\n<\/p>\n
Investing in sober living facilities<\/strong> may not be the first thing that comes to mind when we talk about building a real estate portfolio<\/strong><\/a>. But if you knew how much they made, you might take a second look. We often focus on short-term rentals, long-term rentals, or fix-and-flip properties. But one of the best things about choosing real estate as an investment medium is its wide range and opportunities for creativity<\/strong>. People out there are house hacking<\/strong><\/a>, wholesaling, investing in mobile homes, and buying up parking lots. The options are truly endless.<\/p>\n So, where do we start? Sometimes, the best real estate investments are the ones that mean something more to us than cash flow. Devana Came and Reid Stadelman<\/strong> saw a gap in their community, and they filled it. They turned their real estate investment into a sober living facility<\/strong> to help people in recovery, and gave them a safe, structured place to stay while earning (mostly) passive income<\/strong><\/a> and building their investment portfolio<\/strong>.<\/p>\n In this episode, this husband and wife dynamic duo tells us all about their creative real estate investments<\/strong> that cash flow like nothing else. We talk about what a sober living facility is (hint: it\u2019s not a rehab center), how and why they built theirs, how to find and screen tenants<\/strong><\/a>, and tips for reducing tenant turnover rates<\/strong>. These things don\u2019t just apply to sober living facilities. Devana and Reid<\/strong> offer advice that applies to any real estate investment journey.<\/p>\n Ashley: Devana: Ashley: Tony: Ashley: Tony: Ashley: Tony: Ashley: Tony: Ashley: Tony: Ashley: Tony: Ashley: Tony: Ashley: Tony: Reid: Devana: Tony: Devana: Tony: Devana: Reid: Devana: Reid: Devana: Ashley: Devana: Tony: Devana: Reid: Devana: Reid: Tony: Devana: Reid: Devana: Ashley: Devana: Reid: Tony: Devana: Ashley: Devana: Reid: Ashley: Devana: Ashley: Devana: Tony: Devana: Reid: Devana: Tony: Devana: Reid: Devana: Ashley: Devana: Tony: Devana: Tony: Devana: Reid: Devana: Reid: Tony: Devana: Reid: Tony: Devana: Reid: Devana: Ashley: Devana: Reid: Devana: Ashley: Tony: Devana: Tony: Reid: Devana: Reid: Devana: Reid: Devana: Reid: Devana: Ashley: Devana: Tony: Reid: Ashley: Devana: Tony: Reid: Devana: Ashley: Reid: Devana: Tony: Reid: Devana: Reid: Ashley: Reid: Devana: Reid: Tony: Devana: Reid: Ashley: Reid: Tony: Reid: Devana: Reid: Devana: Reid: Devana: Reid: Ashley: Tony: Devana: Ashley: Tony: Devana: Ashley: Devana: Reid: Devana: Ashley: Devana: Reid: Devana: Reid: Devana: Tony: Devana: Tony: Devana: Reid: Devana: Reid: Devana: Reid: Devana: Reid: Ashley: Devana: Tony: Ashley: Devana: Ashley: Devana: Ashley: \u00a0<\/p>\n<\/div>\n
This is Real Estate Rookie, episode 265.<\/p>\n
I also reached out to the Sober Living Coalition in our area, and then, we started going to their meetings. And they gave out kind of a packet, I guess, of some sorts that had some intake papers. And then, Reid and I really sat down and thought about what our why was, how we wanted people to feel in our house. And we started structuring our paperwork off of that and off of experiences that we knew people had in other sober livings, like, well, how could we make it different? And we just kind of formed it from there.<\/p>\n
My name is Ashley Kehr and I\u2019m here with my co-host Tony Robinson.<\/p>\n
And welcome to the Real Estate Rookie Podcast, where every week, twice a week, we bring you the inspiration, motivation, and stories you need to hear to kickstart your investing journey. And today, I want to start out by shouting out a special person in the Rookie audience that goes by the username Smiley21. And Smiley21 left a five-star review on Apple Podcast that says, \u201cA must listen as a newbie. I\u2019m so happy to have discovered the Real Estate Rookie Podcast. Ashley and Tony do a great job of breaking things down while keeping the show entertaining with their banter and jokes. I hope to begin my journey this year in real estate and this podcast has been so inspiring.\u201d So Smiley21, we appreciate you. We also hope this year is super successful for you and thanks for supporting the podcast. So if you haven\u2019t yet, please leave us an honest rating, review on whatever platform it is you\u2019re listening to. The more reviews we get, the more folks who can reach, the more folks we can reach, more folks we can help.<\/p>\n
And let\u2019s be clear about that review, it\u2019s my jokes, because I think there\u2019s been two times, in the history of this podcast, where you cracked a joke. I remember typing to you, \u201cOh my God, that was somewhat a good job.\u201d<\/p>\n
That\u2019s true. That\u2019s true. But they also love the banter, which is awesome. And it\u2019s so funny, Ash, because I\u2019m in Houston right now, so if you guys are watching on YouTube, I\u2019m like in an Airbnb in Houston, and I\u2019ve had so many people come up to me, it\u2019s actually Rob from the Real Estate Podcast, Rob Abasolo, he\u2019s been out here, and I\u2019ve had so many people come up to me and say, \u201cTony, I love yours and Ashley\u2019s banter, please don\u2019t ever stop it. Forget the haters that are saying that the banter is boring.\u201d So I appreciate you guys for having our backs.<\/p>\n
Yeah. Yeah. We really do appreciate it because I can\u2019t take any constructive criticism. But Tony, how is the conference going? And you also have your own conference coming up too.<\/p>\n
Yeah, it\u2019s conference season right now. So, Rob has his event called Host Con, that\u2019s obviously about investing in short-term rentals, some amazing speakers coming out. So I was on stage with Rob and our buddy, Kai Andrew. We did a live YouTube thing and did some Q&A with the audience ant that\u2019s super cool. Rob\u2019s obviously an amazing host and so much good content coming up. And then, literally in nine days, I will be leaving to Orlando for our event, the STR Summit. So we\u2019ll have almost 400 people all gathered in Orlando to talk short-term rentals for a few days. So it is definitely a busy couple of weeks for us, but we\u2019re excited. The events in person are always fun.<\/p>\n
