Tenants: Group Home for the Elderly?

Question

Hello everyone,

I purchased my first rental property in the North Dallas area a little over a month ago as a long-term rental. We just received our first tenant application, and I’d appreciate some insight from those with experience.

The applicant (let’s call her Sara) runs a business caring for elderly individuals. She would like to rent the home and house two elderly clients there, for a total of three occupants. Sara also works a daytime job and would mostly be at the property in the evenings and at night.

We haven’t run a background check yet, but she’s offering a two-year contract, has no pets, and my agent says her financials appear solid with sufficient liquidity. There would also be a medical transport service regularly picking up and dropping off the elderly tenants for hospital appointments.

I’m getting mixed opinions from my wife and other agents, so I wanted to ask the community here: has anyone managed a similar tenant situation before?

I’m not too concerned about cash flow, but more about tenant quality, property wear-and-tear, and potential “headaches.” Based on the information above, how was your experience, and would you recommend moving forward with tenants like this?

Thanks in advance for your feedback.

James Lee · Answer

@Kenneth Garrett Yes, my agent is looking into the zoning and license question.

I was informed that Sara would stay there at night and there will be a Day person helping her coordinate and cook meals.

Luckily, there's no HOA in this neghborhood. But yes, my wife and I were concerned about how the neighbors would react if they saw multiple people going in and out of the home.

Kenneth Garrett · Answer

@James Lee

There are a few things to consider.

This could be considered a senior group home.  You would need to check the city’s zoning code and business license to make sure this is allowed and if so what the rules are.

It sounds like the elderly need some type of assistance. Who is there when Sara is at her regular job.  Is Sara considered an operator and is licensed by the state.

If this is just renting a couple rooms to people who happen to be seniors and don’t need any medical assistance or anything special then it’s no different than a co-living scenario.  It’s just a rental property.

If the neighbors complain just make sure you are in compliance with the city because that could get ugly for the owner.

Of course don’t forget about the dreaded HOA rules if you are in a HOA.

Diego Alvarado · Answer

Hi @James Lee

This is a very common request nowadays when you have a large home. There is a lot of need in North Dallas for those facilities and they are using SF for that.

Zoning might not be an issue, however city has to provide occupancy like any other business. Some are lost strict than other asking you to add an sprinkler system inside the house.

Another thing to consider is the modifications to the house, the size of all the doors are large so they have to open them up. Modify the bathrooms to meet requirements and decrease liability.

I would consider that application but the lease agreement has to be spot on and the deposit substantially larger.

James Lee · Answer

@Diego Alvarado I apreciate the considerations. The home is a 4 bed 2 bath, but the size is relatively small, right under 1800 square ft. I think the tenant chose our spot because of the walk-in showers in both bathrooms. I'll have to look more into this, but it seems like there could be more chance of liabilities than having the typical tenant family with kids?