Increasing Need for Recovery Housing

[Craig Herrmann]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $270,000
Cash invested: $67,000

This is our 2nd single-family property with long-term tenants in recovery. What a great opportunity to serve this community with safe and affordable housing. We design for living.

What made you interested in investing in this type of deal?

Recovery housing is a major issue in the United States. we are not just proving safe and affordable housing, but helping people in different communities get back on their feet and help serve others.

How did you find this deal and how did you negotiate it?

The property was presented to us by the organization we work with. We made an offer based on the organization's proposed monthly rent.

How did you finance this deal?

I financed the property as an individual and placed the property in an LLC.

How did you add value to the deal?

We turned the dining room into a 6th bedroom and replaced the HVAC unit and hot water tank.

What was the outcome?

The terms of our lease start at a 2-year minimum and can expand to 3-5+ years in length and routinely twice the amount of normal market rent, providing stability and high cash flow.

Lessons learned? Challenges?

When analyzing investment properties, always research property taxes for non-owner occupied properties. We learned the hard way that investment properties (non-owner occupied) pay higher property taxes, similar to owning commercial property. In this particular case, it was almost 3 times that of owner-occupied single-family homes.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

This property was financed through Ridge Lending Group.