By the time this airs, both of those events will be long gone. I think this comes out March or so.<\/p>\n
Yeah. But if you want to go to the next one strsummit.com or hostcon.com for Rob\u2019s event. You guys can hang out with us in person.<\/p>\n
Yeah, I am attending Tony\u2019s event in Orlando, and trust me, I\u2019m really, really hoping for warm weather.<\/p>\n
Yeah. I\u2019m almost nervous that you\u2019re coming because you bring bad weather everywhere you go, so hopefully, we break that streak.<\/p>\n
I know it. Like December when we went to Phoenix, it was freezing. I brought my bathing suit, everything. It\u2019s like, \u201cNo.\u201d I almost DoorDashed a sweatsuit to the Airbnb because that was so cold.<\/p>\n
So hopefully we get a better luck in Orlando.<\/p>\n
Okay. So the main point of this episode this week is not only to learn from some great investors, but to learn also how much of a creepy neighbor Tony is as we bring on two people who he drives by their house, and when he actually met them at a meetup says, \u201cI actually know where you live. I know where your house is.\u201d So we\u2019ll get into that story. But Tony, do you want to introduce everyone to your neighbors?<\/p>\n
Yeah. So today, we have Devana and Reid, they\u2019re a husband and wife duo, and they actually have a very unique niche, which is why I was so excited to get them on the podcast. But they invest in sober living facilities, which is something that I\u2019ve actually never met anyone else that does. So in today\u2019s episode, we break down exactly what a sober facility is, like a sober living house is, the steps you need to do to get folks into the home, they talk about how they manage the properties, they talk about how they screen the tenants, and they also talk about why these types of investments are so important to them. And they really caution everyone at the end of this episode that once you hear the tremendous returns that they get, don\u2019t just start chasing the strategy just for the returns alone, but make sure that your heart is in it as well. So I thought that was a really important thing to call out for our listeners as well.<\/p>\n
Yeah. I love the part about just their business model because no matter what real estate strategy you\u2019re doing or whatever business you are in, having the right business model and structure and your mission statement really can help you increase the actual profit that you\u2019re bringing in. So listen to how they developed, how they run their properties and how that is impacting the success that they have in these properties. And when you listen to them talk about their turnover rate, I think some of you are going to be very jealous that you don\u2019t have that right now in your long-term rentals. And then, when you compare it to Tony\u2019s short-term rental turnover rate\u2026<\/p>\n
Devana and Reid, I am so incredibly happy to have you guys in the Real Estate Rookie Podcast. Before I even let you guys get into your story, I just want to let the entire Rookie audience know that I basically had to beg you guys to come on to this podcast. So as a quick backstory, we host a monthly real estate meetup here in SoCal, me and my wife do. And Devana and Reid live in the same city as me, they came out to the meetup. And I chat with folks at the meetup all the time, and after hearing their story and the kind of unique niche in real estate they\u2019re operating in, I said, \u201cWe got to get you guys on the podcast.\u201d
So what\u2019s even more weird is that I actually knew where Devana and Reid lived before I even met them. So again, we live in the same town, and every morning when I drive my son to school, I saw this ADU being built at one of the houses on the corner, and it\u2019s super unique as in our city there are no ADUs anywhere. And me being a real estate investor, I was like, \u201cThat\u2019s pretty cool, someone\u2019s building an ADU in the city that I live in.\u201d So when I was talking to them and they were telling me their story and they do this thing, but then they were also building this ADU, and I was like, \u201cWait, is your house on this street and this street?\u201d And they were like, \u201cYes, that\u2019s our house.\u201d So we became fast friends after that. So anyway, Devana, Reid, thank you both so much for coming on to the podcast. We\u2019re super excited to have you here with us.<\/p>\n
Thank you very much.<\/p>\n
Thank you.<\/p>\n
So I\u2019ve already given everyone a little bit of background. Right. Obviously, you got the ADU coming on, but if you can take it all the way back, what was the starting point for Devana and Reid as real estate investors and what kind of led you all into the niche that you currently kind of specialize in?<\/p>\n
So I\u2019ll start with that. I have background in addiction. I\u2019m not personally in recovery myself, but some close people that I knew in my life were struggling with addiction and alcohol. In 2007, I lost a really close person to me with a heroin overdose, and that kind of started my brain going, like I\u2019m angry at addiction, but what could I do to not be angry anymore? Could I do something to help instead of sit in that anger? So my kids were too little at that time, but my head started spinning about stuff. So I came to Reid one day and said, \u201cWe\u2019re looking for something else to do with investments and stuff, why don\u2019t we buy a house and turn it into a sober living?\u201d And he looked at me and said, \u201cOkay,\u201d but I had no idea what I was about to get him into.<\/p>\n
And Devana, just for those who don\u2019t know, define sober living. What is a sober living home?<\/p>\n
A sober living home is a structured home that has accountability and structure for somebody who is in recovery from drugs and alcohol. So a lot of times people will leave a 30-day treatment center and then instead of going back into their toxic environment or maybe back into a house where their spouse is still drinking or something, they\u2019ll come to sober living where they have, like I said, the accountability, the structure, and they can get their life back on track with a fellowship of people who are in the same place they are really, it\u2019s a lot of support for them.
