Transitional living house hack
Hey BiggerPockets!
Aaron here. So I'm a newbie, but a quick learner, and motivated investor. I've been running analysis after analysis on rental properties, as that's where I would like to start. Well, I found some really good numbers (in my opinion).
Here it is. It is a 3 bed 2 bath single family home located in a rougher part of town, but also quickly changing area. I ran my first analysis on this property as a single family home, and to my surprise it had a decent cashflow. I know it's not always the better option to chase higher cashflow properties if you sacrifice quality of clientele. But this one is a bit unique.
Within a mile radius we have 2 bus stops, 4 drug addiction clinics, and a mess of low income citizens in a high incarceration rate part of town. This all being said, there is a lack of functional transitional housing. The ones that are available are severely inflated and someone in need of help such as this cant afford. For those that aren't sure what transitional housing is, it is units that drug addiction recovery patients, recent prison release, or even homeless can rent out with little of their own money.
Sounds a bit risky given the clientele, but in my town one small unit with a closet and bath can easily get $650-700 per unit. There would be deposit requirements in order to get in. The property in question could be hacked into 4 of these smaller units.
I'm an active carpenter and have been in the field as lead carpenter and supervisor for the past 7 years. I see all strokes of employees come through. I have 2 currently that stay in a transitional home and claim they were on a 9 month waiting list to get into one. This tells me the demand is there. I want to be the one to fill this void, and I'm extremely motivated to do so.
If there is someone here willing to help me analyze this property and the numbers behind it, I would be very grateful. Wish you all the best in your endeavors!
Thanks truly,
Originally posted by @Aaron Furr:Hey BiggerPockets!
Aaron here. So I'm a newbie, but a quick learner, and motivated investor. I've been running analysis after analysis on rental properties, as that's where I would like to start. Well, I found some really good numbers (in my opinion).
Here it is. It is a 3 bed 2 bath single family home located in a rougher part of town, but also quickly changing area. I ran my first analysis on this property as a single family home, and to my surprise it had a decent cashflow. I know it's not always the better option to chase higher cashflow properties if you sacrifice quality of clientele. But this one is a bit unique.
Within a mile radius we have 2 bus stops, 4 drug addiction clinics, and a mess of low income citizens in a high incarceration rate part of town. This all being said, there is a lack of functional transitional housing. The ones that are available are severely inflated and someone in need of help such as this cant afford. For those that aren't sure what transitional housing is, it is units that drug addiction recovery patients, recent prison release, or even homeless can rent out with little of their own money.
Sounds a bit risky given the clientele, but in my town one small unit with a closet and bath can easily get $650-700 per unit. There would be deposit requirements in order to get in. The property in question could be hacked into 4 of these smaller units.
I'm an active carpenter and have been in the field as lead carpenter and supervisor for the past 7 years. I see all strokes of employees come through. I have 2 currently that stay in a transitional home and claim they were on a 9 month waiting list to get into one. This tells me the demand is there. I want to be the one to fill this void, and I'm extremely motivated to do so.
If there is someone here willing to help me analyze this property and the numbers behind it, I would be very grateful. Wish you all the best in your endeavors!
Thanks truly,
This is a great cause Aaron! Sounds like something that is in demand for the area and will bring a ton of fulfillment to you.
I'd recommend using the BP search function (top right corner) to locate folks in your market. Local investors and/or Realtors can shed some insight that'll be useful.
Best of luck to you moving forward!
Abel
Cost to operate
- Water $180/month
- Electric $150/month
- Phone $10/month
- Furniture/appliances $2000/bi-annually?
- Beds/Bed Clothes $200
- Mortgage $275
License is not required in NC to open halfway house.
Each room can legally hold two people
Rent will be $500 per head
3 Bed 2 Bath with a garage, with possibilities of expansion.
Realistically project could be ready for tenants by February.
List Price: $66,500
Ideal Investment: $56,000 /cashflow = $2,017.47
Repair costs: $22,000
ARV: $110,000
Initial Equity: $65,200
Could Pay up to: $65,000 /cashflow = $1,975.22
Repair costs: $22,000
ARV: $110,000
Initial Equity: $58,000
So now the anxiety is kicking in! These numbers seem way too good to be true, but I have ran the numbers over and over and this is the first REAL DEAL I have found and I want to put in an offer but my agent is busy... Its going to take a little creativity to pull this off as I just paid entirely too much for my first primary residence. (lessons learned) Fortunately I have BiggerPockets to back my knowledge now and I'm moving forward in a better head space. Patience and persistence.
Thanks again BiggerPockets,
Originally posted by @Aaron Furr:Cost to operate
Aaron is this a different deal to the other one you posted? The numbers appear to work. It looks like your initial outlay would be around $10K, good deal. You need to pull the trigger on one of these deals; get after it.
I've missed a lot of deals working with a buying agent; you feel like you owe them something because they've put in some effort somewhere along the line...but deals slip by because our agents are 'too busy til Wednesday' or something like that.
Go to the listing agent and you'll get the deal.
I was looking at an apartment building, told my agent about it, 3 days later he says he can't find it on the MLS, so I send him the Loopnet link. Another 3 days and he tells me it's off market. So I track down the owner through the LLC that owns the property, send him a letter and I have it under contract now. Agents don't know what's good for them when it slaps them in the face sometimes.
Michael, this is extremely helpful! I have a good agent will be available in the morning and normally is available when I need. It's more the anxiety that comes with the waiting and uncertainty. As I said I WAY over paid for my primary residence as I bought in a hurry to have a home by time my first child arrives in March. So finding a deal of this caliber is exciting and scary all in the same.
Thanks again Michael,