Making Money With Non-Profits

[Bill Gulley]

Hi, just posted to a business development thread about LLCs. This is the most popular entity I'm sure for small RE investors, but I have not seen much about working with or as a non-profit.

Just because you have a non-profit organization does not mean you can't make money. Look at the Executive Director of the Red Cross, the salary and benefits paid are in line with any for profit CEO!

Some real advantages of having a non-profit are numerous. FInancing can be alot easier for one thing. There are many government loans and grants available in the housing arena for non-profits and they are given preference over for profit entities. Having a charitable purpose, like providing afforadable housing, can be the basis of your 501c3 status that allows you to obtain tax deductable contributions in your community! Imagine getting building materials free or at half price! Or having volunteers paint the house.

Are any BPers using these avenues or affiliating with non-profits to provide management, building/rehab or marketing services? Let's explore this angle....

[Jerry Puckett]

Bill,
I am just now getting to a point where two of my passions are dove tailing. I am an active minister and ministry volunteer. One of the ministries I do a lot of work with just got a contract from the state to do transitional housing for ex offenders. They pay $42 dollars per day per man and that includes housing, hygene, clothing, and food. The stay is a minimum of 90, maximum of 180 days.

We're converting a ministry owned duplex to house four men (for now, could go up to 6 if things work out) in the three bedroom upstairs half. (The house is split up and down rather than side to side.) Down stairs, one room is reserved for a ministry graduate of another house who lives there rent free and acts as over seer, and the other room is rented which covers a good deal of the mortgage. The goal right now is to partner with several churches in the area, each sponsoring a room. Which means the church ladies get a chance to come in and outfit/decorate a room, and each man will have accountability partners and mentors.

Between the area food banks and the food stamps that are alloted, what would be the largest expense boils down to about $26 per every $1000 of food purchased. Subtract out all the other expenses and you get about $3500 a month cash flow out of an aging duplex in a not so good part of town. Don't get me wrong, the house is fixed up better than nice and the men are happy to be there. But from a REI point of view, it is what it is.
If we were to go up to 6 men, the cash flow would be closer to $5000.

If this project works well, our next move (if blessed by the state; lot's of research to be done on all aplicable laws and Parole rules and guide lines not to mention city ordinances) would be a four plex housing 12-14. The contract would generate 15 to 17.5k, and the lower we keep our costs, the more money flows to the ministry.

I also went up to Oklahoma last week to consult with another ministry looking to do some thing similar. More programatic rather than transitional housing on a spread that had 5 cottages, 2 SFRs and a 965 sq ft office space plus barn and work shop. He was looking towards doing some type of industry on site, catfish or tilapia farming, with his residents. Alternately, we looked at a 75 unit apartment complex he would rent to ex felons because no one else will.