So right away we started looking for a house. And he\u2019s more the numbers guy and the construction and I\u2019m more the vision and oh, it\u2019ll all work out. \u201cLet\u2019s just do it.\u201d So we did, and to be honest with you, I didn\u2019t really know what I was doing, I just thought, \u201cI\u2019m going to just do this and it\u2019s going to work.\u201d And so, we did, we went in and we built it and we thought of all the things and how we can get beds in. And then, once it was all done, that\u2019s when we took pictures and I started, not really marketing it, but going to the rehabs and introducing myself.<\/p>\n
We had no idea what we were getting into. We had no idea.<\/p>\n
Oh, it\u2019s been an awesome journey.<\/p>\n
It was awesome.<\/p>\n
So the first two weeks were really stressful because this was in 2014, so I wasn\u2019t really on social media and all that stuff back then either, so I just did the footwork and went into rehabs to introduce myself. And after the first two weeks, when we got our first client, it\u2019s like I can never look back. We\u2019ve been filled with the waiting list ever since.<\/p>\n
Well, that\u2019s really cool. The first question that I have about this is this is actually a business, you are operating a business out of this. This isn\u2019t a long-term buy and hold where you get the tenant and then you leave it be and they just pay their rent, there\u2019s actually some sort of operation that goes into that. So how did you learn about this? As you were building out this property, how did you know somebody would be looking for sober living, how to attract them, and then, also, how to build out the operations? Do you have any employees or team members that help you with this project?<\/p>\n
Yeah. So the strange thing is, growing up, my grandma actually had a sober living. I didn\u2019t really understand it when I was younger or know\u2026<\/p>\n
Had you ever gone in to it or?<\/p>\n
I maybe drove by, didn\u2019t even go into it, I mean, I was young. So I had heard the term before. And then, growing up with some close people to me that were an addiction, I actually had to bring people to sober livings before. And I would always walk in and I would leave crying sometimes because they just were not a place I wanted to leave somebody. So I had in my head that I wanted to do it different.
And then, I also, reached out to the Sober Living Coalition in our area and then, we started going to their meetings and they gave out kind of a packet, I guess, of some sorts that had some intake papers. And then, Reid and I really sat down and thought about what our why was how we wanted people to feel in our house. And we started structuring our paperwork off of that and off of experiences that we knew people had in other sober livings, like how could we make it different? And we just kind of formed it from there.<\/p>\n
Well, and Devana, being or going to sober living homes before she would tell me stories about how horrible they were. And it was the living environment. The landlord wouldn\u2019t put money back into the home so they were dirty or things weren\u2019t working and electrical outlets weren\u2019t working or different things. So she\u2019s telling me the stories and I\u2019m thinking, I have background in construction, and I\u2019m like, \u201cWell, let\u2019s make this awesome. So I know exactly what to do. We can put electrical outlets on each side of the bed instead of behind the bed and we\u2019ll make everything super convenient for everybody. And I can do all that kind of stuff.\u201d I mean, you can give a better example of what you saw before, but it was about how do we make this a place that we would want to live in?<\/p>\n
A high quality.<\/p>\n
Like why is a landlord skimping on their tenants living space? You want your tenants to be happy and you want them to be there, they want to want to be there. And I think that was where the struggle is. We saw an area that we could really help.<\/p>\n
Well, first, let me take a few steps back. Right. I love the approach that you two are taking because it shows that there are people who genuinely care about the folks that are staying inside of their properties. When there are landlords that don\u2019t take care of their properties, don\u2019t make repairs, don\u2019t do CapEx, it gives all landlords a bad name. And that\u2019s why when you talk about being a real estate investor in some circles you are immediately a bad person because you own investment properties. And I think if more people took the approach that you, Devana and Reid are taking of coming from a place of caring and actually worrying and working on the experience that people have when they come into your homes, it makes it a better thing for all of us.
But before we go too far, I\u2019m loving this conversation, if we can just zoom out for a second. What does your current portfolio look like today? How many of these homes do you have? What other type of real estate investments? Just give us the 30,000-foot view.<\/p>\n
So we have three sober livings currently with a total of 47 beds, 48 because I have an emergency bed. So it\u2019s kind of an interesting thing because I have those three houses, but I actually have 47 paying people, so it\u2019s a little apartment or complex or something?<\/p>\n
Yeah, they\u2019re single-family homes, they\u2019re not anything special, but-<\/p>\n
So there\u2019s not really a term, like a strategy, like you hear all the time, like short-term or midterm or whatever. I don\u2019t really know. I\u2019m almost bed hacking instead of house hacking. I don\u2019t really know how else you would say it. So we rent the bed out instead of just the room. So there\u2019s shared bedrooms. So we have three of those and then we have one longterm and we just built our first 1200 square foot four-bedroom ADU in the back of our house. So with a total of 52 paying tenants in all of those.<\/p>\n
That\u2019s awesome. Congratulations you guys.<\/p>\n
Thank you.<\/p>\n
Thank you.<\/p>\n
I just wanted to ask one followup question, and maybe we\u2019ll get into this, but how are these tenants paying for their beds? Is this a county-sponsored program where there\u2019s some kind of funding that they applied for that\u2019s something like Section 8 or is this a self-pay program that every person is kind of paying for their own bed?<\/p>\n
Personally, we do private pay, so everyone\u2019s private pay. I do know of some houses who do county beds because there are state and county programs that do pay for sober livings. I just personally don\u2019t because I really like to have the control over who comes in and who doesn\u2019t and I think that\u2019s part of why we have a very low turnover rate. I mean, my average people who stay in our houses are one to six years. I literally have people who are there six years right now. And so, I don\u2019t have that every two weeks somebody turned around and leaves. I have people who I offer quality soberly so people don\u2019t leave. I maybe get a bed open every few months, so my wait list is hard, I feel like I have to turn a lot of people away.<\/p>\n
