Increasing Profits with Sub-Niche Housing

I tuned into the REIClub’s webinar where they featured Dr. Cash Flow, Nick Sidoti. Nick advocates renting rooms to high-functioning handicapped people on government assistance. He claims this private co-housing approach is cheaper and more efficient than what the government can do, so it saves social agencies money – and is therefore a sustainable model.

The nutshell summary goes like this: special needs individuals may only have an $800 housing allowance which may barely cover their rent and utilities. Nick places three or more of these type of tenants in a nice house (one per bedroom), provides a housekeeper, pays all utilities and collects $800 from each person. This is how he can gross $2,400 per month from a house that might normally rent for only $900. Solid idea – check out Nick’s website to learn more.

Dr. Cash Flow says he got this idea from an amusement park pizza vendor who sold one slice of pizza for $4 but an entire 8-slice pizza for $16.

The vendor had the ability to charge 50% more for a slice because he had a niche product for a niche customer.

Nick created a new industry because he decided to market his rentals just like the guy sold pizza.

Some of the benefits of this approach include:

1. No vacancies – he rents directly to the government agency
2. No late payments – government pays automatically on the first of each month
3. Automatic rent increases – he gets an adjustment automatically for inflation, etc.
4. No tenant issues – the agencies’ social workers handle all those types of things.
5. Providing a built in support system for the tenants
6. You don’t even need to own the rental to make money with this approach

Having a niche inside a niche, or what is call a sub-niche, is really a step towards a monopoly.

This system blows our $100 challenge out of the water. We are going to add it to the idea matrix under the “Passive Landlord – Passive Tenant” category. It’s another illustration that the normal, default way of being a landlord is the least profitable way to operate.

Now, how could you use this sub-niche concept? Could you use it to house graduate students, or house rotating medical students, or just use Dr. Cash Flow’s method and house hearing-impared people, etc?

Let me know what you think? I always enjoy hearing from you.