Advice - Residential home leasing to assisted living company?

Question

Hi all,As a newer landlord I wanted to reach out and get some advice on a topic. I have a single dwelling home in Texas that is for rent. I was approached by an assisted living company to lease out. They would put two elderly clients in the home with 24-hour nurse coverage.My concern is I've never signed a lease to anything other than a family. This raised many questions and I wanted to see if anybody has experience or legal Vice in this field.  Some of the things that I am concerned about include things like:Since this is a single dwelling home am I allowed to least to a business that puts two roommates inside a home?  Normally I require tenants to carry renters insurance but in this particular place should I require or ask them for some type of additional insurance?  If I put them on a general lease that I use for all other properties would this be enough?  Would I be responsible for making things handicap accessible due to the circumstances?  As you can tell I'm a bit skeptical basically any insight would be greatly appreciated.

David D Painter · Answer

Call your insurance agent. I own a SFH used as a group home.  In 2005 my policy increased from about $600 a year to $10,000. It took lots and lots of looking to find a company that now charges about 2,000. This is still about double the cost of my other similar homes. There are lots of local regulations that will apply to zoning. You should inquire locally. You should be able to negotiate payment of any changes or improvements needed with your prospective tenant as these can be very costly.  It has worked out well for me. Good luck!

Gene Guarino · Answer

1- You can always have the tenant pay for the insurance if it is cost prohibitive.  $10,000 was outrageous.  The $2,000 is reasonable but still high.

2- require the tenant have "professional liability insurance" for the business

3- Have them name you (the entity that owns the property) as an "additional insured"

4- Charge them higher then the "fair market rent" because they will be making great income.

Using residential property as an Assisted Living home can be an incredible lucrative option.

Gene Guarino · Answer

The tenant isn't the residents that are in the home.

The tenant would be the entity that is operating the RAL business.

They would have to take care of that issue if it were to come about which is highly unlikely.

They have licensing and legal obligations to care for the residents and they wouldn't jeopardize that.

Gene

Al Boettger · Answer

Suggest you call the number for RALA in Gene's response.  Sorry to say he had not responded, as he passed last October.

Glenn McCrorey · Answer

@Marvin Phelps  I rent to 7 different companies that provide varying levels of assistance to individuals with special needs.  I lease to the company, not the individuals and get paid electronically.  There are lots of advantages such as low/no turnovers and vacancies.  If one individual moves out the company is responsible for the rent.  Insurance is no more than any other rental property but I make sure the company knows it's a rental.  I allow them to make modifications but don't pay for them myself.  Some companies even have their own maintenance people so you don't get nit noid maintenance calls.  Just saying I've had good experience with it but get other opinions.  In my town a "group home" has different rules but it's not a group home unless there are at least six tenants so it's completely different than the model of @Gene Guarino

Good luck and let me know if I can be of assistance.  That's what BP is all about.  The last 20 minutes of podcast 110 I talk about my model if you're interested.

Matt Fields · Answer

marvin

What did you decide to do?

Mosha Katz · Answer

Hi, is there anyone who does Residential ALF in new jersey?i have ALF in florida, and there is easy to get it done, but i did not see any help in new jersey , no consultant etc, who can help me please to open a small ALF in new jersey

John Clarken · Answer

Wow, that is sad to hear. Thanks for following up.

John Clarken · Answer

Hey Gene, thanks for the following responses on the thread above. The company that wants to rent from me with an assisted living home with has offered to either sign a lease individually (business owner) or through his company. Both with the intent to run this as a business.

My two questions:

Would I want this to be run through the business and not the individual for liability?

Where can I find a good commercial contract for a business (tenant) to owner covering this type of lease?

Justin Keller · Answer

Yes, that is  a better question Gene.  I see you listed some considerations at the top of this thread.  My main concern is what if the tenant does not perform/pay rent.  It seems like it would be difficult removing elderly residents from the property should I need to evict.  Thank you!

Advice - Residential home leasing to assisted living company?

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