Let\u2019s kind of talk about that, like having a wait list. So you mentioned that you guys go above and beyond with these properties. Are you guys the only ones having a wait list or did you do some market research and see that there\u2019s actually a big demand for this type of housing and there just wasn\u2019t enough supply in the area or is it because of your model or maybe a mix of both?<\/p>\n
Yeah. I think a mix of both. There is a very high demand, but the other houses have such a high turn up that people go there and then, something happens and they leave. So they\u2019re searching for that good home to stay in. So they will go to those other houses, but they\u2019re not staying, you hear lots of stories about it. We just haven\u2019t had that experience because when we get the people, they\u2019re like, \u201cWow, I feel home. I feel comfortable here and I don\u2019t want to leave.\u201d<\/p>\n
We\u2019ve heard of other owners of sober livings say, \u201cWell, how are you staying full right now?\u201d And we haven\u2019t had the issues that other sober livings have had. Now, there\u2019s obviously some good sober livings out there, there\u2019s just not very many of them, there\u2019s a lot of bad ones.<\/p>\n
So along those lines, what\u2019s the average rent you charge per bed? And then, what would be the difference if they were to go and rent a studio apartment or a single-family apartment or a single bedroom? I\u2019m just trying to look at the difference in cost and to show what that motivation is to pay to have that kind of environment around you.<\/p>\n
So it all depends on the area. We\u2019re in California, we\u2019re in Riverside County, so we charge 700 a bed for our men\u2019s homes and 650, I think we\u2019re at 650 for our women\u2019s house. If you go down to Orange County in California, I mean, a cheap bed is 1500 for like, I don\u2019t know what you\u2019re getting, but 2,500 a bed is average. If you go into LA, 2,500 to 5,000 a bed is average. I mean, they go up to $35,000 a bed if you\u2019re in a really nice place in Malibu. So I\u2019ve seen sober livings down to three\u2026 Nowadays, probably 450 is like a lower end, but that\u2019s like-<\/p>\n
So the ones that you have that are 650 to a 700, how does that compare to if they were to go and rent a studio apartment in that same market, that same area, what would the rent be for that?<\/p>\n
In California, a studio apartment probably would be 1200. Okay. Do you have that Tony? I don\u2019t know what a studio\u2026 I mean, a one bedroom probably would be 1500 for a one bedroom apartment in California.<\/p>\n
The last time I had an apartment in California was six years ago and I think I was paying $1,800 for a two bedroom. So somewhere around there probably seems right in today\u2019s market. I guess one followup question for me. So what are the responsibilities? Actually, before I ask that question, let me ask this, how do you guys set your prices? So you\u2019re at 650 versus 700, is there a process for comping other sober living homes in the area so you know how much to charge?<\/p>\n
Yeah, to be honest with you, I could charge way more because we have the quality that we\u2019re giving compared to what other sober livings are, I could. But this is my philosophy, I\u2019m making money, I\u2019m making good money, and I want every single person that comes into my house to be able to do it on their own because by the time they get to us, they have exhausted family, they\u2019ve burnt their bridges. And so, I want them to gain that self-respect. So if they had to go get an entry level job at McDonald\u2019s even, they would be able to pay their own rent and feel good about themselves and save some money and be successful in life.
So I could ask more, but I feel like I\u2019m in that really good balance where we\u2019re still making good money, but we\u2019re also helping people. If our houses were in Orange County, they would be going for on the very high end of rent. We\u2019re comparable in Riverside, so maybe that\u2019s also why we have a wait list because they\u2019re like, \u201cWell, I could pay for the House of Courage this much and I\u2019m going to go other places for pretty much the same and I\u2019m not getting nearly the quality of life.\u201d<\/p>\n
Well, I think to go back on what Ashley had asked earlier, so that $700 a month, that includes all the utilities, we\u2019re paying for toiletries, cleaning products, cable TV, air conditioning, heating to whatever temperature, no matter how hot or cold it is, so we have all of that incorporated into that dollar amount. If you\u2019re going to go rent an apartment at, let\u2019s say, $1,500, 1,200s, 18, whatever, you\u2019re also paying for utilities and the other things. We have Netflix included and certain things included. So a lot of people are leaving the sober living home and going to get their own place and realizing, \u201cWow, I thought it was just the monthly rent of the apartment, no, there\u2019s a lot more to get the same quality of life that I had at the House of Courage.\u201d So, that\u2019s part of the benefit of going into sober living and paying that amount. But you do have to live in a room with somebody else, so-<\/p>\n
Like a bedroom in our city, they\u2019re just going to go rent a bedroom out of somebody\u2019s house. They\u2019re going for like 950 to even a thousand dollars for just a bedroom in somebody else\u2019s house. But I think more so what they\u2019re looking for, it\u2019s not just that they need an inexpensive place to stay, but they need the structure. People come to me and say, \u201cI need the accountability because if I\u2019m in a bedroom by myself, I might use or drink and I want to be surrounded by people that go to meetings that I can come home to and talk about my day and I\u2019m getting that support.\u201d So they\u2019re actually looking for the accountability part of it.<\/p>\n
So now, say that I\u2019m someone that\u2019s brand new and I\u2019m looking to start my first sober living facility, and I know you said that you kind of undercharge a little bit, but is there a tool or a website or what should my process be if I wanted to understand what is the going rate for bed in my city?<\/p>\n
So I would start at who you\u2019re looking to attract. So if you\u2019re looking to attract more a professional that wants to have really strict anonymity, maybe a police officer or a lawyer or something like that, they don\u2019t want to share rooms with people, you could do more of an exclusive sober living and charge a higher rate and maybe do a private room type situation. If you\u2019re looking just for the average person, I think checking other sober livings and what they offer, there\u2019s not really a book or a thing to go by, I know people who charge a little bit more than me, a little bit less, it\u2019s just kind of what you feel like you\u2019re offering.<\/p>\n
