Case Study · Florida · Assisted Living & Memory Care · HUD 232
Assisted Living Feasibility Study, Florida — A HUD 232 Worked Case
This is how our independent feasibility study company and senior housing feasibility consultant team analyzed a new assisted living and memory care community underwritten to an FHA Section 232 credit, from age-qualified demand and penetration through the debt-service coverage a HUD lender must document. It is a representative, anonymized worked example of the methodology — not a specific client deal — set in a fast-growing retiree submarket on Florida's Gulf coast.
A new care community on Florida's retiree coast.
A sponsor came to our feasibility study company with a ground-up assisted living and memory care community and a two-stage capital plan: a bank construction loan to build and lease it, then an FHA Section 232 permanent loan to take out the bank at stabilization. Both lenders needed the projected cash flow independently tested before they would commit. The subject is a roughly 90-unit community — 66 assisted living units and 24 secured memory care units, about 85,000 square feet on an infill parcel — in a high-growth retiree submarket on Florida's Gulf coast.
Because assisted living is a licensed operating business rather than a passive real-estate play, the lender's question is not “what is the dirt worth” but “can this specific community fill, at this acuity mix and rate, and cover this specific loan.”6 A sale transfers the real estate plus FF&E plus the operating business — the license, the assembled workforce, and other intangible value — so the going-concern basis governs the appraisal and the underwriting.18 Our scope as the senior housing feasibility consultant was the independent demand, penetration, competition, and debt-service analysis that supports that credit.
Representative and anonymized. Every figure below is illustrative of a typical engagement of this type; the community, submarket, and parties are composited, not a real named borrower, address, or completed transaction.
Age-qualified, income-qualified, need-qualified demand.
The demand read starts with the qualified elderly population, not a share of the whole metro. It is built in three screens — age, income, and need — then netted against the competitive supply the community will actually share the market with.
The single most common demand error in senior housing is applying a national or metro penetration rate to a primary market area without qualifying the elderly population by both age and income.10 Penetration averaged roughly 10.2 percent of the 80-plus population across the top 140 markets in 2023, and the qualified base is growing fast: the U.S. 80-plus population is projected to roughly double from about 13 million in 2020 to about 27 million by 2040, a wave that lands early and hard on Florida's retiree coast.10 Supply has moved the other way: units under construction nationally fell to roughly 17,000 by the third quarter of 2025, the fewest since 2012, and NIC projects about 806,000 additional units are needed by 2030 just to hold current penetration.23 Against that backdrop, the subject's primary market area holds about 16,500 residents aged 75 and older, growing near 4 percent a year on retiree in-migration. Screened for the households that can afford $5,000 to $7,500 a month of private-pay care, roughly 9,000 remain income-qualified; a need-based penetration near 10 percent implies on the order of 900 units of latent assisted living and memory care demand in the trade area.10 Set against roughly 586 competitive licensed units running near 91 percent occupied, the market clears with an unmet gap the 90-unit subject fills on a graded lease-up rather than by splitting a saturated market.1
| Demand driver | Basis | Supported figure |
|---|---|---|
| Age-qualified population (75+ in PMA) | ~16,500 residents, growing ~4%/yr on retiree in-migration10 | Rising qualified base |
| Income-qualified households | Can afford ~$5,000–$7,500/mo private pay | ≈ 9,000 |
| Need-based latent demand | ~10% AL/MC penetration of qualified 75+/80+10 | ≈ 900 units |
| Competitive licensed supply (PMA) | ~586 units, ~91% occupied1 | ≈ 53 units available |
| Subject capture at stabilization | 66 AL + 24 MC at ~90% occupancy | ≈ 81 occupied units |
Penetration and qualified-population logic grounded in Plante Moran / Census projections and NIC MAP occupancy; see sources 1 and 10. Figures are illustrative of the engagement type.
A tight comp set, with one new entrant in lease-up.
