Sober living house

[Amanda Paugas]

Does anyone have experience with owning/managing sober living houses? I’m looking at a portfolio of three homes, buying both the buildings and the business. Quick analysis yields a 16% cap rate, just wondering if anyone has experience with logistics In running these places, paying staff, rent collection, etc. Thanks!

[Steve Vaughan]

@Amanda Paugas I had one all set up until Covid hit and changed my plans.

I was partnering with Oxford House.  I think they operate in 36 states.

I would lease the house to them for an estimated but not guaranteed $x per room.   They apply their house rules to the guests so you aren't stuck trying to evict one that relapsed.   They can remove a guest in 2 hours if needed. 

They require meetings where the house chores and costs are divied up, a house mgr in charge, all that.   The guests pay Oxford, Oxford pays you.    Seemed like they had the process down.  

[Karen Chow]

I'm just starting to look into it. You can check out Kate's house foundation, and also NARR standards for sober houses.

[Jared Galde]

Just joining BP but this is my area of expertise, we manage 50 properties (own 43 of those) for sober living specifically. Glad to help if I can. Shoot me a message

[Zach Edelman]

These can be difficult to finance just an FYI. I know for DSCR especially, lots of lenders don't like sober homes unless there's truly no medical services offered.

[Gloria Grotjan]

Quote from @Jared Galde:

Just joining BP but this is my area of expertise, we manage 50 properties (own 43 of those) for sober living specifically. Glad to help if I can. Shoot me a message

Hi Jared - I am just starting to look into sober living homes as an investment strategy. My objective is to just offer housing but also someone who oversees the home and makes sure people are staying sober, going to AA meetings, doing chores in the home etc.  Just curious how you are running your homes? do you have someone managing each home or living in? I have watched some Youtubes and most operators say 3-4 bedrooms and 2 baths are ideal. Are you being paid by a local, state or federal program?  I've got alot of questions (LOL) but this is a good start.  Thank you in advance for your insights

[Jared Galde]

Hey Gloria! 

I think it's important to note and I am the investor. We LOVE the impact happening in our homes but we are not the operators of the homes. We lease our homes to organizations who pay us one amount every month on the lease and they are in charge of the operations of the house and how the lease is getting paid. 

https://narronline.org is a great resource to learn about operating effective sober living homes and the different levels of homes and care required to meet those levels. You can set up a call with a representative of their organization in your state. Oxford House (https://oxfordhouse.org) is the biggest "peer run" sober living home nonprofit organization in the world, they lease about 3,600 homes nationwide and is a good model to study as well. Hope that helps! Bless you!

[Steve Garcia]

Quote from @Amanda Paugas:

Does anyone have experience with owning/managing sober living houses? I’m looking at a portfolio of three homes, buying both the buildings and the business. Quick analysis yields a 16% cap rate, just wondering if anyone has experience with logistics In running these places, paying staff, rent collection, etc. Thanks!

 Hi Amanda,

I recently converted a mid-term rental into a Sober Living. I am the Owner/Operator. The home just opened and I have 2 residents in place. Biggest challenge is to network to build relationships with rehab facilities, detox centers, IOP/PHP clinics. I have a live in house manager that is also in recovery. House managers typically are offered free rent, but I am charging half until the house is filled. There are policy and procedures in place. House rules, meeting requirements, and chore's to mentions a few. 

[Jared Galde]

@Steve Garcia first, LOVE that you're doing this! Curious what made you decided to operate the house yourself instead of Oxford House or another tenant organization who specializes in this?

[Steve Garcia]

Quote from @Jared Galde:

@Steve Garcia first, LOVE that you're doing this! Curious what made you decided to operate the house yourself instead of Oxford House or another tenant organization who specializes in this?

Thanks Jared! My son is battling addiction which is where I discovered what a sober living home is. I wanted to open and operate my own to serve the need in my community to help bridge those gaps between families. I am in hopes he will join me in this venture.  