You can find the sober livings that are in an area through a couple different websites and you can just call them up and ask.<\/p>\n
\u201cWhat are you guys charging? And what do you offer? What are your amenities?\u201d We have a lot of amenities.<\/p>\n
Yeah. And that\u2019s so interesting to me because I think of rehab, you watch movies and there\u2019s people going to rehab and it\u2019s like it\u2019s so expensive, we can\u2019t afford it or whatever and that\u2019s why I was curious as to how that rental price compared to having your own apartment where really it is more affordable and it\u2019s a great option, plus you\u2019re getting that structure and that accountability of the sober living. So can you talk more about that actual operation? Is there somebody that lives there full-time? Do you have people, employees that come in and out and kind of monitor if someone has abused a substance?<\/p>\n
Yeah. So we have managers that live in all of our houses, they live there 24 hours. They\u2019re allowed to have their own jobs outside, so they kind of come and go and they monitor, they check chores that have to be done every day, they make sure everybody\u2019s in on time. They pretty much make my life so nice. They do all the day-to-day operations, they do the disciplinary stuff, unless it\u2019s something that I have to step into, which I haven\u2019t had to do in a really long time, they just run the house for me. So how we structure it with them is they live there for free and they get the manager\u2019s room and they collect the rent for me if anybody pays, if they don\u2019t pay. Some people don\u2019t have bank accounts yet and that kind of stuff, so if they have to pay in a different way than Venmo or another way, then the manager would collect that and I would pick it up. But they pretty much do everything for me.<\/p>\n
So one followup, when you\u2019re looking for these managers, are you looking for someone with specific training or qualifications or is it you, Devana and Reid that are finding just people that you feel are good people and then you\u2019re training them up how to be managers in that house?<\/p>\n
So this is a really important fact. I think that they have to understand addiction because they\u2019re dealing with\u2026 A lot of things come with addiction, there could be manipulation, old behavior and how they used to work when they were in their addiction. So the hardest part to find a manager is the first manager because you have to find somebody who\u2019s been in recovery to do that. Once you have a house full of people, I pull from the house. So if my manager were to tell me they were moving out tomorrow, I have 19 other guys that have been there for three years that know how to run the house, they\u2019ve done everything, I know they\u2019re responsible and whatever. So I usually go and pick somebody who would like to have that position. So we usually have a manager and an assistant manager so that there\u2019s always kind of eyes and ears if one\u2019s working, one\u2019s not, and he might get half off.<\/p>\n
So then, just to clarify, so your managers and assistant managers are people who came into your sober living home to stay there and then they\u2019ve kind of leveled up to become your management team, I am understanding that correctly?<\/p>\n
Yeah.<\/p>\n
Correct.<\/p>\n
Yeah.<\/p>\n
Yep.<\/p>\n
That is fantastic. That is fantastic.<\/p>\n
And it gives them something to put on their resume. It gives them responsibility and purpose, which most of them want just to help to give back to the community that helped them.<\/p>\n
Yeah. And you have people living in the house and they have pride in where they live, and so, they want to keep that running the same way that it\u2019s been running. If they have a great manager that\u2019s been overseeing everything and that person leaves, there\u2019s usually a lot of people that are interested in stepping up to make sure that the house stays the quality and level of management that they\u2019ve seen. So we usually have a lot of great people to pick from.<\/p>\n
So you guys have talked a little bit about the amenities that you offer and kind of what that community looks like. Are there any certain boxes that you have to check to be considered a sober living home like you have to offer this or you have to offer that? And if so, what are those requirements?<\/p>\n
So there\u2019s no requirements in terms of amenities. I mean, I\u2019ve seen basic where they don\u2019t even turn the air conditioner on in California because they don\u2019t want to have the air conditioning bill.<\/p>\n
Unfortunately, yeah.<\/p>\n
It\u2019s pretty sad. To be a sober living, the qualifications, I guess, if code enforcement were to come to your house, we do random drug testing and alcohol testing and my managers do all that, so they log that. And then, our people do some sort of self-care, like either AA or NA meetings, therapy, not in our house, this is outside. We don\u2019t provide any services. So we require, it\u2019s three to five times a week that they do something, an outpatient program, an AA or NA meeting, something like that. And then, we keep their logs. So if somebody were to come to the door, we could say, \u201cNope, look, here\u2019s their stuff and here we drug test them.\u201d And they sign something saying they are in recovery from drugs and alcohol, but we\u2019ve never had an issue with having to prove it to anybody or anything. You can just buy a house and start a sober living, there\u2019s no license because we don\u2019t provide any service really, it\u2019s just like-minded people living together, really, if you want to break it down.<\/p>\n
So how are you finding these people? You\u2019re going to the rehabs and you\u2019re giving them the information, then they must refer people to you. And then what does the screening process look like?<\/p>\n
This is another interesting thing. I mean, we pay for our domain names. I don\u2019t know, what is that? A hundred bucks a year or something. That\u2019s the only money we\u2019ve ever put into marketing.<\/p>\n
Ever.<\/p>\n
Ever. Not a single penny in marketing. Our people in our house are best marketers, so when they go to their meetings and back to their rehabs and wherever they go, people are like, \u201cOh, what house are you in?\u201d It\u2019s like this whole community. And then, we get 90% of our calls just from word of mouth, I guess.
The screening process, I still do all of that. To me that\u2019s really important. I haven\u2019t given that over to the managers yet. And I just go through a series of questions. And I don\u2019t know if I\u2019ve been doing it so long, I just know. Like in the first three seconds of the phone call, I know if it\u2019s somebody I\u2019m going to continue with or not. And I\u2019ve just gotten kind of good at that process.
