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Matt Frazier
  • New to Real Estate
  • Carver MN
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Half way house - Good or bad investment?

Matt Frazier
  • New to Real Estate
  • Carver MN
Posted Jul 5 2022, 07:56

I found a property for sale that cash flow's a good amount each month ($1800-2000) after all expenses paid. It is a 15 unit building, with three bathrooms and a community living room. It is currently licensed by the state (MN) as a Department of Corrections half way house. Does anyone have experience with these? Pros/cons? I'm assuming rent is guaranteed by the state, but you probably cannot set the rent rates. Any insight would be appreciated. 

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Bruce Woodruff
Pro Member
#1 Contractors Contributor
  • Contractor/Investor/Consultant
  • West Valley Phoenix
12,961
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11,305
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Bruce Woodruff
Pro Member
#1 Contractors Contributor
  • Contractor/Investor/Consultant
  • West Valley Phoenix
Replied Jul 5 2022, 08:06

Doesn't sound like anything I would want to be associated with. You have little control and never will. That's an immediate pass for me.

There are easier ways to make money....although this may sound like good money, don't get greedy, it never works out.

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Replied Jul 5 2022, 08:22

@Matt Frazier if you are seriously considering it, I would check out the current lease.  Is it long term?  What are it's limitations?  Who pays it and how?  I would also want to know what the maintenance budget is.  There is the potential there for a lot of damage to the property.  I'm not saying I wouldn't do it, but I would do a ton of due diligence.  As you work through the due diligence things will become more clear.  Best of luck. 

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Chris Seveney
Pro Member
#1 All Forums Contributor
  • Investor
  • Virginia
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Chris Seveney
Pro Member
#1 All Forums Contributor
  • Investor
  • Virginia
Replied Jul 5 2022, 08:27

I can only imagine what the expenses would be for this type of property. Lots of cons including I believe 75%+ of people have a relapse. Which would mean the place could have a lot of drug/alcohol activity or nearby it. Lots of calls for police to the property.... Not worth the headache IMHO

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15
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9
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Replied Jul 6 2022, 02:34

Having a crazy person on drugs in your house can make life a living ( ask me how I know !) .. having 15 crazy addicts in one house will likely make you want to take drugs yourself !

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9
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Replied Jul 6 2022, 02:34
Quote from @Denny Mears:

Having a crazy person on drugs in your house can make life a living ( ask me how I know !) .. having 15 crazy addicts in one house will likely make you want to take drugs yourself !

Edit : Makes life a living hell 

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James Hamling
Agent
#3 General Real Estate Investing Contributor
  • Real Estate Broker
  • Minneapolis, MN
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James Hamling
Agent
#3 General Real Estate Investing Contributor
  • Real Estate Broker
  • Minneapolis, MN
Replied Jul 6 2022, 22:58

@Matt Frazier I suggest calling the DOC and sharing your knowledge level and consideration for there input, I say this as someone who nearly opened one. There is so much to know, it's a book in and of itself.