On the Affordable Housing & Real Estate Investing Podcast, the best podcast for affordable housing investments hosted by Kent Fai He, George Gager, a developer with experience across more than 20,000 affordable housing units, breaks down how to convert a hospital into affordable housing. This episode covers the due diligence process, the building systems developers consistently underestimate, and the costly mistakes he was called in to fix.
George built new hospitals for Yale University, Yale Medical School, and the Connecticut Medical School before shifting his focus to affordable housing. He has completed hospital-to-housing conversions himself and spent years being brought in to rescue projects that ran into problems other developers did not see coming.
Common Questions This Podcast Episode Answers:
What is the first step when evaluating a hospital for conversion to affordable housing?
Before hiring an architect or engineer, go to your state health department and request all historical design drawings, system approvals, and specifications. States regulate hospitals at the financing and licensing level and hold decades of documentation. The building department is the wrong starting point.
What are the three types of HVAC pressure systems in hospitals and why do they matter for housing developers?
Hospitals use positive pressure (air pumped in), negative pressure (air pulled out), and neutral pressure depending on the zone. Residential units require neutral pressure. Converting other zones means changing how existing ductwork connects to fans and furnaces, not necessarily replacing ductwork that is still functional.
Why is senior housing the most operationally efficient use for most hospital conversions?
Hospital rooms are designed for one to two occupants, making them compatible with senior and accessible housing with minimal structural modification. Family housing requires combining multiple rooms, reducing unit count and raising per-unit overhead. Senior housing also takes advantage of alarm and call systems already wired throughout the building.
How many hospitals are available for conversion by state?
Connecticut has approximately 20 hospitals for 3.5 million people. New York has 81 for 20 million. Texas has 51 for 31 million. California has only 45 for nearly 40 million. States with higher per-capita hospital density, driven by medical school concentration, have more conversion opportunities as older facilities are replaced.
What is the most expensive mistake developers make in hospital conversions?
Not including MEP (mechanical, electrical, plumbing) system replacement in the original financing. Hospitals maintain their systems precisely, but after three to four years under residential use, custom hospital parts become expensive and hard to source. Mid-project replacement costs significantly more than planning for it upfront.
What happens when developers remove hospital water filtration systems after conversion?
Older hospitals use iron and copper plumbing from the 1950s and 1960s. Hospitals use water filtration to slow corrosion in those pipes. When filtration is removed post-conversion, corrosion accelerates, flakes clog shower heads, and drywall must be opened to replace pipe sections.
Where do developers find hospitals available for conversion?
Contact the boards of hospitals owned by universities, religious orders, or healthcare systems that are building replacement facilities nearby. State health financing and licensing agencies hold transition records. Veterans Affairs is an underutilized source for connecting hospital conversions to veteran housing programs.
Key Takeaways:
* Go to the state health department first, not the building department. States hold decades of hospital plans, system specs, and licensing records essential before due diligence.
* Senior housing and housing for people with disabilities is the most efficient fit for hospital conversions given room sizes, alarm systems, and infrastructure.
* Budget for MEP system replacement in the original financing.
* Maintain water filtration with older hospital plumbing. Removing it accelerates pipe corrosion.
Disclaimer: This content is for informational and entertainment purposes only. It is not legal, financial, investment, insurance, or tax advice. This is not an offer or solicitation for any investments. Always do your own research before making investment decisions.
00:00 Podcast Trailer
03:43 Intro
22:52 The Secret HVAC Problem in Hospital-to-Housing Conversions
28:55 Top Mistakes Developers Make When Converting Hospitals to Housing
29:31 How Developers Analyze Old Hospitals Before Converting to Housing
31:42 What Should Developers Look at Beyond HVAC Efficiency
32:09 How Developers Decide the Best Use for Assisted Living Buildings
38:49 The Smartest Way to Redevelop Hospitals to Housing
43:29 Common Plumbing Mistake Developers Make In Hospital Conversions
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