So that my life isn\u2019t super chaotic getting a thousand phone calls a day because I could probably get a hundred calls a day on my phone, I just kind of go through, I screen them first because I don\u2019t have any open beds. So then, I\u2019ll go through my voicemails and get back to them or give them a text message quick or a response like, \u201cNo, we don\u2019t have a bed open. I\u2019ll put you on the list.\u201d Or something like that. So it used to be in the beginning, I wanted to talk to everybody and I had to, I\u2019ve learned how to simplify my life a little bit and not have to talk to every single person that calls, but still get a good quality person in. Having good processes and procedures in place has made my life so simple around this. I don\u2019t think it takes any more time for me where I\u2019m at in my stage than it would with a mobile home park or I think even a short-term rental probably would be more work for me than what I\u2019m doing right now.<\/p>\n
Well, especially with your low turnover too with having people stay for so long, it\u2019s not like every month you\u2019re having a new turnover.<\/p>\n
Our properties in Joshua Tree turn on average 12 to 15 times per month, so to have someone staying there one to six years is crazy.<\/p>\n
And when I get the call, then I just set up the time, I text my manager and say, \u201cSomebody\u2019s coming in for the intake.\u201d They do all the intake paperwork, they get them in. I don\u2019t have to go over and do all of that, they do all that for me.<\/p>\n
Yeah. I guess let\u2019s talk about that process. So someone, a lead comes in, is it typically that they\u2019re filling out a form on your website or how does that person typically come to you?<\/p>\n
There\u2019s no background check, by the way.<\/p>\n
It\u2019s so different than any anybody.<\/p>\n
Just like anybody else.<\/p>\n
Does, yeah.<\/p>\n
Not completely.<\/p>\n
We don\u2019t do a background check, we don\u2019t do a credit check because they all have past, they probably all have back credit. I don\u2019t really know how I can explain this, it\u2019s like a gut feeling or just how they answer the question. Then I\u2019ve just had a really good experience.<\/p>\n
Well, I think you can tell when you\u2019re talking to somebody on the phone, you can tell whether they really want to be in recovery or whether they\u2019re being forced to be in recovery. And that\u2019s a big factor. We want everybody to want to be there. If you have people that are mandated by the state to be in a sober living or something like that, that\u2019s not always bad, they may be mandated, but you can tell if they really want to be there. And that\u2019s who we want as a tenant. That\u2019s what makes everybody in the house like-minded. When you have people that are like, \u201cYeah, I just have to be here, but I can\u2019t wait to get out,\u201d and do whatever negative things, that just doesn\u2019t help the house.<\/p>\n
So to go back, I don\u2019t remember if Tony or Ashley asked me the question, but there\u2019s about, I don\u2019t know, seven questions that I ask that I can tell right away.<\/p>\n
Can you give us an example of a couple of those, just maybe two or three?<\/p>\n
Yeah. So the first question I ask is if you\u2019re a 290 registrant, which is a registered sex offender. And let me just throw this out there, these questions just aren\u2019t to protect my house or myself, it\u2019s also to see if this is the right fit for them because I want to set them up for success. And I know some people sometimes have a child that comes to visit, so I don\u2019t want them to get in trouble for being around a child in a certain vicinity. So I always ask that.
My second question would be, how long have you had clean and sober? And that\u2019s where it gets a little tricky, you got to kind of experience. They\u2019ll tell you something, but you\u2019re like, \u201cHey, when\u2019s the last day you used? Don\u2019t tell me two years ago when you got clean, but did you relapse?\u201d You kind of ask those questions. \u201cYeah, what\u2019s your why? Why do you want to be in sober living?\u201d If it\u2019s, \u201cOh, my mom\u2019s kicking me out and I have no other place to go and I need to do this for a month,\u201d or \u201cI really want to do this. I want to do this for myself, I want to do this for my family,\u201d whatever, you can kind of just tell how they answer the questions. Another one would be, \u201cDo you have any violent offenses or any arson? Are you registered arson?\u201d Certain things like that.
Now, there are some sober livings that don\u2019t ask any of these questions and they just let whoever. If they have an open bed and you want to come, you can come, that\u2019s the ones that have the turnover rate and have some crazy stories because they just really\u2026 I do ask about mental health because again, I want to set them up for success. So I only take a certain level of mental health and it has to be secondary so they can\u2019t be bipolar and because of that, they drink once or twice. Drugs and alcohol have to be their primary issue.
And then, a lot of times, some mental health will come with that just because of the drug and alcohol use. So if it\u2019s a higher level of care, then I want to refer them out because I don\u2019t want to set somebody up in my house that has schizophrenia that we\u2019re not capable to handle and I don\u2019t want them to fail in my house. So just certain questions like that and then, I can move them to give them a phone number to where they need to look or say, \u201cSure, show up on Tuesday, the manager will meet you.\u201d<\/p>\n
So is there an ideal property type that you all look for when you\u2019re kind of scouting for new locations for your sober living homes?<\/p>\n
For us personally, yes. And this goes back a little bit onto what Devana was saying earlier, it depends on the type of tenant that you want to have. So for us, we have multiple tenants per room. We don\u2019t want to have a single tenant per room. We\u2019re not looking for a higher end price range. So we want to figure out how many people we want to have. For us, we\u2019re looking around 16 to 20 people per home is our range. Now we do have a home that we have 10 people in, but we have some others that have more people, and we just found that\u2019s kind of our sweet spot. So the size of the home is really important. How many bedrooms and how many bathrooms is really important. Bedrooms, not as much because with my construction background, we can always make bedrooms out of certain living spaces, but bathrooms are a little bit more expensive to build, so we want to have the appropriate amount of bathrooms for your tenants.<\/p>\n
Reid, one question real quick. Is there a certain law or regulation as to how many people per a bathroom at all? So do you have to work around, okay, if you can fit six beds in there, you need at least two bathrooms or anything like that?<\/p>\n
It\u2019s six people to a bathroom.<\/p>\n
And sorry, is that based on city regulations?<\/p>\n
Yeah.<\/p>\n
Four people to a refrigerator and six people to a bathroom, so we have five refrigerators.<\/p>\n
Okay. So that\u2019s great advice right there. If someone is looking to do that makes you look into your city regulations. I never even would\u2019ve thought a refrigerator at all is something that you would have to be careful of how many people you have on the property. Okay, sorry, go ahead. Continue, Reid.<\/p>\n
Outside of the size of the home and the bedrooms and bathrooms, we\u2019d prefer to have a corner lot because we\u2019re going to have a lot of cars parking, so we want to make sure we have enough area for people to park on the street. And a cul-de-sac would not work, there\u2019s not enough parking space there. And then, we want the location to be kind of central to the recovery network.
