Operating a rental geared towards the elderly?

Investor · Milpitas, CA · Member since 2015 · 278 posts · 155 votes

Real estate guys recently had a podcast that was pretty interesting about targeting the retiring baby boomer demographics: http://www.podtrac.com/pts/redirect.mp3?http://tra...

The long story short, they have homes, and renovate it with things that cater towards elderly people by putting in ramps, outfitting showers with handles and holds, wheelchair lift, etc.

They have like 3-4 bedrooms, and rent them out by room, one to two people per room. And sounds like they also hire a caretaker to make sure things are fine, do laundry, some cooking, etc.

Anybody do anything similar to this? Would love to pick your brain!

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Glenn McCrorey

Investor · Cedar Rapids, IA · Member since 2013 · 494 posts · 407 votes

@Andrew Wong @Jennifer Beadles I do exactly what Jennifer does. I rent to companies that provide services to individuals with physical or developmental disabilities. I get paid by the company electronically and they manage the people in the house. It's pretty hands off but I do have to take care of maintenance issues. Some of the companies actually have a maintenance person on salary which is ideal. I have 45 of these and spent yesterday afternoon throwing darts in my garage while I listened to podcasts and smoked a cigar, so it's not too labor intensive.... check out BP podcast 110 where I talked about it on the second half of the podcast.

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Don KonipolBusiness Member
Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
9y
@Andrew Wong, While I myself have never owned this type of "shared living" housing, I did provide financing for three such units a developer was building in Texas. He sold them to individual investors who believed that the return generated would be significantly higher than returns in other residential properties. However, these properties need to be compared to assisted living, hotels, residence inns, etc., as they require active day to day management, as opposed to somewhat more passive rental income.
As for the build outs for the less than mobile, this is constantly being done to regular houses as the owners "age in place". While the type of "elder living" situation you mention does contain these build out, what will differentiate them is the level of services that will be provided. They will fit in as a less institutional assisted living facility.
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Jennifer BeadlesPro Member
Rental Property Investor · Phoenix, AZ · Member since 2016 · 424 posts · 261 votes
9y
Andrew Wong I do something similar, though my homes are rented room by room to people with intellectual disabilities and a third party provider provides care. The caregivers don't live there, they just work on shifts. From an investment standpoint I love that I never have to worry about having vacancies as the state pays for any vacant rooms and all utilities are paid by the residents. Unlike group homes or assisted living the property does not have any special licensing and I have no part in the care side. I'm not getting thousands per room like senior care but the per room rates are higher than fair market rent would be.
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Glenn McCrorey
Investor · Cedar Rapids, IA · Member since 2013 · 494 posts · 407 votes
9y
@Andrew Wong @Jennifer Beadles I do exactly what Jennifer does. I rent to companies that provide services to individuals with physical or developmental disabilities. I get paid by the company electronically and they manage the people in the house. It's pretty hands off but I do have to take care of maintenance issues. Some of the companies actually have a maintenance person on salary which is ideal. I have 45 of these and spent yesterday afternoon throwing darts in my garage while I listened to podcasts and smoked a cigar, so it's not too labor intensive.... check out BP podcast 110 where I talked about it on the second half of the podcast.
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Jennifer BeadlesPro Member
Rental Property Investor · Phoenix, AZ · Member since 2016 · 424 posts · 261 votes
9y
@Glenn McCrorey It's great to finally meet someone else that does this! So few know about it. Are all of your properties in Iowa? I'd like to do this nationwide and am working with some larger providers now that operate in multiple states.
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Glenn McCrorey
Investor · Cedar Rapids, IA · Member since 2013 · 494 posts · 407 votes
9y
@Jennifer Beadles They are all in Iowa but in multiple towns. Some of the companies are small and local but a couple are tied to larger organizations that operate state wide and in multiple states. Check out The Mentor Network.
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Tobey Porter
Investor · Huntingtown, MD · Member since 2016 · 97 posts · 41 votes
9y
@Jennifer Beadles - how did you get started doing what you're doing? Making contacts with the companies who work with people with developmental disabilities. I worked for a company doing this exact thing in college and, now that I've started investing in real estate, have considered doing the same thing.
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Jennifer BeadlesPro Member
Rental Property Investor · Phoenix, AZ · Member since 2016 · 424 posts · 261 votes
9y
@Tobey Porter I had owned quite a few traditional rental properties and came across a listing on the commercial MLS for a triplex. The listing said that it was a group home and that all tenants were disabled (exact words, listing agent didn't know what it was). The price was great and other investors were passing it up because no one understood how it worked. I got it under contract and then grilled the provider because it all sounded too good to be true as the provider does all of the placement of residents, and they pay for vacancies. So I bought it and have continued to acquire new properties for them and other providers in the state.
@Glenn McCrorey Thank you, I'll check it out!
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Glenn McCrorey
Investor · Cedar Rapids, IA · Member since 2013 · 494 posts · 407 votes
9y
@Jennifer Beadles Here's another little tid bit because I like the cut of your jib....lol ... I have bought several houses from non profits that want to unload the asset, maintenance responsibility, and the appearance of a conflict of interest in being both the landlord and the care giver for significantly less than "market value". They like knowing they can keep renting the property from someone that understands their business and is a good landlord. Example, bought one for 90K cash then had it appraised for 126K and got a loan for 80% or $100,800. You could do one of those a day if you could find them.
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Mike Flora
Investor · Menifee, CA · Member since 2015 · 534 posts · 216 votes
9y
Glenn McCrorey where can I get more info on how to do this and find a caretaker that does all the work while I just do the maintenance etc etc. my take is I rent it out to the care taker for an inflated amount of what market rent would be in that area??? I'm about to put a house on the market for rent in a 55+ neighborhood and I only have a sign out front for now and only 2 calls I got were from caretaker wanting to move in with there family memeber. That's how they get around the 55+ portion to live there as a caretaker. I need more info on this to see if it will be a better than just basic rent rates.
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Glenn McCrorey
Investor · Cedar Rapids, IA · Member since 2013 · 494 posts · 407 votes
9y
@Mike Flora "community based living services" is the service these companies provide. You can google that and wherever you are interested in investing. You can contact those companies and ask if they have any housing needs that you might be able to help with. I wouldn't say the rents are inflated, they are around market value. I try to keep the 1% rule in mind when purchasing and setting the rent.
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Mike Flora
Investor · Menifee, CA · Member since 2015 · 534 posts · 216 votes
9y
Glenn McCrorey thanks for the info!
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Luke M.
Investor · Cedar Falls , IA · Member since 2014 · 49 posts · 8 votes
9y
@Glenn McCrorey long time time buddy! Thanks to the pod cast glen was on I was able to get into the disability homes as well. It has been great. I will give you a call soon. Have some things coming up I want to pick your brain about!
@Jennifer Beadles How have you been? We met in Dallas at one of the Real estate guys seminars. Hope all is been great!
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Andrew Wong
OP
Investor · Milpitas, CA · Member since 2015 · 278 posts · 155 votes
9y
@Don Konipol, any way I can talk to this guy that you provided financing for? Also, as an investor, what piqued you to put some money into this? What can I do in this space to make it appealing to an investor?
@Jennifer Beadles, do you find the third party care provider and also the people who are renting? Or are you renting out the unit to a third party to provide everything? What additional improvements did you add to the units so that others go, "Hmm, yeah this place deserves higher than FMV rent."
@Glenn McCrorey, I'm guessing you did some renovations? What renovations did you do? Will listen to #110 this week!
Originally posted by @Glenn McCrorey:

