Group homes licensing for rent by the room

[Shai Flax]

Hey y'all,

After doing long-term renting, we are looking to get into mid-term by doing rent by the room.

I've heard that there is a limit for unrelated people living in one house, which can be as low as 3 people (which is very low and doesn't make sense ROI-wise).

We thought that the solution could be us being licensed for a group home which by that will give us way more wiggle room.

Does anybody here do that? Know if this process will solve that problem. I couldn't figure it out when I was researching about that topic.

Thanks in advance!

[Colleen F.]

@Shai Flax Unrelated person ordinances are area specific so you shouldn't have heard, you would have I assume found a town ordinance that applies. In our area that means you need a boarding house license if you want a higher limit. Generally when people say group home they have a treatment population with a medical need in mind and lease to an organization. I know what you mean but in general renting by the room is not considered a group home per say. 

[Shannon Strickland]

As Colleen F. said, “Unrelated person ordinances are area specific.” For example, my county permits 3 unrelated, but bordering counties permit 4. A wise use of money was to pay a local real estate attorney $150 to review my options and boarding house agreement. A handful of compliance problems were flagged and adjusted, but I would have never known I was outside the law without proper advice. Try to always find out the truth for yourself from the source instead of hearsay.

It sounds like you might be converting a long-term rental (LTR) into a medium-term rental (MTR). If so, after furnishing, ideally you will make more renting to just 3 individuals as MTR than 1 LTR lease.

I highly recommend paying a local real estate attorney for either an initial consultation or 1 hour. Everything should be clear for you then. By doing so, you'll be able to make an informed decision that will benefit you in the long run.

[Shai Flax]

@Colleen F. thanks for your answer.

I unfortunately realize that rent by the room is not a thing for a group home but thought it would be a creative solution to my limit for not enough people...

Thanks!

[Shai Flax]

@Shannon Strickland

thanks for your answer.

unfortunately 3 people won't be enough cash flow for us to convert from LTR to MTR...

I'll try to find an RE lawyer, Thanks!

[Colleen F.]

@Shai Flax  If you mean a Group home as it is normally refered to, and licensing varies by the type of home you want to run. They are often not patient pay, the organization running them takes rent as an assigned payee for SSDI for example, they then apply for other subsidies for the housing and heat and other services that person may need. Sometimes they are staffed. There is no one group home license. It took two years for me to get a group home placement for a disabled adult in NJ because of needs and matching the person to the placement.  Now my cousin on the other hand was in a group home through another organization for the mentally ill that was much quicker. 

You could get a license as a boarding home or look for a facility that wants to rent your property that services this population which if it is well suited might have a good ROI. However you would need to match your house type to their needs. Disabled need single level WC accessible or some of developmental delayed only would need bus nearby as they often don't drive. Organzations will apply to the town for the business use license. That said some types of group homes will be better accepted than others in a neighborhood. It really is a business, more than a real estate investment.

[Shai Flax]

@Colleen F. Thanks for you answer!