I mean, there\u2019s a large city and there\u2019s usually like a smaller hub of where recovery and meetings are taking place, so you want to be closer to that because not everybody has a vehicle. So public transportation\u2019s really important for us. We need to be close to a bus stop and easy to get to close meetings and that kind of stuff.
Another important point for us is we need to be close to entry level jobs, so usually next to large retail areas, or maybe lots of industrial areas. The types of entry level jobs need to be fairly close for people as well because 95% of the people coming in they don\u2019t have a job, they\u2019ve lost their job, they\u2019ve been in rehab for a long period of time, and so, they\u2019re coming out, they have to start fresh. Those are some of the biggest things. I miss anything?<\/p>\n
Yeah. I would touch more on the reason why we like corner lots too is because sometimes the guys will go outside to smoke and so, my thought process is, put the table on the side where the neighbor\u2019s not just so don\u2019t have\u2026 We all know about NIMBYs, right? So you could have a NIMBY in your backyard. So I try to be a really good neighbor and think of those little things to not irritate a neighbor as much as possible.<\/p>\n
Since you mentioned neighbors, let\u2019s talk about that a little bit. How receptive is the neighborhood to having a sober living home in their community? And do you feel that there\u2019s a stigma at all around the home? What\u2019s the reaction, typically, when you move in?<\/p>\n
I did forget to mention that you need to check your city ordinances, wherever you\u2019re looking to start your sober living or group home, you need to make sure that\u2026 Some cities have ordinances or anything that can make it more difficult to operate. But-<\/p>\n
Yeah, I will say this, they are illegal ordinances, but it\u2019s just how much time do you want to push back on that? How much money do you want to spend on a lawyer to push back on that? Our city doesn\u2019t have any ordinances that continue, but San Bernardino County has some ordinances. So for the ease of your life, I would check ordinances first.
And oh, the NIMBY stuff, so we had an issue with one of our neighbors at our house number two, and he saw a lot of guys and he questioned it and I told him it was a sober living. For me, I feel like it\u2019s more education. When they hear a sober living, they think, \u201cOh, there\u2019s 20 drug addicts living next to me. It\u2019s going to be this crazy, wild house.\u201d And when I educate them and say it\u2019s going to be the quietest house on the block, they have to be in a curfew. They\u2019re not even drinking a glass of wine at night. There\u2019s like no parties, there\u2019s no anything. Then after a couple of months he was like, \u201cWow, this is like\u2026\u201d Where our house is by University of Riverside, so there\u2019s a lot of student housing nearby. So they\u2019re like, \u201cOh, here we go, another party house\u201d or whatever, but he\u2019s like, \u201cWow, this is the nicest house.\u201d
And we make sure that our outside is kept up really nice, so you wouldn\u2019t even be able to tell it was a sober living by driving by. And now he actually is really close with some of the neighbors. They help him unload his truck at night. They\u2019ll take his garbage cans in for him. And now, there\u2019s no problem. But I think the stigma at first is like, \u201cWhoa, what is this?\u201d
But I think educating people about what\u2019s happening and then they kind of back off. Now, it also depends on the community. If you\u2019re in an HOA, you might get some pushback because it\u2019s not legally allowed to be because they are protected against the Federal Fair Housing Act. Nobody can say they can\u2019t be there, but you could get pushback. If you\u2019re in a really exclusive neighborhood, you might get more pushback than just a working family neighborhood.<\/p>\n
We also want to be the best looking house on the block. We take a lot of pride, not on just the interior of the house and the operations of the home, but looking presentable on the exterior. So we\u2019re putting money into the exterior and we truly do have the nicest house on the block everywhere we\u2019re at with the landscaping and the care and everything that goes into that. And the neighbors know pretty quickly, \u201cOkay, this is not what I thought it was.\u201d<\/p>\n
Would you guys want to go into one of the numbers on one of those properties for us and kind of walk us through the purchase price, any rehab you did and then, what you\u2019re bringing in?<\/p>\n
So I can do that. I\u2019ll give you a just quick backstory on some of this to try and understand some of the numbers. So I\u2019ll give our second house that we purchased as the example. So we found this property on the MLS and that\u2019s where we\u2019ve bought all ours. We haven\u2019t had any special real estate.<\/p>\n
Freedom.<\/p>\n
Anyways, we found the house on MLS. It was a five-bedroom, three-bathroom house. It was 2,800 square foot when we bought it. The purchase price was $415,000.<\/p>\n
Which is pretty good for Southern California.<\/p>\n
Yeah.<\/p>\n
That was 2015. We weren\u2019t completely out of the recession yet, so it was a little cheap. So we just did with the conventional loan route, 20% down on that. And we ended up putting a lot more into construction than we originally thought we would have to. And the quick backstory on that was our realtor made us aware that there was an additional structure that was on the side of the house or on the back of the house that was attached that was not permitted. And we were under the impression, well, it\u2019s not permitted, it doesn\u2019t count as square footage of the property and all that kind of stuff. So we bought the property not needing that, but we went to get permits on doing construction work. We repiped the house with new plumbing and did some electrical work, got permits for all that.
