In this article, I’m sharing one of my favorite investing strategies, supported living program, where we are able to provide long term housing to people in need while lowering our operating expenses.
The supported living program consists of renting out your properties to people with intellectual disabilities. There is virtually no information online about it. Very few investors have ever heard about it. Though I’ve helped several of my investor clients convert their units to supported living.
I’ve owned supported living rentals since 2015 and have worked with multiple providers. Some were non-profits and others were for profit, but overall the program is the same.
The supported living program is available for landlords in all 50 states, and below are some of the details.
Some Background….
On June 22, 1999, the United States Supreme Court held in Olmstead v. L.C. that unjustified segregation of persons with disabilities constitutes discrimination in violation of title II of the Americans with Disabilities Act.
The Court held that public entities must provide community-based services to persons with disabilities when:
(1) such services are appropriate; (2) the affected persons do not oppose community-based treatment; and (3) community-based services can be reasonably accommodated, taking into account the resources available to the public entity and the needs of others who are receiving disability services from the entity.
The Investment Opportunity
The department of justice has been enforcing the Olmstead act by shutting down state-run mental institutions, thereby displacing those with intellectual disabilities who are now in desperate need for community-based housing.
The Benefits Of Owning Supported Living Program Rental Properties
- The Provider will pay for any room vacancies, so unlike regular rental properties, you will achieve a zero percent vacancy rate.
- Residents pay all utility bills, through the providers who have checkbook control over the resident’s finances.
- Each resident has licensed and professionally trained caregivers, paid for by the state. Each caregiver works on shifts and they do not live at the property.
- Property management is not necessary. Rents are guaranteed. The provider place the residents.
- Housing modification funds of up to $12,000 (may vary by state) used to pay to install modifications for that residents needs such as grab bars, walk-in shower, fenced yards, wheelchair ramps, etc. receives each resident.
- Depending on location, the per-room rates vary from $400 to $800 per room per month which may be higher than fair market rent for a property.
- There are no certifications, special zoning requirements or special insurance necessary for the property or the property owner.
- Bottom line: rents are often higher, and you can save at least 15%* in expenses by working with this program as a landlord.
Property Characteristics For The Program
- Single story building is preferred, but not required.
- No more than 4 rooms per unit, though multiple rooms in separate units are fine. For example, a duplex (2 units) with 4 bedrooms each side works great for the program.
- The location must be close to transportation, shopping in mid-sized cities (not rural small towns).
- The more bathrooms the better.
- Single-family homes or multi-family properties work great. There is a 5-year waitlist for a 40 unit apartment complex in my local area, used for supported living.
Ideal Property Characteristics For Investors
- Single story multi-family buildings with 3-4 bedrooms per unit offer the highest return on investment and are easiest to staff and provide care.
- Single-family houses with 4 bedrooms in a lower cost of living area.
Downsides To The Supported Living Program
- There is more “wear & tear” to the property. However, most residents stay 10+ years so you’re also not paying turn over costs every few years. The damages that are more severe, such as holes punched in walls, the provider pays for these repairs and notifies us immediately.
- Staff turnover is high. This does not necessarily affect the investment, however, it can be frustrating to have a new manager every year.
- Some caregivers lack the knowledge of checking breakers, or how systems work. So some repairs are really minor.
- Some repairs are exaggerated, demonstrated by the photo below which I requested after I was told that “a staff member fell through the outside stairs”
Bottom Line…
I love working with the supported living program for several reasons.
The first reason is it feels good to know that we are making a difference for these residents who have such a need for housing.
The second reason being the many benefits such as long term tenants, zero percent vacancy rate, no turn over costs, not having to screen or place tenants and that the rents are often a little higher than what a normal tenant would pay.
So we have plans to convert all of our properties to supported living rentals. Since every property meets their criteria, and I love helping other landlords convert their properties and achieve higher cash flow.
*15% is assumed when applying a 5% vacancy rate and 10% for property management.
