Renting to a Residential Care Facility

[Fiona Humphrey]

Hi, 

I am in negotiations to purchase a property in Sacramento, CA which has an existing lease with a Residential Care Facility. The price and the rental income are good. I have looked up the license of the business with the state and they are in good standing with only small violations in the past (fixed in a timely manner). This will be my first pure investment purchase, my experience up to now has involved house hacking. That was what I thought I would do again, but then I came across this deal. I will have to scramble some to come up with a bigger down payment than I expected and that is making me a little nervous. Does anyone have any experience with these types of tenants? Have any advice? I am researching myself, but want to leave my question open ended to see if something is brought up that I have not thought of. I appreciate any assistance with this matter. 

[Melinda Vaughn]

Hi Mike! Happy to discuss. Please feel free to give me a call. Structure as a commercial lease, 5+ years, annual rent escalations, requirement to carry liability insurance (name you as additional insured), etc. You will need special Lessor policy.