Five stabilized communities and one lease-up property make up the surveyed competitive set within about nine miles. Occupancy across the standing set runs near 91 percent, and because assisted living is not Certificate-of-Need gated in Florida, supply is market-driven and the pipeline must be scanned, not assumed away.
| Community | Care type | Licensed units | Distance | Read |
|---|---|---|---|---|
| Community A | AL + MC | 110 | 3.2 mi | ~94% occ, memory-care waitlist; dated plant |
| Community B | AL only | 88 | 4.1 mi | ~90% occ; no secured memory care |
| Community C | AL + MC | 74 | 5.5 mi | ~88% occ; rate leader, older building |
| Community D | MC standalone | 48 | 6.0 mi | ~92% occ; small, effectively full |
| Community E | IL + AL (entrance-fee) | 130 | 7.2 mi | ~91% occ; different buyer, care overlaps |
| Community F | AL + MC | 96 | 8.8 mi | Opened 2025, in lease-up ~70% — the one new competitor |
Competitive set surveyed for the engagement; anonymized. Announced and permitted communities were scanned, not just the standing set, because Florida does not gate assisted living supply through Certificate of Need. See sources 1 and 13.
The standing set is nearly full: the AL-plus-MC communities cluster near 90 percent and the two memory-care operators are effectively at capacity, consistent with the supply-constrained national picture — NIC MAP Primary Market senior housing occupancy reached 89.5 percent in the first quarter of 2026, its nineteenth consecutive quarterly gain, with assisted living at 87.9 percent.1 The one genuine risk to the capture forecast is Community F, a 2025 delivery still filling, and a rigorous study does not wave it away: because Florida repealed Certificate of Need for hospitals and does not require it for assisted living, supply is set by the market rather than a permit gate, so the pipeline scan is part of the demand test, not an afterthought.13 Even absorbing that new supply, absorption has outrun inventory growth nationally for more than seventeen consecutive quarters, roughly 31 units filled for every 10 opened, which is why the model credits the subject with a defensible graded fill rather than an instant lease-up.9
Florida: strong demand, but underwrite the submarket and the insurance.
The state backdrop is a powerful tailwind for needs-based senior housing, tempered by two Florida-specific realities a national assumption misses: county-level demographic divergence and the nation's most expensive property insurance.
Florida held 23,372,215 residents as of July 2024 and had four of the nation's five fastest-growing metros in the 2022–2023 vintage, led by Wildwood–The Villages.15 But the growth is not uniform, and that is the underwriting point: by 2024–2025 Miami-Dade lost 10,115 residents and Pinellas lost 11,834, even as the retiree coast and interior kept climbing.15 A statewide capture rate is analytically useless here; a defensible Florida study is built at the submarket level, and senior-housing occupancy proves the point — Tampa runs above 90 percent, among the top three markets nationally, while Miami / South Florida sits near 86.2 percent with lingering oversupply risk.16 The subject's Gulf-coast retiree submarket reads to the tight end of that range.
Two Florida factors reshape the model. First, supply: Florida does not gate assisted living through Certificate of Need — CON was repealed for general hospitals effective July 1, 2019 and never applied to assisted living — so AL and memory care face market-driven supply and elevated oversupply risk, while skilled nursing, still CON-gated under the Agency for Health Care Administration, does not.13 Second, cost: Florida property insurance runs roughly 2.8 times the U.S. average and premiums rose 49.5 percent from 2020 to 2025, so a national expense assumption materially understates the NOI drag on a Florida community, and commercial named-storm deductibles of 2 to 10 percent of insured value must be modeled as first-dollar risk.14 The market has stabilized after SB 2-A — Citizens fell to about 395,144 policies in early January 2026 from roughly 1.42 million at its October 2023 peak, and the state approved an 8.7 percent average Citizens rate cut for 2026 — but insurance still has to be carried at current Florida carrier quotes, not a mainland default.14
Why the submarket supports the community.
Age structure, adult-child proximity, and income all point the same direction, and the site converts that demand into a fillable, licensable community.
