This is a long one, but hopefully I can shed some light here. Of course, there are always multiple ways to overcome any challenge, but this is how we have done it so far...
My partner and I currently own and operate transitional living houses in a Midwest city, and it is definitely a different business than owning or managing standard rentals. We are for-profit and currently have about 150 beds, most of which are in large single family homes located within city limits (no suburban living for us). We used to own all of our houses but are about 50/50 lease vs. own, mainly because leasing allows us to move faster when opening additional houses.
The main difference here is your clientele/residents. Because of their background (95% of our residents are recovering heroin addicts) and payor status (50% are paid for by their treatment centers, the rest split between family or self-pay), standard 1 year leases with monthly payments do not work. We accept cash, credit, check at any time of the month, for any period of time. While the treatment centers generally pay monthly by check, the families usually pay weekly. If the resident is self-pay, it could be a few days rent at a time, which is fine too. To solve this, I built a custom mobile app to handle rent payments and due dates because no other management software can handle the payment schedules or turnover. It also tracks who is in what house and all other resident info I might need, and is absolutely vital to our operation.
Each of our houses has a live-in manager who, for free rent, ensures all residents are following a strict set of rules and guidelines that is enforced quantitatively with a points system to ensure objectivity and uniformity between managers and houses. All rules infractions have a point value, and if a resident accumulates X points in a certain time frame, there are several steps the manager takes to remediate the behavior i.e., curfew, no nights out, extra chores, eviction, etc.
AH, eviction. Not only eviction, but how about occupancy or location? No one would ever be caught saying they don't think transitional living houses can be a great resource...as long as that house is across town. NIMBY syndrome is perhaps one of the largest challenges any sober house will face. Luckily, there is a long trail of litigation under the Fair Housing Act 1934 and the AFH Amendments of 1988 which established the legal grounds for those in recovery (by definition "disabled") to live together in a single family home. As far as eviction, we as a management company do not evict anyone. All of our rules are guidelines for the men to use, and they police themselves. If one resident relapses or brings drugs into the house, the residents resolve the situation themselves, usually by requiring the offending resident to leave for 2 weeks before reapplying for residency. That said, we do monitor the managers, who have final say in all house decisions (for free rent, remember?).
We also have several levels of housing. Initially, all new residents stay for about 6 months in our largest home. Because they are so new in their sobriety, the risk of relapse is highest so rules are the tightest. Nightly meetings are mandatory, and there is not much personal space. After about 6 months, they transition to a more traditional sober living house. Residents are welcome to stay here for much longer periods, but still must obey the house rules, which are more lax than the initial house. Finally, we offer apartments for the men to rent which more closely resemble your standard apartment. They maintain access to the house managers and meetings, and while we make the transition to independent living as seamless as possible, they are essentially on their own.
Outside of the inherent challenge of managing heroin addicts (by definition some of the most manipulative and difficult personalities on the planet, especially when it come to money), the business can be quite good. Because we charge by the bed, returns are significantly higher than market rental rates, even when considering our rent covers ALL housing costs ex food.
With today's opioid epidemic rampaging across the US, there is a massive need for well run transitional living facilities everywhere, but it is easy for good intentions to sour when the houses are not run properly. Addiction is the disease of chronic relapses and heroin is a monster, so issues do occur. A whole lot of work is required to successfully run just a single house, and the clientele can be very difficult. But if you can handle the challenge, it is definitely worth the work!
There you have it...I am happy to answer any questions!