[Jessica Madigan]

@Jared Galde - I saw you mentioned that you are leasing your home to an organization that operates the sober living house. I have been presented this same opportunity and I just want to make sure I have the right insurance.  Do you have standard property insurance for your houses since you are leasing to the organization that would ultimately carry the insurance for operating the sober house? 

[Gloria Grotjan]

Quote from @Steve Vaughan:

@Amanda Paugas I had one all set up until Covid hit and changed my plans.

I was partnering with Oxford House.  I think they operate in 36 states.

I would lease the house to them for an estimated but not guaranteed $x per room.   They apply their house rules to the guests so you aren't stuck trying to evict one that relapsed.   They can remove a guest in 2 hours if needed. 

They require meetings where the house chores and costs are divied up, a house mgr in charge, all that.   The guests pay Oxford, Oxford pays you.    Seemed like they had the process down.  

[Gloria Grotjan]

Hi Steve,

Thanks for your post and info on Oxford House. Did you change your plans and decide to go back into investing in sober living homes?

[Gloria Grotjan]

Quote from @Zach Edelman:

These can be difficult to finance just an FYI. I know for DSCR especially, lots of lenders don't like sober homes unless there's truly no medical services offered.

 Key is to just mention it as an investment property

[Gloria Grotjan]

Quote from @Steve Garcia:

Quote from @Jared Galde:

@Steve Garcia first, LOVE that you're doing this! Curious what made you decided to operate the house yourself instead of Oxford House or another tenant organization who specializes in this?

Thanks Jared! My son is battling addiction which is where I discovered what a sober living home is. I wanted to open and operate my own to serve the need in my community to help bridge those gaps between families. I am in hopes he will join me in this venture.  

 Just curious if you've started the process of opening your first home and how thats going? Looking at opening a home this year in California but in the research stage and trying to learn from others.

[Gloria Grotjan]

Quote from @Steve Garcia:

Quote from @Amanda Paugas:

Does anyone have experience with owning/managing sober living houses? I’m looking at a portfolio of three homes, buying both the buildings and the business. Quick analysis yields a 16% cap rate, just wondering if anyone has experience with logistics In running these places, paying staff, rent collection, etc. Thanks!

Did you encounter any issues with neighbors or the city? 

 Hi Amanda,

I recently converted a mid-term rental into a Sober Living. I am the Owner/Operator. The home just opened and I have 2 residents in place. Biggest challenge is to network to build relationships with rehab facilities, detox centers, IOP/PHP clinics. I have a live in house manager that is also in recovery. House managers typically are offered free rent, but I am charging half until the house is filled. There are policy and procedures in place. House rules, meeting requirements, and chore's to mentions a few. 

[Steve Vaughan]

Quote from @Gloria Grotjan:

Hi Steve,  Thanks for your post and info on Oxford House. Did you change your plans and decide to go back into investing in sober living homes?

Nope, I stopped hunting altogether when I tapped out in '22. Sad. 

If another seller of a good house for sober living called me (large, near the bus and amenities) I'd do it.   

I'm also on the lookout for warehouse space for the Women's Service League and Stage Kids. 

Higher purpose stuff than a box LLs overcharge people to sleep in😎

[Steve Garcia]

Quote from @Gloria Grotjan:

Quote from @Steve Garcia:

Quote from @Jared Galde:

@Steve Garcia first, LOVE that you're doing this! Curious what made you decided to operate the house yourself instead of Oxford House or another tenant organization who specializes in this?

Thanks Jared! My son is battling addiction which is where I discovered what a sober living home is. I wanted to open and operate my own to serve the need in my community to help bridge those gaps between families. I am in hopes he will join me in this venture.  

 Just curious if you've started the process of opening your first home and how thats going? Looking at opening a home this year in California but in the research stage and trying to learn from others.

Hi Gloria! Everything is going well so far. I continue to market my home by touring rehab/IOP centers along with giving house tours to said facilities. You definitely need a strong house manager in place with a policy and procedure manual. It can be a lucrative business opposed to the traditional LTR, but you definitely need to have your heart in the right place. PM me if you want more information or have additional questions. 