The trade area carries an unusually deep 75-plus cohort by national standards — the product of decades of retiree in-migration — and it is still growing near 4 percent a year, so trailing Census counts understate the qualified base, a distortion a careful study corrects for rather than extrapolates.15 Assisted living and memory care are needs-driven rather than lifestyle purchases: the decision is usually triggered by an acute event and made within a tight radius of family, so the primary market area is drawn to a realistic drive time and screened for the income band that can sustain private-pay rates, not the whole county.10
The site does the rest. The subject occupies an infill parcel with residential density and a hospital and medical-office cluster within a short drive — the referral and adult-child catchment that feeds needs-based census. The building program pairs 66 assisted living units with a 24-unit secured memory care neighborhood, so the community captures both the base assisted living demand and the higher-acuity, higher-rate memory care demand that the standing competitors are already turning away.6 That secured memory care wing is why the model can credit a richer blended rate than an assisted-living-only building, provided it is underwritten to memory-care staffing and economics rather than a blended assisted-living assumption.6
Bank construction, HUD 232 permanent takeout.
Total project cost lands at $31.5 million, about $350,000 per unit.12 A ground-up care community does not go straight to HUD: it is built and leased on a bank construction loan, then refinanced into an FHA Section 232 permanent loan once it reaches the coverage HUD requires.
| Cost component | Amount |
|---|---|
| Land (infill retiree-submarket parcel) | $2.8M |
| Site work & utilities | $1.9M |
| Building shell & core (~85,000 sf) | $17.3M |
| FF&E & secured memory-care build-out | $3.2M |
| Soft costs (A&E, permits, HUD/lender fees, legal) | $2.6M |
| Financing costs & construction interest reserve | $1.9M |
| Working capital & lease-up operating reserve | $1.8M |
| Total project cost | $31.5M |
Per-unit cost (~$350k) is consistent with ASHA construction data of ~$317,400/unit ($333/sf) plus a Florida and secured-memory-care premium; see source 12.
| Item | Figure |
|---|---|
| Bank construction loan (65% loan-to-cost) | $20.5M |
| Sponsor equity injection (35%) | $11.0M |
| Total project cost | $31.5M |
| Construction coverage / interest reserve | 1.20x–1.40x cost test; reserve funds debt service through lease-up17 |
| HUD 232 permanent loan (takeout) | $21.0M |
| HUD 232 term / amortization | 35-year fully amortizing, non-recourse8 |
| Illustrative rate (note + MIP) | ~6.0% |
| HUD 232 annual debt service | ≈ $1.44M |
Construction terms per conventional bank-construction convention; permanent terms per HUD-FHA Section 232 (1.45x DSCR, ~80% LTV, 35-year, non-recourse). See sources 8 and 17.
The two-stage structure is the standard route for a ground-up care community, and each stage asks a different question. The bank construction loan is sized on cost and on a pre-lease and absorption analysis, with an interest reserve funding debt service through the lease-up ramp so the deal does not depend on census it does not yet have.17 The FHA Section 232 permanent loan is the takeout: administered by HUD's Office of Residential Care Facilities through the LEAN methodology, it runs 35-year fully amortizing and non-recourse, up to roughly 80 percent loan-to-value, and requires a minimum 1.45x debt-service coverage ratio for market-rate assisted living, state licensure with continuous protective oversight, and an FHA and MAP-approved lender with a MAP-approved healthcare underwriter.8 Critically, the takeout is sized to the lesser of the 80 percent LTV ceiling and the 1.45x coverage floor — and here, as in most higher-rate deals, coverage binds first: the $21.0 million HUD loan sits near 62 percent of the community's stabilized going-concern value, comfortably inside the 80 percent line.17 The study exists to support exactly that number: the coverage the lender must document, tested against an independent read of demand rather than the sponsor's own projection.
Feasible and bankable, on coverage HUD can document.
