America’s aging population is creating one of the most powerful demographic trends of the next two decades — and it’s reshaping opportunities in real estate. But senior living is far more complex than traditional multifamily investing. From staffing challenges to operational improvements and investor structures, understanding the sector requires a unique blend of healthcare expertise and real estate strategy.
In this episode of The Agent of Wealth, host Marc Bautis is joined by Radhika Rastogi, Co-Founder of Relik Capital Group, a senior-living real estate investment firm focused on acquiring and repositioning underperforming senior living communities.
In this episode, you will learn:
- Why demographics are creating massive demand for senior living — and why supply hasn’t kept up.
- How senior living investments differ from traditional multifamily real estate, including unique revenue streams like level-of-care fees.
- The strategy behind repositioning underperforming senior living communities to improve operations, occupancy, and investor returns.
- How syndication deals are structured, including preferred returns, refinancing strategies, and capital return timelines for investors.
- The biggest risks in senior living investments, including staffing challenges and legal considerations.
- And more!
Tune in for a behind-the-scenes look at how senior living communities operate as both healthcare environments and real estate investments — and why many investors are beginning to pay attention to this rapidly growing asset class.
Resources:
www.relikcapitalgroup.com | Connect with Radhika Rastogi on LinkedIn | Bautis Financial: 8 Hillside Ave, Suite LL1 Montclair, New Jersey 07042 (862) 205-5000 | Schedule an Introductory Call
Disclosure: The transcript below has been edited for clarity and content. It is not a direct transcription of the full episode, which can be listened to above.
Welcome back to The Agent of Wealth Podcast, this is your host, Marc Bautis. Today, I’m joined by a special guest: Radhika Rastogi. Radhika is the the Co-Founder of Relik Capital Group, a senior-living real estate investment firm redefining what it means to raise capital in a sector with explosive demographic demand and limited supply.
What makes Radhika’s perspective so valuable is her ability to bridge operational expertise with institutional-level financial discipline. Her firm specializes in acquiring and repositioning underperforming senior living communities by improving staffing, care levels, NOI, and resident outcomes.
Radhika, welcome to the show.
Thank you so much, Marc. I appreciate being here.
Of course. I’m curious to know what got you into this sector, and especially senior living real estate. We see a lot of people in real estate, and a lot of it is apartment buildings or residential living buildings. You don’t see that many involved in senior living. And we know it’s an exploding area. How did you get involved in it?
Yes. So my background is actually — I’ve got more than 12 years of healthcare consulting experience. I come from working with government entities who are licensing and regulating long-term care facilities, including assisted care and assisted living communities.
A big part of what I realized was, “Wow, I’ve got all this domain expertise from what I used to do previously.” At the same time, I have this amazing passion for real estate. I’ve been a real estate investor for over a decade. I started in residential and wanted to scale into commercial.
When I started researching — like most people — I started by researching multifamily. Eventually I found senior living, and I was like, “Wow, I’ve got all this experience that’s actually relevant to what happens in senior living.”
So that was my introduction into the asset class. I’m really grateful for the ability to use so much of my prior knowledge in what I do now day-to-day, and in helping our investors learn more about a new asset class that, like you said, is growing tremendously.
What are some of the biggest differences you’re seeing between senior living and your typical multifamily, or even other commercial real estate like office space, storage, or other things that people may be more familiar with?
Yeah. I think the thing that’s really driving the senior living industry right now is two things.
One is demographics. The demand that is in the market right now — and projected for the next 20 years — is staggering. Let me give you a couple data points. The oldest boomers are turning 80 this year. What that means is the highest acuity, highest-need segment is starting to enter the system at scale. And that wave is expected to last about 15 years. So what we’re seeing is that absorption of demand is around 3.5% to 4.5% annually, nationally.
But what we’re seeing on the supply side is that inventory is at its lowest level since 2012. Even under-construction units — in Q3 of last year — were about 17,000 units nationally. That’s basically nothing compared to the millions of people who are becoming of age and will be looking for care.
So what that means is demand is rising, while supply is very, very small. That creates a great opportunity from a pricing perspective. It allows us to acquire assets — there is definitely a lot of competition right now — but our thesis at Relik Capital Group is to reposition them, stabilize underperforming assets, and then sell them in five to seven years.
