount — matters: it gives the Operator a direct financial stake in maintaining the highest occupancy/census level, since their fee (and the Landlord’s fee expense) scales with actual performance.

Rent coverage = 1.0x

The occupancy percentage at which the Operator’s EBITDAR exactly equals rent. Below this occupancy, the Operator can’t cover rent from operations alone.

Operator total profit = $0 (includes Mgt. fee from Landlord)

The occupancy percentage at which the Operator’s total pre-tax profit — including the management fee paid by the Landlord — hits exactly zero.

EGR (Effective Gross Revenue)

Gross revenue after deducting credit loss / bad debt.

EBITDAR

Earnings before interest, taxes, depreciation, amortization, and rent — the Operator’s operating profit before the rent payment. Used to test rent coverage.

NOI (Net Operating Income)

The Landlord’s income after paying the management fee out of rent received.

Coverage ratio

EBITDAR divided by rent. Shows how comfortably operating profit covers the rent obligation.

IRR (Internal Rate of Return)

The annualized return implied by a series of cash flows — here, the Landlord’s upfront investment, annual NOI, and the net buyback proceeds at exit.

Equity multiple

Total cash received divided by total cash invested, expressed as a multiple (e.g., 1.5x).

Credit basis

The combined dollar total of the Improvement value and the Option Agreement Amount, before the Full/Partial treatment is applied, used to calculate the leasehold improvement credit at buyback.