The stabilized model builds revenue from two care lines — assisted living and memory care — nets a going-concern operating expense in which labor is the largest line, and carries the coverage to the HUD 232 floor on a graded fill-up.
| Line | Basis | Amount |
|---|---|---|
| Assisted living revenue | 66 units × ~90% occ × ~$6,200/mo (base + care)4 | ≈ $4.42M |
| Memory care revenue | 24 units × ~90% occ × ~$8,000/mo (higher acuity)4 | ≈ $2.07M |
| Total resident revenue | Acuity-blended, ~90% stabilized occupancy | ≈ $6.49M |
| Operating expenses | Labor ~55% of opex; total opex ~68% of revenue6 | ≈ ($4.41M) |
| Net operating income (NOI) | Going-concern NOI, ~32% margin | ≈ $2.08M |
Rates grounded in NIC MAP average asking rent above $5,650/mo and the Genworth/CareScout 2025 median of $6,200/mo, with memory care at a higher acuity-driven rate; expense ratio and labor share per Janover/MMCG and PHI. See sources 4, 5, and 6.
| Year | Stage | NOI | Debt-service basis | DSCR |
|---|---|---|---|---|
| Year 1 | Fill-up (pre-stabilized) | ~$0.65M | Interest reserve–funded | n/m* |
| Year 2 | Building | ~$1.65M | HUD 232 ~$1.44M | 1.15 |
| Year 3 | Stabilized | ~$2.08M | HUD 232 ~$1.44M | 1.45 |
*Year 1 is the lease-up ramp; the construction interest reserve funds debt service until the community reaches its supportable census, so permanent coverage is measured from stabilization. DSCR is NOI divided by the period debt-service obligation. See source 8 for the 1.45x HUD 232 minimum.
The stabilized 1.45x coverage is the figure the HUD lender documents, and it sits exactly at the Section 232 floor for market-rate assisted living.8 The ramp to get there is deliberately graded, because assisted living and memory care lease up slowly and on need: industry practice models 18 to 30 months to stabilization, and a pro forma that fills a 90-unit community in twelve months without a comparable-property basis is a red flag.9 Short length of stay compounds the fill: NCAL data put average assisted living length of stay near 22 months, with nearly 40 percent of residents leaving within the first year, so the model carries an ongoing re-lease burden rather than a one-time lease-up.7 Year 1 is the fill-up year — census is building, staffing is carried ahead of it, and the construction interest reserve funds debt service so coverage is not yet measured on permanent debt. By Year 2 the community covers the HUD payment at 1.15x, and by Year 3 it stabilizes near 90 percent occupancy and reaches 1.45x. Modeling stabilized margins in Year 1, or underwriting the memory-care wing to assisted-living labor ratios, are two of the most common ways these pro formas fail review; the model here does neither.6
On the equity side, the $11.0 million injection earns growing levered free cash flow — roughly $0.55 million a year once stabilized and net of a replacement reserve, about a 5 percent cash-on-cash yield that builds as NOI grows near 3 percent a year.1 The exit is valued on a going-concern basis, not a leased-fee cap rate: capitalizing a Year-10 stabilized NOI near $2.56 million at a going-concern rate around 6.25 percent — consistent with the JLL average senior-housing cap rate of 6.2 percent in the fourth quarter of 2025 — implies a gross value near $40.9 million, and roughly $21 million of net equity after selling costs and the outstanding HUD balance.11 The intangible, going-concern value is real but conditional: if the community goes dark the license and workforce evaporate and the collateral is worth far less, which is why HUD, agency, and SBA lenders treat operator quality and census stability as credit inputs.18 Blending the stabilized cash flow with that exit, the illustrative levered equity IRR is about 16 percent over a 10-year hold.
Verdict: financially feasible and bankable. On independently derived demand, a stabilized 1.45x DSCR at the HUD 232 floor, and a ~16% levered equity IRR, the projections support the bank construction loan and its FHA Section 232 permanent takeout.
Independent demand, penetration, competition, and DSCR stress.