Who are you seeing owns these properties — the ones you’re looking at or the inventory that’s out there? Is it mom-and-pop owners? Do you see private equity owning them now, or is it just senior living corporations?
It’s all of them. It really is all of them.
Our buy box is between 80 and 150 units, and that’s by design because we don’t want to go bigger. What that means is we are not competing with the REITs or the BlackRocks of the world — and we don’t want to.
The other part of our strategy is to find those mom-and-pop operations. They might have been the original builder of the community 25 years ago. They might be 70 years old now and looking to retire themselves.
We’ve looked at a couple of these assets that we’ve acquired, and the biggest things we see are that they don’t do digital marketing. They’re not using the latest technology that’s available in the market today. There’s definitely no AI infrastructure built in place for back-office productivity.
A lot of those things help our investors see returns in a much quicker cycle than if we purchased an asset from a large corporation.
Can you take me through what a typical purchase would look like? Not just in terms of what you’re purchasing, but what happens after that. Are you operating it as well? Do you have a five-year or ten-year plan to sell? Or are you following a model across all of them that you’re hoping to execute?
We syndicate all of our deals, meaning we pool money together with passive investors. Our typical structure is that we acquire the property first. Repositioning or stabilizing can take anywhere between one year to 18 months, depending on the business plan for that particular deal.
Where we’re a little different is that our goal is to de-risk the LPs as soon as possible in the deal. Many times — especially in multifamily syndications — you’ll see that your initial return of capital doesn’t happen until year five when you decide to sell the asset.
We don’t do that. Our goal is that by year three, we refinance, take cash out, and return 100% of that capital back. That’s designed for two reasons.
One is de-risking. But also, I personally co-invest. GPs and our team have to co-invest in order to be part of the deal.
And I also want to get my money out and recycle it for the next deal. That’s really how you start compounding wealth over time.
So we return capital in year three. Then our goal is typically to sell between years five and seven.
LPs are still part of the deal the entire way through. They’re still getting quarterly distributions. They’re still seeing progress made. We’re continuing to improve operations throughout that period, and then we sell.
After you purchase and reach that year-three point where you’re potentially refinancing, what’s the biggest driver of the value or growth of the property? Is it operational efficiencies? Are you doing building improvements or repairs? Or is it a combination of things?
Yeah, we typically look for underperformance from an operational standpoint. We buy buildings that, for the most part, have been well maintained. There might be very little deferred maintenance that we need to address. We always have a CapEx budget, but it’s intentionally small.
Our goal is to improve operations.
One thing we often see is that an entire revenue stream is missing. To give some background and compare it to multifamily: multifamily’s primary revenue stream is room rent. In senior living, the primary revenue stream is room rent plus level-of-care fees.
These level-of-care fees are driven by acuity. The more support a resident needs, the more they pay in an additional monthly fee. Levels can vary between Level 1, which might be $250, to Level 4 or 5, which could be $1,800. So that’s an additional $1,800 on top of the $2,500 or $3,000 room rent someone might already be paying.
Then, of course, we have other ancillary revenue sources like salons, transportation support, meals, and similar services. But those are secondary — we don’t consider them the primary driver.
On the revenue side, we’ve seen many assets where they don’t even have level-of-care fees implemented. That’s one of the biggest opportunities we focus on.
Another thing we see is buildings with 20% or 30% Medicaid populations.
What we’re seeing in the market — generally at the federal level — is that Medicaid reimbursement is going down. That makes it very difficult as an operator to rely on government funding to run operations.
So part of our business plan is sometimes transitioning those Medicaid residents into private-pay residents. That helps bolster room rates and also allows us to charge level-of-care fees, which typically aren’t allowed with Medicaid residents.
On the expense side, the biggest category is labor.
We often see heavily inflated labor costs because if a REIT or national operator is running the property, they tend to have a lot of overhead. They’re spending heavily without necessarily optimizing staffing based on resident acuity and operational needs.
The other two biggest expense categories are marketing and dietary. Dietary includes raw food and supplies. We’ve seen cases where it costs $30 per day per resident. That’s incredibly expensive when the industry average is closer to $7. So that’s another major area we focus on improving.
