Why I Invest in Recovery Housing—and Why More Investors Should Too

Question

Most investors I talk to have never considered recovery housing (also known as sober living homes). Yet the demand is massive, and the model combines consistent cash flow with real community impact.

A few quick points:

• Demand far outpaces supply in most cities.
• Homes are leased or operated with long-term stability.
• Many states offer certification programs that build credibility.
• Done right, it’s a win-win: investors see returns while residents rebuild their lives.

Demand far outpaces supply in most cities.

Homes are leased or operated with long-term stability.

Many states offer certification programs that build credibility.

Done right, it’s a win-win: investors see returns while residents rebuild their lives.

I’ve developed and worked with operators across multiple states, and the success stories are incredible. Curious if anyone here has looked at recovery housing as part of their investing strategy? Happy to share resources and insights with those interested.

Mitch Tamap · Answer

You’re right, the process can vary depending on the state and the operator, but there are some common steps and best practices that really help smooth things out. A few quick do’s and don’ts from my experience:
Do’s:
- Do your homework on local zoning and licensing requirements early, it saves a ton of time.
- Do build relationships with the right professionals.
- Do run conservative numbers so you’re prepared for any surprises.

Don’ts:
- Don’t skip due diligence just because the deal looks good on paper.
- Don’t underestimate the importance of solid systems and tenant screening, it makes or breaks operations.
- Don’t try to do everything yourself; having a good team matters.

Every market has its nuances, but those basics apply everywhere. Happy to share more about my experience if it helps, you’re definitely headed in the right direction.

Holly Lyons · Answer

Yes! This is actually the strategy that prompted me to get into real estate investing in the first place. I am still a newbie and do not yet own one, but have a property in escrow that I believe is a perfect fit.

I am curious about the process you have to go through for your property to be accepted and if it is different for each operator, state, etc.

I'd love to hear some of your do's and don'ts. This is definitely the direction I am headed and I'm happy to meet someone on BP who is already doing it.

Candace Hughes · Answer

Thanks for sharing this, Hunter! I’ve heard of sober living homes here in Indy, as well as housing options for special-needs adults who can live on their own but still need some oversight. I haven’t personally invested in that space yet, but I can definitely see the demand and the positive community impact. It’s interesting to hear how stable and structured the model can be. I’d love to learn more about the process and what it looks like from an investor’s perspective.

Ashish Acharya · Answer

@Hunter Foote

I am glad you shared these. These long-term housing and operate more like small businesses, opening the door to deductions and credits that traditional rentals don’t always qualify for. Investors can often use cost segregation to accelerate depreciation, reducing taxable income while maintaining strong cash flow. In some cases, partnering with or leasing to a nonprofit operator can even allow for partially tax-exempt rental income under certain IRS provisions.

Beyond depreciation, operators may also qualify for the QBI deduction, which lets you exclude up to 20% of your business income from taxes if the property is managed as an active business rather than a passive rental. Expenses related to staffing, maintenance, certifications, and community programs can further increase deductions while improving the property’s overall impact.

What makes this model special is its ability to combine purpose and profit. Investors help people rebuild their lives while building wealth through consistent income and smart tax planning. With the right structure and guidance, recovery housing can be both a meaningful and financially rewarding addition to your portfolio.This post does not create a CPA-client relationship. The information contained in this post is not to be relied upon. Readers are advised to seek professional advice.

Katie Alexander · Answer

Following this post

Hunter Foote · Answer

Thanks so much for your thoughtful comment! It sounds like you’re really interested in learning more about this space. I’d love to connect and have someone from our team walk you through the process from an investor’s perspective. Feel free to send me a private message here, and we can set up a time to chat!

Why I Invest in Recovery Housing—and Why More Investors Should Too

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