30 thoughts on “The Supported Living Program Investment Strategy”
This is fascinating, Jennifer. I have not heard of this program but it seems incredible on many levels. Thank you for sharing the details!
I’ve only met a few other investors who knew about this program. It wasn’t until we bought a triplex that was already run as a supported living program property that we learned about it, and now it is our favorite investment strategy.
This is fascinating, Jennifer. I have not heard of this program but it seems incredible on many levels. Thank you for sharing the details!
I’ve only met a few other investors who knew about this program. It wasn’t until we bought a triplex that was already run as a supported living program property that we learned about it, and now it is our favorite investment strategy.
Jennifer,
Thank you for sharing this information. I live in Illinois and was not aware of any such program. This is an excellent strategy for “easy ” landlording strategy. Please let me know more as I would love to learn more!
Hi Lawrence! I love this strategy, and we have been working on expanding with this program out of state. Each state has their own “rules” yet they are not really published anywhere online so I’ve had to do a lot of calling and talking to providers. I’m working on putting together a list of guidelines and providers in all 50 states, when it’s ready I’ll share it 🙂
Hi Jennifer!
Curious did you ever share this list of guidelines by state?
Hi Jennifer!
Curious did you ever share this list of guidelines by state? Or do you have any suggestions on what state department to call to get more information on program guidelines?
Thanks for your help!
Hi Kristi! My suggestion would be to reach out to the social services department in your state for the specific guidelines. Some states publish guidelines online, others do not. You can also try reaching out to some local care providers and taking with them as well. Hope this helps!
This would be a great resource and greatly appreciated.
I invest currently in 4 states and would be very interested in this list.
Hi Jennifer, I am in an expensive housing market, Portland, Oregon and have rental bought when prices were down. Is there a way to learn about this for other areas? Thinking maybe Salem.
Hi Jennifer, I am in an expensive housing market, Portland, Oregon and have rental bought when prices were down. Is there a way to learn about this for other areas? Thinking maybe Salem.
Thank you, Jennifer. Its good to know both pros & cons.
Thank you, Jennifer. Its good to know both pros & cons.
Hey Jennifer,
I’m here after you recommended it to me on another post.
I live in Indiana. Where would you recommend I start for finding information?
Nicki, I suggest calling some local care providers and asking if they have a housing need. You may have to make a few calls to get to the right person, but that’s where I would start.
Hi Jennifer! Still looking out for the list of all 50 states! Have you ever broken the ground in Texas with this program? How would you recommend getting started in this type of strategy?
Hi Jennifer! Still looking out for the list of all 50 states! Have you ever broken the ground in Texas with this program? How would you recommend getting started in this type of strategy?
Hello,
I have searched up and down to obtain information about this program here in San Antonio TX and I’ve been unable to get any solid information. I’ve been told that I would have to establish a staff to care for the patients, do I need a license, etc
My main question is who do I contact, an existing supported living facility to discuss renting my SFH to them or the department of Health and Human Services? Any information would be appreciated.
Hi Jennifer,
Thank you for sharing this great information. I love learning new investing strategy. I am glad to find your website. This is one of the best website I have seen for REI.
Thank you! I am so glad you are finding it helpful. If you want to learn more about Support Living, join the Support Living Waitlist here. We will be putting out a mini-course just on Support Living soon. Join the waitlist here: https://agentsinvest.lpages.co/supported-living-waitlist/
Hi Jennifer,
Thank you for sharing this great information. I love learning new investing strategy. I am glad to find your website. This is one of the best website I have seen for REI.
Thank you! I am so glad you are finding it helpful. If you want to learn more about Support Living, join the Support Living Waitlist here. We will be putting out a mini-course just on Support Living soon. Join the waitlist here: https://agentsinvest.lpages.co/supported-living-waitlist/
Hey Jennifer thanks for sharing your knowledge with us! I want to do that strictly as a landlord ,so how would I go about finding caregivers to fill in the property?
Hey Jennifer thanks for sharing your knowledge with us! I want to do that strictly as a landlord ,so how would I go about finding caregivers to fill in the property?