Renting to group home for the elderly

Milwaukee, Wisconsin
General Landlording & Rental Properties
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Renting to group home for the elderly

Seth McGatheyBusiness Member
Real Estate Agent · Milwaukee WI · Member since 2024 · 320 posts · 254 votes

I recently had an applicant for a rental where she wants to run the 3 bedroom lower unit of my duplex as a group home for elderly. She makes it sound pretty legit, however I have never dealt with something like this. The people living there wouldn't actually be the tenants, her group home would be. So how would applications work? Also, if some of the elderly people are causing damages or problems, am I sort of limited in my response due to them being a part of a group home? Any info, directions to good info, or personal experience would be appreciated. 

[email protected]708-297-0996
Seth McGathey - Shorewest Realtor4.912 Reviews
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Janice Carter
Real Estate Broker · Atlanta · Member since 2024 · 1k+ posts · 606 votes
7mo

Seth, proceed carefully as a group home is very different from a standard residential tenancy. First, verify zoning and local licensing requirements. Even small residential care homes may require state approval, inspections, insurance and compliance with ADA/Fair Housing regulations.

Your lease would be with the operating entity and not the individual residents. You should require business formation documents, state license (if required), commercial liability insurance and clear use clause defining number of occupants

As for damages or issues, you would enforce the lease against the operator, not the elderly residents. Before agreeing, I would strongly recommend consulting a local real estate attorney and confirming zoning compliance.

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  • Joe S.Pro Member
    Investor · San Antonio · Member since 2020 · 3k+ posts · 3k+ votes
    8mo
    Quote from @Seth McGathey:

    I recently had an applicant for a rental where she wants to run the 3 bedroom lower unit of my duplex as a group home for elderly. She makes it sound pretty legit, however I have never dealt with something like this. The people living there wouldn't actually be the tenants, her group home would be. So how would applications work? Also, if some of the elderly people are causing damages or problems, am I sort of limited in my response due to them being a part of a group home? Any info, directions to good info, or personal experience would be appreciated. 


     Is it the same price to rent to a group home versus renting to a regular family?  Does the renter that wants to do the group home have other group home she runs as a reference?

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    • Seth McGatheyBusiness Member
      OP
      Real Estate Agent · Milwaukee WI · Member since 2024 · 320 posts · 254 votes
      8mo

      @Joe S. Unfortunately this would be her first one. So I know that makes it a bit worse. 

      I assume I could ask for more, even just claiming more concern over more risk and more traffic with medical workers coming in and out constantly. 

      [email protected]708-297-0996
      Seth McGathey - Shorewest Realtor4.912 Reviews
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  • Janice Carter
    Real Estate Broker · Atlanta · Member since 2024 · 1k+ posts · 606 votes
    7mo

    Seth, proceed carefully as a group home is very different from a standard residential tenancy. First, verify zoning and local licensing requirements. Even small residential care homes may require state approval, inspections, insurance and compliance with ADA/Fair Housing regulations.

    Your lease would be with the operating entity and not the individual residents. You should require business formation documents, state license (if required), commercial liability insurance and clear use clause defining number of occupants

    As for damages or issues, you would enforce the lease against the operator, not the elderly residents. Before agreeing, I would strongly recommend consulting a local real estate attorney and confirming zoning compliance.

    1Reply
  • Marc Winter
    Real Estate Broker · Northeast PA · Member since 2017 · 2k+ posts · 2k+ votes
    7mo

    @Seth McGathey,

    It's an interesting proposal.  

    We have rented to associations that have placed tenants with disabilities in our rentals.  The association is responsible for the actions of any tenant they place, as well as the rent, security, utilities, etc.  

    There was a fairly responsive representative to interact with, and little direct contact with the tenant.  Maintenance issues were communicated from the tenant to the representative, who would, in turn, contact us.  These arrangements have been stable in the past.

    That being said, a group home run by a first-time operator would require a great leap of faith on the landlord's part, IMHO.  To pay for that leap, the security, and monthly rental would need to be substantially above the current market rent to an individual/family.  

    Your lease should be edited by a real estate attorney familiar with this type of rental.  Ask the attorney about using a performance bond.  And make sure your property insurance/landlord policy is suitable for this type of tenancy, as well as zoning, permitting, and licensing.  

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