Need some info on Group Home (potentially looking in Indiana)

[Michinori Kaneko]

Hi,

Does anyone have experience with converting (or rather renting out) their SFH as a group home? I have a SFH i'm looking at, and looking at different investment option for it. It's a good investment just as a SFH, but it maybe more lucrative to look at other options. First, it looks like this property used to be a Duplex (I can clearly see that there was a second kitchen in the 2nd floor before). The zoning however, is for SFR, and the current zoning does not allow the lot of this property size to be zoned for MFH. I'm trying to see if we can get grandfathered in some how, since it clearly was a duplex at one point. Secondly, this is a nice size 5BR2B home, and my property manager thinks group home is another great option. I have never done group homes, and I wanted to see if people can share their experiences with me. My understanding is that we can lease it to a company, which then sublets it to an individual, and we can pass on all expenses (e.g. insurance, utility, maintenance) as part of rent to the company. the property has been maintained REALLY well. here are some of my questions about group homes:

1. Does the property get trashed or is it usually well maintained?

2. I understand that the property will be classified as commercial property. I know this increases insurance expense to x2~ x3 of SFH. what other costs should i be aware of?

3. Usually when i look at SFH, I estimate 1 month rent towards repairs/maintenance/capex. is that estimate still a fair one for group homes? Note that income on group home is estimated to be x2~x2.5 of what a SFH would be able to generate for this property.

4. Any other general advices? Tax consequences?