[Gloria Grotjan]

@Steve Garcia - Thank you for the info. I think marketing is the key before you even get started with a home at least thats what I'm seeing from various comments and also Youtube videos.

[Steve Garcia]

Quote from @Gloria Grotjan:

@Steve Garcia - Thank you for the info. I think marketing is the key before you even get started with a home at least thats what I'm seeing from various comments and also Youtube videos.

If you need any guidance feel free to reach out. It’s just the matter of letting facilities know you’re there. 

[Amy Konopka]

Quote from @Zach Edelman:

These can be difficult to finance just an FYI. I know for DSCR especially, lots of lenders don't like sober homes unless there's truly no medical services offered.

Sober Living Homes --or "Recovery Residences" as the industry is now trying to move toward as far as "names" goes, CANNOT offer services. A Recovery Residence that claims to offer services should be classified as a Residential Treatment Center-which includes staff and usually medical personnel. Then they will be required to be licensed. Recovery Residences (specifically Level 2) offer housing only. DSCR lenders asked for the market rent of the property, they didnt care what I was doing with my house. I actually WISH DSCR Lenders would consider the income projections based on operating a Recovery Residence! I'd be able to scale 5 times as fast.

[Amy Konopka]

Quote from @Gloria Grotjan:

Quote from @Steve Garcia:

Quote from @Jared Galde:

@Steve Garcia first, LOVE that you're doing this! Curious what made you decided to operate the house yourself instead of Oxford House or another tenant organization who specializes in this?

Thanks Jared! My son is battling addiction which is where I discovered what a sober living home is. I wanted to open and operate my own to serve the need in my community to help bridge those gaps between families. I am in hopes he will join me in this venture.  

 Just curious if you've started the process of opening your first home and how thats going? Looking at opening a home this year in California but in the research stage and trying to learn from others.

Gloria, Google CCAPP and their credentialing information. They are super helpful, provide so many forms online necessary for the start up. I'm not a fan of the Oxford House Moedl-they need structure and accountability. Oxford House is reminiscent of a bunch of people who pinky swear to be sober and go to meetings...its hard enough getting people to stay sober--after exiting Residential recovery (another requirement we have) with a House Leader who is truly invested in helping people.   You need a live in House Leader at a minimum.  They get free rent/all utilities paid and I pay mine a $500 month stipend after an initial 6 month trial period. They need to be in it for the right reasons as well.  I also want them to understand ME and my vision: my homes are there for women who WANT recovery and will WORK for it-we're not just a cheap place to live in SoCAL with all utilities paid. I don't advertise on Craigslist and FB marketplace-I rely on word of mouth  so people know before they come to my house they WILL be tested multiple times a week and WILL have to go to AA meetings, do their chores and be a TEAM player with the rest of the house.  The Recovery Community is small--if you're a flop house you will be called out. Will you get "shut down"? Nope Its super hard to shut down a "Sober Living Home" due to ADA and fair Housing.  

[Amy Konopka]

Quote from @Gloria Grotjan:

@Steve Garcia - Thank you for the info. I think marketing is the key before you even get started with a home at least thats what I'm seeing from various comments and also Youtube videos.

 Finding a House Manager should be the first thing. They are the boots on the ground, the most important piece of the entire operation. 

[Johanna Abanes]

Quote from @Jared Galde:

Just joining BP but this is my area of expertise, we manage 50 properties (own 43 of those) for sober living specifically. Glad to help if I can. Shoot me a message

Hi,

This is Hannah from RJERR LLC,

We currently marketing a property at 2635 Ridge Manor,GA and I’m exploring the idea of reaching out to Oxford House to offer it as a rental option. Oxford House is a non-profit organization that helps individuals in recovery find sober living housing, and I feel this property might be a good fit.

I’d love to hear from anyone who has experience working with Oxford House in Georgia (or similar organizations) on how to best approach this. What are the most effective ways to market properties through them? Are there any tips on how to make my listing appealing to Oxford House or other recovery housing networks?

Any advice, resources, or even potential contacts would be greatly appreciated!

Thanks in advance!