Community Living Arrangements: The Next Big Thing in Real Estate?

[Clarase Mika]

For years, real estate investors have focused on traditional single-family rentals (SFRs), multifamily units, and commercial properties. However, an emerging sector, “community living arrangements (CLAs)” offers a lucrative and socially rewarding alternative. These properties provide communal adult living solutions, such as co-housing, senior shared housing, and group homes, offering both financial and social benefits to investors.

With increasing housing demand, affordability challenges, and a growing aging population, portfolio holders may be missing out on a profitable and impactful investment. But how can investors assess the market and navigate regulatory processes to take advantage of this opportunity, particularly in states like Georgia that offer streamlined application processes?

Why Investors Should Consider Community Living Arrangements

1. Higher Cash Flow Potential

Unlike traditional rental properties that rely on a single tenant or family, CLAs generate multiple revenue streams from multiple residents. This often leads to higher gross rental income and stronger returns.

2. Consistent Demand

- Senior citizens looking for affordable, non-institutionalized living options.

- Adults with disabilities who require supportive housing.

- Individuals seeking affordable shared housing due to rising rental costs.

Demand for these arrangements is rising as affordability concerns and aging demographics shape the real estate landscape.

3. Reduced Vacancy Risk

Since multiple individuals contribute to rent, losing one resident has a smaller impact on total income compared to a single-family rental with a single tenant.

4. Social and Community Benefits

Investors can create a positive social impact by providing well-managed, safe, and community-driven living environments. This is particularly true when experienced professionals— such as skilled nursing administrators, caregivers, and those with a Master of Healthcare Administration (MHA) background— are involved in ensuring quality care and daily living activities.

Assessing the Market: Where Are the Best Opportunities?

Investors looking to convert residential properties into CLAs should evaluate markets based on:

1. State and Local Regulations

Some states have simplified the process for converting homes into CLAs. Georgia, for example, has relatively clear guidelines for certain group home licenses, making it an attractive market for investors. Other states, such as Florida, Texas, and North Carolina, also have frameworks that support communal housing models.

2. Demand and Demographics

Look for areas with:

- A high population of seniors (ideal for shared senior living).

- Strong rental demand and affordability challenges.

- Growing interest in co-living or alternative housing solutions.

3. Property Suitability

- Larger single-family homes with multiple bedrooms and bathrooms.

- Properties in residential areas with lenient zoning laws.

- Locations near medical facilities, public transportation, or job centers.

Navigating the Regulatory Process: How to Minimize Headaches

One of the biggest concerns for investors is how to legally convert a property into a CLA. Here are steps to streamline the process:

1. Understand Zoning and Local Ordinances

- Some municipalities have strict zoning laws against multiple unrelated adults living together.

- Others have exemptions for community residential settings that provide supportive services.

Solution: Work with local zoning departments or a real estate attorney to determine what’s allowed.

2. Explore Licensing Requirements

Depending on the type of CLA, you may need licensing, especially for senior housing or group homes with care services. In Georgia, for example, Personal Care Homes (PCHs) and Community Living Arrangements (CLAs) require licensing but have an application process that is more streamlined than in other states.

Solution: Research the licensing process or partner with an operator who has experience in obtaining approvals.

3. Retrofit the Property for Compliance

- Ensure the home meets safety codes (e.g., fire alarms, accessibility).

- Modify bedrooms, bathrooms, and common areas for shared living.

Solution: Work with contractors familiar with local building codes for community housing.

4. Create a Sustainable Management Model

Whether operating the home yourself or working with a property management firm, a clear operational plan is necessary. Consider:

- Rent pricing models (per room vs. all-inclusive rent).

- House rules and resident agreements.

- Staffing needs if providing additional support services.

A Major Opportunity for Young and New Investors

I believe that with the right team, CLAs represent a huge opportunity for young and new investors— especially those with backgrounds in skilled nursing, healthcare administration, and caregiving. These professionals understand how to provide quality care and daily living assistance, which is critical for the success of these homes. By ensuring that residents receive proper care, social engagement, and support, investors can help improve the quality of life for many adults who cannot live independently.

For those new to real estate, partnering with experienced investors and healthcare professionals can help mitigate risks and provide operational expertise, making this a strong niche investment strategy.

The Power of Group Investment in CLAs

Another exciting aspect of CLA investing is the potential for investors to combine their resources to acquire and operate these properties. Pooling capital to buy larger properties or multiple homes can help investors:

- Scale faster by acquiring multiple properties at once.

- Share operational responsibilities, such as licensing, staffing, and property management.

- Increase profitability by leveraging economies of scale in staffing, maintenance, and resident services.

Of course, rules and regulations dictate how investments in CLAs can be structured, but when done properly, group investments can be an excellent way to enter this growing market while reducing individual risk and increasing overall returns.

Final Thoughts: Is This the Future of Residential Investing?

The demand for affordable, community-oriented living solutions is growing. Investors who take advantage of states with streamlined application processes ( such as Georgia) can get ahead of the curve while also making a positive social impact.

If you’re looking for ways to diversify your portfolio, increase cash flow, and reduce vacancy risk, community living arrangements could be the next big real estate investment trend you don’t want to miss.

Have you considered investing in community living arrangements? Let's discuss your thoughts and experiences in the comments below!