What about geography? Are you looking across the entire U.S., or are there specific regions where you see the best opportunities?
I actually think there’s opportunity in most states. But our firm primarily focuses on the Sunbelt. We are very active in Texas, and we’re scaling in Arizona, Utah, and Oklahoma.
Maybe you can walk us through how this works for an investor.
We’ve had a lot of episodes about different types of real estate investments, so people probably somewhat understand syndication. But maybe explain the typical investor profile you work with. And then also explain the interaction LPs have with the investment — things like reporting, transparency, and what they can expect.
First, we are actually not a fund. We are direct syndicators. We work with capital allocators, which could include family offices, RIAs, or other co-GPs.
Typically, our LP profile consists of ultra-high-net-worth or high-net-worth clients who have previously invested in alternative investments of some kind.
Most of the time, they’ve actually never thought about senior living. They didn’t even realize it was an option they could invest in.
So many times we’re educating them about the industry itself. But in terms of running the syndication, it’s very similar to other alternative investments they’ve done before.
Our deal structure is typically a 65/35 or 60/40 LP/GP split. That means that any profits or cash flow coming in are distributed with 60% going to LPs and 30% to GPs. We usually include a preferred return of 6% to 8%, depending on the deal.
Again, our goal is to refinance by year three, return 100% of capital, and then continue quarterly distributions until we sell.
We also include a performance hurdle. If the LP return hits around 12% to 14% IRR, the LP/GP split changes. Depending on the investment, it may become a 50/50 split or sometimes 45/55, meaning 45% to LPs and 55% to GPs.
In terms of communication, we provide institutional-grade reporting. We send monthly reports, and they are extremely detailed. They’re not just financial statements—they include a narrative explaining what happened operationally. We provide variance reports for any expense or revenue category that deviates more than 5% from budget.
Each month we also outline challenges and explain what we’re doing to address them. A lot of feedback we get from LPs is, “Wow, I never feel like I’m in the dark.” And that’s exactly the goal. Our reports are long — four to five pages — but that’s intentional. We’d rather over-communicate. If an LP feels everything is going smoothly, they don’t have to read every detail. But our philosophy is that more communication is better.
So I think I understand, but just to clarify: the difference between a syndication and a fund is that with a syndication there’s a specific project you’re raising money for, whereas with a fund you raise money first and then go find the deals.
Exactly.
And then, going back to something everyone asks: “What’s the risk? What could go wrong?” Give me some of the potential downsides or risks someone might face when investing in something like this.
The biggest risk is staffing. Labor is the largest risk for two reasons.
First, caregivers are not paid very much. That’s just the reality of the market today. A caregiver might earn $16 or $17 an hour, but the emotional and physical burden of caring for residents is significant. So we try to compete by offering better-than-market hourly rates and by creating career paths.
Caregivers can move into management roles or other positions within the community. We want them to see long-term opportunity.
We’ve also offered benefits like 401(k) plans, life insurance options, and other benefits depending on the market we’re in.
Our goal is to deliver benefits that are meaningful for the workforce in that specific local area while also positioning ourselves as one of the best employers in the market.
Another huge factor is culture, which is built by our operating partners. They are on-site training staff daily, providing coaching, and helping employees develop professionally.
If someone doesn’t want to remain a caregiver, we may help them transition into a med tech role or another position through training and tuition reimbursement.
So we do everything we can to retain staff.
Beyond staffing — which is really an industry-wide challenge — the second major risk is legal risk. Because we operate in a healthcare environment, there’s always the possibility of lawsuits.
To address that, we structure our syndications with multiple entities.
LP investors participate on the real estate side only, and there is a clear separation between ownership and operations.
There are lease agreements and other legal structures in place so that while revenue flows to LPs, they are not members of the operating entity.
That structure helps limit the risk they take on.
The primary risk LPs face is loss of principal, which is why we structure deals conservatively to minimize that risk as much as possible.
How do interest rates impact the properties or the opportunities? Because I think I saw a lot of activity when interest rates were lower. A lot of people were buying commercial real estate. Then all of a sudden interest rates spiked up, and the prices didn’t really come down that much relative to what the interest rates did. So it made the cost of operating these properties really expensive. They’ve started coming down a little bit, but how does that factor into how you’re leveraging, buying, or considering these types of properties?