The engagement was scoped the way a HUD credit reviewer reads it. As an independent feasibility consultant, our role is to test the sponsor's projection against the market, not to restate it — the value of the deliverable is precisely that it carries no stake in the outcome. We derived demand from an age-, income-, and need-qualified primary market area and a defensible penetration rate, not a share of the whole county, then netted it against a surveyed competitive set and a scan of the market-driven Florida pipeline. Revenue was modeled on acuity — a base room rate plus care fees, with the memory-care wing on memory-care economics — and the operating model was built with labor, the largest single expense line, staffed position by position at documented local wages.5
The coverage analysis was then stress-tested. We ran the debt-service coverage against lease-up pace, achievable rate, and labor re-escalation — the three variables a care community is most exposed to — to confirm the HUD 232 credit still holds when census lags or wages climb. One scope boundary is worth stating plainly: as the feasibility consultant we reference, but do not perform, the going-concern appraisal, the Project Capital Needs Assessment, and the Phase I environmental site assessment that complete the Section 232 third-party package; each is a separate professional's engagement running in parallel to the study.8 That combination — independent demand, penetration, competition, and a stressed DSCR — is what lets the lender rely on the file.
Representative engagement
This is an anonymized, illustrative worked example of our methodology, built on market data current to 2026; figures are representative of a typical engagement of this type and do not depict a specific client, site, or completed transaction.
Underwriting a Florida assisted living community for HUD 232? Start with the feasibility study.
Feasibility Study Company prepares independent assisted living and memory care feasibility and market studies for HUD-FHA Section 232, SBA, agency, and bank construction credits, built to the coverage standard your lender must document. A methodology briefing walks through the demand, penetration, competition, and DSCR analysis behind a case like this one, calibrated to your submarket, acuity mix, and capital stack.
Request a methodology briefingData sources and dates.
The deal figures are illustrative of the engagement type; the market data that grounds each dimension is real and sourced, drawn from our standing Florida, Assisted Living & Memory Care, and Conventional & Institutional analyses and the primary authorities they cite.
- NIC and NIC MAP Vision press release (April 23, 2026): Q1 2026 Primary Market senior housing occupancy 89.5% (19th consecutive quarterly gain); independent living above 91%, assisted living 87.9%; occupied units a record 637,000; same-store asking-rent growth ~4.3% (AL 4.4%) in Q3 2025 and average asking rent above $5,650 per month. As compiled in the firm's Assisted Living & Memory Care analysis.
- NIC MAP Vision construction and inventory data (2025–2026): units under construction ~17,000 by Q3 2025 (fewest since 2012); quarterly starts ~1,076 units in Q1 2025 (lowest since 2009); year-over-year inventory growth a record-low 0.4% in Q1 2026.
- NIC MAP Vision Senior Housing Outlook (June 26, 2024): roughly 549,000 additional units needed by 2028 and 806,000 by 2030 to hold current penetration; a 550,000-unit shortfall and $275 billion investment shortage by 2030.
- Genworth and CareScout Cost of Care Survey: 2024 survey national median assisted living cost $5,900 per month, up 10%; 2025 survey national median $6,200 per month; memory care underwritten at a higher acuity-driven rate. NIC MAP average asking rent above $5,650 per month (Q3 2025).
- PHI, Direct Care Workers in the United States: Key Facts 2025 (June 2025; BLS OEWS analysis): direct-care workforce median wage $17.36 per hour in 2024; turnover routinely cited at 40 to 80 percent; workforce ~5.4 million in 2024.
- Janover Pro and MMCG (2025): labor roughly 55 percent of assisted living and memory-care operating expense; stabilized AL/MC operating-expense ratios 55–70 percent of revenue versus 35–45 percent for stabilized multifamily; memory-care staffing ratios (~1 caregiver per 5–6 residents versus ~1 per 8 in AL) and margin compression.
- NCAL and Senior Housing News operator survey (March 2025): average assisted living length of stay near 22 months; roughly 18–28 months in AL and 18 months to three years in memory care; nearly 40 percent of AL residents leave within the first year.
