anyone rent to tenants with cognitive disabilities?

Question

Has anyone been successful (i.e., made the numbers work) renting to adults with cognitive or developmental disabilities? These are individuals who are high-functioning but are probably in a program of some sort, and have caseworkers who look in on them periodically. They are renting rooms in a house or apartment and sharing common space. Perhaps some or all are able to work. Not talking about a staffed halfway house or assisted living--at least I think I'm not. Would like to hear your experiences doing or trying to do this. I have a 2-unit in Baltimore that I'm thinking of upgrading for this purpose.

Many thanks,

Nancy Roth

Many thanks,

Nancy Roth

Glenn McCrorey · Answer

@Greg S. There are several reasons to rent to these companies.  I do not have to show the house to prospective tenants, no tenant screening, the rents come to my account electronically from the non profit, some even have maintenance people so I don't get bothered with minor repairs, and exceptionally low vacancy.  The first one I bought was in March of 2008 and have not had one day of vacancy since.  We have close to 40 that we rent to 7 different companies and I have only had one instance where they moved out.  The lesson from that was, don't buy in a small town because it's more difficult for the companies to back fill a vacancy.  The rents are in line with the market rate but I make my money on no vacancies or turnover.

@Nancy Roth  In my town, you can only have 5 unrelated people in a house.  I do have a few 5 person programs but most are 3 or 4.  I have one that has only two individuals but they have severe disabilities and require a great deal of constant care (this is the exception).  In  most "programs" as they are called the folks go somewhere during the day, they might take the bus or work at the grocery store, etc.  Others they are there most of the time except when the staff take them to appointments and activities.  There are no special requirements from the city to rent to these people or companies, just the normal registration.  In my town, a "group home" is defined as 6 or more individuals and that falls under separate rules, regulations, etc.  I do not have any of those.

Glenn McCrorey · Answer

@Chelle Knijnenburg  google "community based living services" and your town.  The Mentor Network is a big one across many states.  Some are local and just run a small number of programs like 6.

Mike Cumbie · Answer

No, but I know where there are a bunch of "low functioning" people in Washington DC....

Bada Bing!!

Thomas S. · Answer

Sounds like partnering in some from with the government or social agencies is more intrusive to a independent investor than it is worth.

To each their own but obviously there are draw backs or more investors would be doing it. Some what like housing welfare recipients, not appealing to most investors as too management intensive.

Nancy Roth · Answer

Hi, everyone, thanks so much for responding. To clarify one point, although I live in Washington DC, my rental business is all in Baltimore City (hope to expand to County). I grew up there and know it very well, and the market is much better suited to rentals than we have in DC.

Glenn, your model is exactly what I'm trying to achieve. I'm interested to know if your group houses must be staffed or if the residents are allowed to live independently with case workers visiting to keep them on track. I'm finding in Maryland the practice seems to be keeping the number of occupants down to 3 or at most 4 per household. Do you have those limits in Iowa?

Also, did your houses have to go through a licensing process by the state? In Maryland that is one path to becoming a housing supplier for special-needs tenants, but I'd rather not do that. Another path seems to be partnering with/subcontracting to a nonprofit that already has a license. I'm exploring that now, and trying to identify the right partner.

You are exactly right that it's better for the rent to be paid or supplemented by Medicaid, because these folks may be able to work but don't have much earning power and cannot pay market rates. One more question: are your tenants paying by the room, or is the agency paying overall a single price for the unit? I'm so far finding nonprofits want to pay for the unit, which is less lucrative.

Jim, yes, there is legal compliance with this, but the whole rental business, in Baltimore City especially, has a lot of legal compliance issues you have to be mindful of. Of course housing for special-needs tenants has to be compliant with Fair Housing but so does everything else. As for ADA compliance, it depends whether the tenants have physical challenges. With this two-unit I expect to make the lower unit wheelchair accessible but the upper-level unit is better suited to able-bodied residents, as there is no elevator. At this point I don't see why I should go to the expense of making it accessible although it's not problem to enhance safety with grab bars, etc.

Greg, the goal of my business is to achieve a stable, predictable passive income flow. There is such a dearth of housing for this population in the Baltimore area that when you get someone with physical disabilities or other challenges moved in, and their support systems are set up, they are not going anywhere. So they constitute an unusually stable source of rental income. Plus there is a pent-up market for this kind of housing, so you can replicate this kind of rental unit almost endlessly. Another upside, as Glenn mentions, is there is an intermediary who is responsible to see the rent gets paid and the maintenance done, which is another stabilizing factor in the income flow. It's not particularly sexy, and not that many in the business are drawn to it. In a way that's why I'm interested in exploring it.

Many thanks to all,

Nancy Roth

Account Closed · Answer

Lots of legal compliance but could be lucrative. Be sure to comply with the American with Disabilities Act (ADA) and Fair Housing laws. There are likely HUD regulations as well.

Deanna McCormick · Answer

Thomas S.

I'd do upgrades to match or slightly exceed your similar competition and not limit yourself to one applicant pool. I think this will meet or exceed the potential for your business and give you better overall results.

Chelle Knijnenburg · Answer

@Nancy Roth and @Glenn McCrorey

Thanks to you both!

Nancy Roth · Answer

@Chelle Knijnenburg There are a few national organizations (Catholic Charities for example) that provide these services, but most are local nonprofits. So the names of the organizations in Cedar Rapids may mean nothing in Colleyville, Texas. I went online to the Maryland Developmental Disabilities Administration and looked up their contractors. There were maybe 200. I went to all their websites and pared it down to about 40-45 based on what I could discern about the services they offer. I have been calling them one by one to tell them about my house and ask about their programs. So far have not hit the right one. There may not be a right one, but if there is, I will find it.

Because the funds for this kind of housing comes through HUD, and goes to the states, and the states contract out locally, you have to look in the state where you want to do business to identify the right partner. So you would start in Texas, find the department in the state government that deals with people with disabilities, and go from there.

Chelle Knijnenburg · Answer

Is it permissible to say the names of these companies, non-profits and government programs? I would like to research further.  If it is not permissible, can you tell which terminology to google?

Thanks

anyone rent to tenants with cognitive disabilities?

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