THE SUPPORTED LIVING PROGRAM INVESTMENT STRATEGY

Some of you have noticed me casually mention the supported living program without giving much detail. Up until recently I had never shared much about it because I wanted to make sure I had enough experience with the program before teaching others.

Basically the supported living program (called different things in different states) is renting out your properties to people with intellectual disabilities. There is no information online about it, and very few people know about it.

I learned about it in 2015 when I was buying a triplex that was run as a supported living property.

I did my due diligence before buying, and honestly thought it was too good to be true….

It’s now been 2 1/2 years since we started working with providers and residents with intellectual disabilities, and we’ve since purchased two more duplexes for the program, and converted two other rentals, for a total of 9 rental units (and 4 more in process of being built) for this program.

So here are all of the details you need to know.

SOME BACKGROUND….

On June 22, 1999, the United States Supreme Court held in Olmstead v. L.C. that unjustified segregation of persons with disabilities constitutes discrimination in violation of title II of the Americans with Disabilities Act.

The Court held that public entities must provide community-based services to persons with disabilities when (1) such services are appropriate; (2) the affected persons do not oppose community-based treatment; and (3) community-based services can be reasonably accommodated, taking into account the resources available to the public entity and the needs of others who are receiving disability services from the entity.

THE INVESTMENT OPPORTUNITY

The department of justice has been enforcing the Olmstead act by shutting down state run mental institutions, thereby displacing those with intellectual disabilities who are now in desperate need for community based housing.

THE BENEFITS OF OWNING SUPPORTED LIVING PROGRAM RENTAL PROPERTIES

• The Provider will pay for any room vacancies, so unlike regular rental properties you will achieve a zero percent vacancy rate
• All utility bills are paid for by the residents, through the providers who have checkbook control over the resident’s finances
• Licensed and professionally trained caregivers are assigned to each resident and paid for by the state. Each caregiver works on shifts and they do not live at the property.
• Property management is not necessary as the rents are guaranteed, and the residents are placed by the provider.
• Each resident receives housing modification funds of up to $12,000 (may vary by state) to be used to pay to install modifications for that residents needs such as grab bars, walk in shower, fenced yards, wheel chair ramps etc.
• Depending on location, the per room rates vary from $400 to $800 per room per month which may be higher than fair market rent for a property.
• There are no certifications, special zoning requirements or special insurance necessary for the property or the property owner

1. Bottom line: Rents are often higher, and you can save at least 15%* in expenses by working with this program as a landlord

PROPERTY CHARACTERISTICS FOR THE PROGRAM

• Single story building
• No more than 4 rooms per unit, though multiple rooms in separate units are fine. For example, a duplex (2 units) with 4 bedrooms each side works great for the program.
• Location must be close to transportation, shopping in mid sized cities (not rural small towns)
• The more bathrooms the better
• Single family homes or multi-family properties work great

IDEAL PROPERTY CHARACTERISTICS FOR INVESTORS

1. Single story multi-family buildings with 3-4 bedrooms per unit offer the highest return on investment and are easiest to staff and provide care.

DOWNSIDES TO THE SUPPORTED LIVING PROGRAM

1. There is more “wear & tear” to the property. However, most residents stay 10+ years so you’re also not paying turn over costs every few years. The damages that are more severe, such as holes punched in walls, the provider (As reimbursed by the state) does pay for those and lets us know immediately.
2. Staff turnover is high. This does not necessarily affect the investment, however it does make it difficult to know who is the boss and who’s in charge.
3. Many caregivers lack the knowledge of checking breakers, or how systems work. So some repairs are really minor.

BOTTOM LINE…

I love working with the supported living program for several reasons. The first reason is it feels good to know that we are making a difference for these residents who have such a need for housing. I also enjoy the many benefits such as long term tenants, zero percent vacancy rate, no turn over costs, not having to screen or place tenants and that the rents are often a little higher than what a normal tenant would pay.

So we have plans to convert all of our properties to supported living rentals since every property meets their criteria, and our new construction project is being built for this program as well.