What I Learned From 7 Years of Recovery House Investing (Alongside My Son)

What I Learned From 7 Years of Recovery House Investing (Alongside My Son)

3 min read
Dave Van Horn

Dave Van Horn is a veteran real estate investor and CEO of PPR Note Co., a $150MM+ company managing funds that buy, sell, and hold residential mortgages nationwide. Dave’s expertise is derived from over 30 years of residential and commercial real estate experience as a licensed Realtor, real estate investor, and private lender.

Experience
Beginning his career in construction and as a Realtor, Dave bought his first investment property in 1989. After years of managing his own construction business, Dave became a full-time real estate investor, specializing in fix and flips, buy and holds, and eventually commercial projects, before moving into note investing in 2007.

Over the past decade, Dave has also invested his time into becoming a connector and educator, who helps others achieve success. He focuses jointly on helping accredited investors build and preserve wealth with his group Strategic Investor Alliance and with general audiences through the annual MidAtlantic Real Estate Investor Summit.

Dave has also shared his strategies and experiences with real estate and note investing via hundreds of articles published on the BiggerPockets Blog and with his acclaimed book Real Estate Note Investing.

Press
Dave has been featured on the BiggerPockets Podcast twice (shows 28 and 273), as well as episodes of familiar podcasts, including Joe Fairless’ Best Ever Show, Invest Like a Boss, Cashflow Ninja, and many others. He also has been a guest of Herb Cohen’s on Executive Leaders Radio, which airs nationwide.

Accreditations
Dave is a licensed Realtor with eXp Realty with CRS and GRI designations.

Follow
Dave’s LinkedIn
PPR on LinkedIn
PPR on Facebook
Twitter @DAVIDAVANHORN

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Fairly often, people hit me up for advice on opening and running a recovery house. What they may not realize is that it could be considered as another form of special needs housing. For me, my journey with special needs housing began almost 25 years ago.

At that time, I was providing low income housing through the government Section 8 programs, which provide government subsidies for those who are of low income, due to a variety of reasons, including disability.

My second experience came from working with folks, who utilized Community Action either for emergency housing or for down payments or rent, often due to a distressful situation, such as being homeless with children or a being a battered parent or spouse with children.

But my third experience, which led me to owning and operating a drug and alcohol (privately owned) recovery house, happened pretty much by accident. My oldest son was in recovery, and he was asked to manage a house for the owner of several recovery houses in a nearby county. This is where my son had gotten well after having a long run of multiple attempts at recovery with little previous success.

The second part of the perfect storm was that my wife and I were looking to downsize from our primary residence, mostly for lifestyle reasons, but the real estate market had already tanked. So, we both took some chances and decided we would open up our own recovery house with our primary residence, especially since there was a drastic shortage of facilities in our area.

multifamily-value

Related: Should I Accept Section 8 Tenants — Or Run the Other Way?

Starting a Recovery House

Once we had the buy-in of me as owner and my son, who had lots of experience with recovery, as a manager, the rest was the easy part. Having a good property, location, and furnishing a place might not seem like the easy part to the typical real estate investor, but it is. The hardest part is having a good manager, culture, and reputation. It also helps to have a big “why.” That’s what keeps you going during the tough times. Most real estate investors have dollar signs in their eyes when they think about renting beds out, but there’s also a lot of responsibility and liability that can go along with it. Personally, my son and I don’t really do it for the money, as there are much easier ways to make a buck.

Biggest Challenges

In the beginning, besides filling up the house, the biggest challenges for us were the township and neighbors. Everyone thinks a recovery house is a good idea as long as it’s not next to them. The truth of the matter is that we never have really had any criminal problems.

The types of issues we usually have are things like an uptick in turnover or someone breaking the house rules. Occasionally, though, we do lose a resident or former resident, and it’s a grim reminder of the life-and-death battle being fought out there on the streets in terms of addiction.

Advantages

There is some light at the end of the tunnel, though, just in the fact that you never have a complete vacancy. Residents also do chores, like maintaining the grounds and shoveling snow. There is some wear and tear, but usually someone at the house is handy in a trade as well. For example, some residents have been chefs, plumbers, electricians, etc. Also, residents can span anywhere from ages 18-65 and are from every walk of life.

Another challenge for us is the enabler in the addict’s life — usually a parent or spouse — who inhibits the resident’s recovery. The most common traits I see in a typical resident are selfishness and a lack of maturity. There have been times when we had to tell a parent that they need to let Junior grow up and to stop calling the house.

choose-niche

Related: “Low Income” vs. “Bad” Neighborhoods: Yes, There IS a Difference. Here’s What Separates Them.

Biggest Rewards

By far, the best part about owning and running a recovery place has been what it’s done for my son and for me, as it’s probably one the most rewarding things I’ve ever done in my life. I’ve had people come up to me crying and saying that my son or I have saved their life, their child’s life, or their spouse’s life — and it’s very hard to put a price on that.

Nothing is better than to see a resident or former resident move on, land a good job, get married, buy a house, or even start a business. It’s one of the greatest feelings of accomplishments in the world.

Many of us know someone struggling with some type of addiction and feel like we would like to do more to serve this community. So, if you are on BiggerPockets and you are contemplating opening some type of drug and alcohol recovery house, a great resource when starting out is going to the Oxford House website to learn more about running recovery houses in general.

Anyway, who says you can’t manage rental properties and do some more socially conscious investing at the same time?

Let me know about your socially enriching real estate projects with a comment!

The best kinds of investing aren't just about money. Learn how one investor used his son's experiences to drive the founding of a recovery house.