Renting to a Company with a Halfway House Program?

Question

Hi Folks!

My partner and I recently purchased a large duplex (5beds, 3baths per unit), and we were thinking that it would be a great property for rent by the room, or a high income tenant.

However, we were surprised to learn from our property manager that a halfway house is interested and willing to pay rents that are at or well above market for both sides.

Does anyone have experience with this? The property is in a B+ neighborhood, quiet street, and I'm intrigued by the opportunity to help folks get back on their feet, but also don't know what I don't know about this type of arrangement. What are some items that you'd be thinking about?

John T. · Answer

@Scott Trench I agree with everything @Matthew Paul said.  But, I've also been thinking about this type of tenant.  Rather than a half-way house, which conjures up thoughts of felons recently released from prison, you might consider leasing to a company that runs a Sober Living House.  Some Sober Living Houses are co-ed, but most are either all men or all women.  (I think "all women" would be easier on your property and more acceptable to your neighbors.)  If you are interested in renting the property as a Sober Living House, you might contact a local alcohol recovery center and see if they have any leads for you.

Another idea is a battered women's shelter.

Scott Trench · Answer

Thanks for the advice, everyone! I really appreciate it!

JD Martin · Answer

Hi Scott,

At a minimum I would require them to have good insurance with myself as the beneficiary. I would also require a significant deposit to guard against unpaid rent. These types of arrangements sometimes result in violence and damage to the property; by their nature the individuals are people who have/had problems. If there's nothing against it in the zoning codes, I would not solicit the advice of neighbors who are highly likely to turn out to a city council meeting and cause trouble for you.

Good ones, barely anyone even knows they are there. It depends *a lot* on the nature of the people they're housing and the experience the company has in running one of these homes and the level and experience of their staffing. A lot of these types of arrangements are run by one-man do-gooder operations with some base funding from a church or other NGO and fold in short order, leaving everyone with a bad taste.

Lyle Fisher · Answer

I have operated halfway houses and they are a great blessing if operated well.  There are lots of great operators out there but there is also lots of bad ones.  Make sure you do your due diligence about who they are and if they have the proper credentials.  There is a lot of money to be made and that attracts bad operators.   In Florida it is not uncommon to get $250 per bed per week ($1000 per month).

In Florida there is a lot of oversight to halfway houses now and there is a state regulated organization named FARR Florida Association of Recovery Residences.  Not sure which state you are in but check with the local/state  agencies.

Good operators are well insured and are great blessings to the people they serve and the communities they live in.  Hope that helps.

Bruce Woodruff · Answer

No under any circumstances. Would you want one next door to you, your wife and kids? Be honest. No you wouldn't. It will lower neighborhood property values and you will make enemies.

These types of houses belong in C or D neighborhoods. Or rural.

Sorry to be the bummer, but you asked for the truth.

Matthew Paul · Answer

There was something like that across the street from one of my properties . B area , there were fights among tenants , people coming and going all the time . Cops there twice a week . One gave the neighbor a hard time and pushed him , the tenant needed dental work after that , lucky another filmed the whole thing . After 3 years the house went to foreclosure , house looks like crap .

If you are looking to make enemies of the neighbors go ahead and do it . But ask yourself , do you want one next to YOUR house ?

James Hong · Answer

@Scott Trench I am looking to do something like this with my property ad well. I was wondering if you ended up doing it or not, if so, if you could share the pros and cons of your decision. Thank you!

Rohe Eshbaugh · Answer

Explore who the tenant is.  From my recollection and understanding of half way houses in JeffCo, your tenant is the state penal division.  They have councilors on property to manage the residents and your contact is the councilor.  You would hold the Criminal Justice department (or what ever that branch is called in that area) responsible for any damages and rents, not the residents.  And yes, by its very nature, the residents come and go, hopefully back out to society after six months.  Unfortunately, some get yanked back into jail for bad behavior and the cops are the ones to come and pick the bad ones up.  There will be frequent police visits.  Those councilors have very little tolerance for bad behavior.

Good luck.

Scott Trench · Answer

@Matthew Paul Yeah - it looks like there are NUMEROUS challenges with it. But, was wondering if the benefits of giving housing chances to some folks and the extra rent was worthwhile. My lean at the moment is no, but it could be that additional perspective comes to light.

Thank you for sharing!

Renting to a Company with a Halfway House Program?

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