Yeah. So two things on that.
First, we aim to be low leverage. We typically aim to be between 60% to 70% loan-to-value, instead of going as high as 75%. That’s one thing we do to protect ourselves.
The second thing we try to do is only go for fixed-rate debt. Our goal is that we’re not buying anything that’s variable. We don’t want the rate changing over time.
Even when we refinance, the goal is to get fixed-rate debt. And we haven’t run into this situation yet, but I think if we had to delay a refinance because we just weren’t able to get a fixed rate—which again is unlikely with plenty of lending partners out there who can provide fixed-rate financing—that would be a conversation we’d have with the LPs.
At that point, we would simply explain that it’s just not worth the risk.
What do you see next for the senior living sector? You mentioned earlier that there’s such a wide disparity between demand and supply. Is there someone coming in who’s going to bridge that gap? Are you planning to bridge that gap? Or what else is happening in the space?
We’re seeing a ton of activity from private equity and REITs, primarily buying up a lot of the larger portfolios. I think that’s going to continue.
Some of these companies have $2 billion annual acquisition goals, so I definitely think that trend will continue.
In terms of creating more supply, I would personally love to eventually develop and build ground-up senior living communities and create a campus-style environment.
The really difficult part is that the government is not incentivizing it. There aren’t any tax benefits.
On top of that, with immigration policies and the rising costs of labor and materials, everything has become more expensive than it was even a few years ago.
Just to give you some context: the cost of acquisition for the types of deals we look at is typically between $100,000 and $125,000 per unit. The cost to build is between $250,000 and $350,000 per unit. So there’s just such a large gap that right now it doesn’t make much sense to build. And that’s very difficult for families who are looking for these options.
I ask everyone this question: how do you see AI impacting your space? Does it ever get to the point where robots are providing care? Or are you mostly using it for analysis—identifying opportunities or improving operational efficiencies? I’m curious about how AI fits into what comes next.
Yeah. Definitely right now we’re using AI extensively for risk management and market analysis, as well as doing a lot of the initial vetting of opportunities.
For example, we’ll use it to help answer questions like: “Do we even want to be in this market?” That’s a lot of the surface-level work that AI can help with.
From an operational standpoint, we’re also seeing more and more AI around workflow automation.
We’ve started talking with our operators about how we can leverage automation through different SaaS platforms within their tech stack. The goal is to optimize operations.
For example, one benefit could be potentially reducing some back-office staffing — not all of it, of course — but also making sure that roles like the Executive Director or the Director of Sales and Marketing aren’t spending their time on administrative work. Instead, we want them out on the floor with families and residents, providing care and building relationships.
Ultimately, we want to create more time for care. Because the better the quality of care becomes, the higher our occupancy goes. And that drives revenue, which in turn drives returns for our investors.
I’m optimistic about AI overall. I think that at some point people might become comfortable with a humanoid robot helping care for them, but I don’t think we’re anywhere close to that yet.
One example from one of our communities: we experimented with a voice agent. Not a humanoid robot — just an AI-generated voice assistant. To me, it didn’t really sound like AI. But we had a lot of families respond with, “Who is this? I want to talk to a human.”
So we’re seeing that adoption can be challenging, especially with this demographic and their families. This is a very trust-driven environment and industry, so we would rather not rely on AI as our primary salesperson.
Alright Radhika, that’s all of the questions I have for you today. Thank you for taking the time to join me today and share this expertise. Before we close, where can listeners go to learn more about you and the work you’re doing at Relik Capital Group?
The best place to go is our website: relikcapitalgroup.com. We provide a lot of educational information there, including a ton of videos. I’m also very active on LinkedIn. Again, our stance is education first, investment second. So if anyone wants to talk or chat, I’m always happy to hop on a call.
Great. We’ll link to that in the resources section of the show notes. Thanks again, Radhika. And thank you to everyone who tuned into today’s episode. Don’t forget to follow The Agent of Wealth on the platform you listen from and leave us a review of the show. We are currently accepting new clients, if you’d like to schedule a 1-on-1 consultation with our advisors, please do so below.
Bautis Financial LLC is a registered investment advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.
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