- U.S. Department of Housing and Urban Development, Handbook 4232.1 and Section 232 program materials (Office of Residential Care Facilities, LEAN): minimum 1.45x DSCR for market-rate assisted living; ~80% LTV; 35-year fully amortizing, non-recourse; licensure with continuous protective oversight; MAP-approved lender and healthcare underwriter; third-party report set (market study, going-concern appraisal, PCNA, Phase I ESA).
- NIC and Senior Housing News (2025): net absorption outpaced new openings for 17-plus consecutive quarters, roughly 31 units absorbed per 10 opened; average operating margins above 25 percent in mid-2025 (highest since 2018); industry practice models 18 to 30 months to stabilization.
- Plante Moran (2024), citing Census projections: penetration averaged roughly 10.2 percent of the 80+ population across the top 140 markets in 2023; the U.S. 80+ population projected to roughly double from about 13 million (2020) to about 27 million (2040). Qualified-population demand method (age, income, and need screens).
- JLL, 2026 Seniors Housing & Care Investor Survey (March 12, 2026): average Q4 2025 cap rate 6.2 percent; rolling four-quarter transaction volume just over $24 billion by year-end 2025, the highest since 2015. CBRE 17th U.S. Senior Housing & Care Investor Survey (late October 2025): cap rates fell 17 basis points over six months, assisted living down 19.
- ASHA / State of Seniors Housing and The Weitz Company construction-cost briefs (early 2026): total development cost ~$317,400 per unit ($333 per square foot), up 17.8 percent since 2020; assisted living construction $280–$452 per square foot by tier.
- Florida Agency for Health Care Administration and Florida Statutes Chapter 408, Part I: Certificate of Need repealed for general hospitals effective July 1, 2019 (HB 21) and for specialty hospitals effective July 1, 2021; assisted living and ambulatory surgery centers are not CON-gated (market-driven supply, elevated oversupply risk); CON retained for skilled-nursing facilities, hospices, and ICF/DD. As compiled in the firm's Florida market analysis.
- Florida property-insurance data (2025–2026): Florida home insurance roughly 2.8 times the U.S. average, premiums up 49.5 percent 2020–2025; SB 2-A (signed December 16, 2022) stabilization — Citizens fell to 395,144 policies in early January 2026 from about 1.42 million at its October 2023 peak, with an approved 8.7 percent average Citizens rate cut for 2026; commercial named-storm deductibles of 2 to 10 percent of insured value modeled as first-dollar risk.
- U.S. Census Bureau, Vintage 2024 Population Estimates (Florida population 23,372,215 as of July 1, 2024); U.S. Census Vintage 2023 fastest-growing metros (four of the nation's five in Florida, led by Wildwood–The Villages); Florida Phoenix county population change 2024–2025 (March 2026): Miami-Dade −10,115, Pinellas −11,834.
- NIC MAP Vision senior housing occupancy (January 2025 and April 2026 releases): Tampa above 90 percent (among the top three occupancy markets nationally), Miami / South Florida near 86.2 percent with lingering oversupply risk. U.S. Small Business Administration: Florida ranks among the top three states nationally in SBA 7(a) dollar volume, served by two district offices spanning 67 counties.
- Conventional and bank-construction underwriting convention (CBRE Q4 2025 Multifamily Underwriting Survey and lender coverage conventions): bank construction sized on cost and a pre-lease/absorption analysis at ~1.20x–1.40x, with an interest reserve funding debt service through lease-up; permanent loan sized to the most restrictive of LTV, DSCR, and debt yield, so coverage frequently binds before leverage; a construction loan with a HUD or agency takeout is built to the takeout's standard from the outset.
- Appraisal Institute, The Appraisal of Real Estate: going-concern and business-enterprise-value method allocating the total assets of the business among real property, tangible personal property (FF&E), and intangible/business value; going-concern value can far exceed the underlying real estate, and if a facility goes dark the intangible value evaporates and the collateral may be worth far less.