Riches in Niches: A Real Life Landlord Success Story!

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Back in March of this year I wrote an article entitled, Riches In Niches: A Guide To Greater Rental Property Cashflow.   The focus of this article was to encourage you as a landlord to explore specific market and tenant niches as ways to maximize the positive cashflow on your rentals.  The key for many landlords, is to explore which “niches” are available within your market and then provide quality rentals to those niches. 

Since that article, a real life opportunity has developed within the Baltimore market that I would like to share.  The primary reason for this follow-up article is to make sure you are thinking about what is possible in your market.

Double or Triple Net

Consider this: How would your life change as a property owner if you could rent your properties to a single organization with multi-year leases (with rent escalation clauses), zero vacancies, zero tenant management issues, no maintenance issues to deal with and a monthly payment that meant at least $350 net positive cashflow.  In essence, a commercial lease that is double net, and almost triple net in nature.

Would this get your attention?  I bet it already has!

For many landlords, their entire business plan regarding tenants is usually the path of least resistance.  The first qualified tenant who shows up gets to move in.  Sound familiar?

While this approach works, the key question is:
Are you maximizing your rental income, while minimizing your expenses?

Here is the “niche” that could maximize your monthly cashflow.

The organization entering into the lease agreements, as the tenant, is a non-profit that provides supportive housing in the form of individual rooms rented out on a weekly basis.  The great thing about this program is that the non-profit does everything.  Tenant (actually their clients) selection and management, rent collection, maintenance and everything else required of a landlord.  They do all the work — you just supply the property and collect a monthly check.  How cool is that?

The niche that the non-profit is supporting consists of individuals who most likely could not afford to rent an entire apartment but can afford a single room, individuals with some sort of health/emotional issues or those who do not qualify for other Government housing programs.  The key for the non-profit is that all of their clients either work in some capacity or receive some non-housing related assistance.  The non-profit does not depend on the generosity of other agencies or organizations for their rental income – a huge plus in today’s challenged budget environment.

I am fully aware that not every market can support this type of arrangement, but I am positive that if you get out of your “comfort zone” and look hard enough, there are other opportunities very similar to this one just waiting to be discovered.

Bottom line…

What are you doing right now – today… to maximize the cashflow generated from your rentals?

Image: jscreationzs / FreeDigitalPhotos.net

About Author

Peter is an active and successful real estate investor in the Baltimore Maryland region for the past 8 years and is one of the founders of The Club Mastermind a real estate investing coaching program focused on local coaches helping investors to perfect their game.

6 Comments

  1. Great story to illustrate your previous post, Pete . . . that said, I kept wondering if you were going to reveal the secret sauce. I guess you’ll be keeping that one to yourself; that said, you’ve given me something to think about and I’m certain others will find this to be a bit inspirational as well.

    • Josh,

      By secret sauce… if you mean the name of the organization… sorry… my clients have already locked this opportunity up tighter than a drum.

      With that being said, anyone in almost any market can execute similar strategy… all they have to do is team up with a non-profit who whose focus is quality housing for their tenants.

      They are out there… you just have to find them.

      Pete

  2. Pete, I regularly come across larger single family homes that are not zoned for multi family. These houses are pricey to rehab as single family homes and would be best as 2-3 units. I see that these houses would be better candidates for a program like you described because it would be a less expensive rehab with the benefits of better income.
    I am a landlord in the Baltimore area always looking for ways to increase my cashflow. Would you be able to share the name of the nonprofit you are working with. If dont want to post it maybe just email me. [email protected].
    I have spoken to individual tenants who are in programs similiar to the ones you describe but have passed on them because the program participants where recently released from prison for a variety of crimes and that was an exclusion in our screening criteria.

    • Bob,

      The Baltimore market is unique due to many factors… such as… great housing stock for a program like the one discussed above, many individuals who are in transition and not enough conventional housing assistance to support the need…

      Regarding the specifics of the program discusses above… my clients have that program totally covered at this time.

      Regarding the individuals who had prison backgrounds… the way to get involved is through programs like the Prisoners Aide Association… they lease from property owners and then select, place and manage their clients who live in the leased property. Very clean for the landlord.

      Hope this helps.

      Pete

  3. Be careful- most Nonprofits in housing like what your talking about will not last without State or Federal grants because the managment of the tenant is too costly. I found out the hard way.

  4. Programs for the devopmentally disabled are one thing, alcohol, rehab & prison half-way houses could make you pretty unpopular with the neighbors pretty quickly unless the house is in a disadvantaged area in the first place. For a large home in an “iffy” neighborhood it might not be a bad option. Since I myself live in an informal, self-run “co-op”-type situation I’ve often wondered about the feasiblity of multi-person housing for low-income (ie elderly) that isn’t run by an organization. It’s not a lifestyle for everyone, & we’ve had some less-than-ideal situations in 15 years, but saving $5K+ tax-free dollars per year PER PERSON, safe neighborhood and a 20 mile view from a hilltop in San Diego? I can put up with a few quirks from my roommates…

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