Renting to an LLC as a halfway house

[Jon A.]

Hello all, 

I have been lurking for awhile on bigger pockets and this is my first post. I have a duplex in downtown Asheville, NC that I have owned for 10 years and recently finished rehabbing the upstairs part of it and have it for rent. My price is a little high and the neighborhood is a little rough. There are a couple low income housing complexes in the area that keep it somewhat "transient". I have never had a problem renting it but the rents have always been on the cheap side. The downstairs will be vacant at the end of March and that will leave both units empty. The downstairs still has old paneling on the walls and this house was built in 1909. The upstairs looks great but I am not allowing pets at this time in the upstairs apt and I am trying to get a better caliber of tenant than I have previously worked with, hence the higher rent price. 

I have been approached by a for profit company that would like to rent the whole house as a halfway house for substance abuse. I am curious if anyone has any experience renting to an LLC and also if anyone has been down this path. I have spoken to an acquaintance that has gone through a program like this and has several years clean. He simply said that the halfway house he was involved in saved his life. I like the idea of helping out a community that I have lived in for 20 years and as you can imagine, "fair market rent" in this city is a very hot topic with many tenants that have a retaliatory attitude towards landlords. Drug abuse in this city is a growing problem and I don't really see a need for this type of housing disappearing any time soon.

Apparently they would put two people in each bedroom and have a live in, full time, house manager. From what I understand, the clients are paying them for a service and not an actual "tenancy". Of course, they have a zero tolerance policy for drugs and alcohol and if the client violates it they are immediately removed. The clients leave the house every day at 10:00 am and after 9:30 pm are quiet hours. I am meeting with them tomorrow to show them the downstairs unit and really am not sure how to proceed. It sounds like they would be very invested in the property and are willing to obviously pay higher than market value for rent. 

Has anyone done this before as  landlord and what are the pros and cons? I have found a few threads on this forum and a few other places but generally speaking I am mostly reading horror stories about half way houses for people coming out of prison. I am calling the city zoning dept tomorrow to find out if this bring up a zoning issue or not. Any thoughts on this subject would be greatly appreciated. 

[Neal Collins]

A friend and colleague of ours was approached by a similar company several years ago with a house and ADU that they wanted to rent. He did his due diligence to make sure the company was legit and then decided to move forward.

Since then he has leased several more properties to the company and has nothing but positive things to say about the experience. He gets above market rent and zero vacancy.

Let me know if you’d like me to put you in touch with him.