I have bought several houses from non profits that want to unload the asset, maintenance responsibility, and the appearance of a conflict of interest in being both the landlord and the care giver for significantly less than "market value".
You also mentioned you bought houses from non profits... Why did they want to unload, and what patterns did you look for? Were these under the same people you contacted from Googling "community based living services" and then just buying properties from them when they needed to offload?
Any of you going to any this SF Bay Area Summit by chance?
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Andrew Wong
OP
Investor · Milpitas, CA · Member since 2015 · 278 posts · 155 votes
9y
Why does the state pay for vacancies?
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Luke M.
Investor · Cedar Falls , IA · Member since 2014 · 49 posts · 8 votes
9y
@Andrew Wong I believe one of the reasons they are selling the houses/buildings because its a bit of a gray area.
They own the real estate their clients live in. It could seem to some that they haven't given them options to live where they like. In my case, I was able to provide a home for them because they sold a multifamily building and were moving towards the single family. It gets them more interaction in the everyday living.
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Glenn McCrorey
Investor · Cedar Rapids, IA · Member since 2013 · 494 posts · 407 votes
9y
Regarding renovations. Usually, none are required. Things like grab bars and ramps you are required to let them do according to the ADA which says you have to allow them to make reasonable modifications. They have to put the property back to it's original condition when they move out. Sometimes I do make modifications for them. Sometimes they want to do thins like widen doorways for wheelchairs but I let them pay for that sort of stuff.
Yes, they non profits that have sold houses to me are the same companies I rent to. I have done this a few times. Twice, one NP owned the house and another NP ran the program. I bought the house and kept the tenants in place.
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Andrew Wong
OP
Investor · Milpitas, CA · Member since 2015 · 278 posts · 155 votes
9y
@Glenn McCrorey
Originally posted by @Glenn McCrorey:

Regarding renovations... They have to put the property back to it's original condition when they move out. Sometimes I do make modifications for them. Sometimes they want to do thins like widen doorways for wheelchairs but I let them pay for that sort of stuff.
@Glenn McCrorey, why don't you install the grab bars and ramps yourself?
My thought is that adding those things would provide more value to third party provider companies, and in turn you could charge more than FMV.
When you bought the house from the NPs, did they continue running the program? Could you also touch a little of why the NPs have incentive to sell to you like so?
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Glenn McCrorey
Investor · Cedar Rapids, IA · Member since 2013 · 494 posts · 407 votes
9y
@Andrew Wong I don't know the details exactly but many individuals on SS disability have a certain amount of money set aside by the government for them to use to accommodate their disability, like build a ramp. Also, I have had two nice big ramps put in by two different NP groups that do nice things for people like .....building ramps.
A company may wish to sell a property to raise revenue for something else or get away from the maintenance and upkeep. There is a feeling among care providers that the government is going to do something to discourage the NP's that provide these services from also being the landlord. It could appear to be a conflict of interest when the NP is being paid to take care of individuals but also has a motive to keep them in a particular house. Individuals are allowed to move out and I have seen people at a house I rent to NP "X" and say.. "Hey, didn't you used to live at 123 Main St. that is run by NP "Y"? One lady said, "yes, too much drama with my room mates." It would be easy to manipulate individuals that weren't functioning on a higher level to live wherever th NP wanted them to.
The other side of that coin though is, if we don't think the NP has any nefarious motives, we can understand how not having a different landlord and lease for each property would be a good thing. If the NP owns the house, they can modify anything they want without needing a landlords approval. Some individuals aren't the most hygienic or tidy and that could be tough for some landlords to take.
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Andrew Wong
OP
Investor · Milpitas, CA · Member since 2015 · 278 posts · 155 votes
9y
@Glenn McCrorey, thanks!
So you don't renovate because the NPs are better able to utilize money from those that they are servicing, and I guess more often than not, that equity gets built up for you with no cost on your part because NPs are using SS disability benefits?
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Glenn McCrorey
Investor · Cedar Rapids, IA · Member since 2013 · 494 posts · 407 votes
9y
That's about the size of it.
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Glenn McCrorey
Investor · Cedar Rapids, IA · Member since 2013 · 494 posts · 407 votes
9y
I just had a NP put an egress window into the basement bedroom to make it "conforming", at no cost to me but I agreed not to raise the rent just because it was a 4 bedroom now. I have added these windows in the past at my expense but then rented it our for more. OK, you're going to call me a liar.... but.... the reason they did this is because there are 3 individuals in the house and 3 bedrooms on the main floor. Two people have passed away in that room in the last year or so. Apparently, tenants and staff now think the place is haunted and no one wants to be in that room, seriously. But, they love the house and location so they offered to put in the window.
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Andrew Wong
OP
Investor · Milpitas, CA · Member since 2015 · 278 posts · 155 votes
9y
@Glenn McCrorey, nice that you get equity built in for free by your NPs. :P
Before I venture into this, I want to do some research about how much rent increase I'll get if I furnish a place to be elderly friendly before renting it out to a NP.
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Jake RhodesPro Member
Rental Property Investor · Crown Point, IN · Member since 2018 · 53 posts · 17 votes
4y
Hi @Jennifer Beadles @Glenn McCrorey - Are you all still doing these group homes? - We stumbled on a 7 bedroom group home (Wholesale Deal) in Indiana.
I don't know anything about the group homes but the cash flow could is good and we are considering keeping it. Would you be open to a chat?
Jake
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Glenn McCrorey
Investor · Cedar Rapids, IA · Member since 2013 · 494 posts · 407 votes
4y
@Jake Rhodes yes, still doing it. Still works.
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Glenn McCrorey
Investor · Cedar Rapids, IA · Member since 2013 · 494 posts · 407 votes
4y
@Jake Rhodes yes, still doing it. Still works.
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