And what we didn\u2019t realize, the city knew about the unpermitted structure and they said, \u201cOkay, yeah, here, here\u2019s all these permits.\u201d It was super easy to get permits. And then, as soon as we got the permits, I went for our first inspection, an inspector comes out and says, \u201cYeah, I\u2019m not going to give you an inspection until you tear this structure down. And that totally disrupted the backyard. So we ended up adding 600 square foot to the house to cover that whole area. Without going into all the details, it was a really ugly part of the property that, after you tore it down, it was just a mess. So we ended up putting in $97,870 in construction costs to the house. So a lot more than we planned on.<\/p>\n
But that was the interior, adding three bedrooms and then, the 600 square foot?<\/p>\n
Correct. Yeah.<\/p>\n
And you guys have to furnish these as well, right?<\/p>\n
Correct. And we\u2019ve always done it on a very creative way on furnishing. So we only put $9,000 worth of furnishing in this house, but yeah, we-<\/p>\n
But it\u2019s done nice.<\/p>\n
Really nice. But yeah, we\u2019ve used reclaimed wood and just painted things and we do a lot of the decor and furniture stuff ourself. So we had $83,000 down on the conventional loan for the 20%. We had 97 and change, 97,000 and change for construction, 9,000 for furnishings. And so, all in, we were like 189,000, almost $190,000 in on the property. So that being said, we have a total of 20 tenants, 18 and a half of those are paying because pro rata for the assistant manager and the manager don\u2019t have any payments or contributions. The mortgage is $3,500. Utilities are around 1800 to 2000. So our net monthly profit is $7,580. Cash on cash return, everybody gets nervous about the almost $200,000 you put in cash on cash return, we\u2019re at 48%. So it took us just about two years, just a little over two years to-<\/p>\n
Pay ourselves.<\/p>\n
\u2026 pay ourselves completely back. So it was a lot to put in. It was more than we thought. We thought we were going to have a better cash on cash return, but-<\/p>\n
We\u2019re happy with 48%.<\/p>\n
We\u2019re happy.<\/p>\n
Yeah, that\u2019s incredible.<\/p>\n
My mind is blown right now. That is phenomenal numbers. Congratulations guys. That\u2019s fantastic. You\u2019re going to have so many people after this podcast reaching out to you asking you how to get into this space. It\u2019s going to be crazy.<\/p>\n
I don\u2019t know, BiggerPockets, maybe there needs to be a book in the future, How to start a Sober Living.<\/p>\n
That\u2019s the worst part about being the host of this podcast is that we immediately get Shiny Objects\u2019 Syndrome. It\u2019s like me and Tony like right when this ends, he\u2019s like Googling stuff and be like, \u201cDid you even see this?\u201d<\/p>\n
Do I have the time of my calendar to start another business? We\u2019ll see.<\/p>\n
I want to say this because there\u2019s really good money to be made in sober living, I don\u2019t want everyone just to get Shiny Objects\u2019 Syndrome and just go start it and then not have their heart in it too. Right. So there has to be a good balance of I want to help people and I\u2019m making money because they are humans and just because they\u2019re on drugs and alcohol doesn\u2019t mean, first of all, that they don\u2019t deserve a good place to live, but second of all, that they\u2019re just looked at as like, \u201cOh, cash cow.\u201d Right?
And that being said, I\u2019ve seen a lot of people try to start sober livings, and I\u2019m sure Tony, you guys probably have had the same thing in your spaces where people get the shiny object and they go, \u201cI can do this short-term rental,\u201d whatever and then, they kind of fade out because they don\u2019t have that heart or that passion for what they\u2019re actually doing, it\u2019s just about the money. And then, I feel like 90% of the time, that doesn\u2019t always just work out for people if it\u2019s only for the money, you have to have some heart in what you\u2019re doing. That\u2019s just my perspective.<\/p>\n
And you guys really touched on that too throughout this whole episode as to how you go above and beyond. And one thing that really impacts that is how you\u2019re not having turnovers, you\u2019re getting people that are staying for six years. And having turnover so frequently really can hurt your bottom line, so you\u2019re not going to see that huge cash cow if you kind of just wing it and do mediocre and just be like, \u201cI want to just get cash out of this. I don\u2019t care about the tenants or the residents of the property or what the property is like.\u201d So I think you guys did a great job of showing that if you are going to get into something like this and you do really want to turn it into that cash cow and make it profitable, you really have to have that balance to keep your residents, to keep your clients staying in the house.<\/p>\n
Yeah.<\/p>\n
Definitely.<\/p>\n
And touching on that, Ashley, I look at other sober living homes and sometimes I\u2019ll even go in them because I have to inspect them for if they want to be in the Coalition because I sit on the board of the Sober Living Coalition in Riverside, and I think, \u201cWow, it\u2019s just interesting. Why wouldn\u2019t you replace those dish towels?\u201d It\u2019s probably 10 bucks or something. Overall picture, I\u2019m still making a good amount of money if I go put new dish towels in. But my turnover rate, if it\u2019s junky and ugly, it\u2019s going to be so much more that, it\u2019s going to be so chaotic for my life. Just to go above and beyond, those are the little extras that make people feel special and you\u2019ll get better clients and keep your tenants longer.<\/p>\n
Let me ask a question about that. Are you doing inspections every so often on the properties or do you have your manager just report to you like, \u201cHey, we need new dish towels\u201d? Is it kind of up to them to bring it to you if there should be something that\u2019s replaced? How does that work?<\/p>\n
Yeah. So we have a list of everything we have in the house that\u2019s like laminated. And every month when they give me their supply list or what they need, there\u2019s a place that they could put like I need light bulbs or the dish towels, whatever, and they can just put dish towels or whatever, and then, I\u2019d go get supplies. When I go visit the properties, I used to go a lot more often than I do, now, I go maybe twice a month, I could go more if I wanted, but I\u2019m I\u2019ve been so busy lately, when I pop in and I notice something, like the other day I noticed these cabinets are looking a little funky, so I had my handyman go out there and paint them. I see things they don\u2019t see for sure, but for the most part, they\u2019ll let me know if the rugs or little things need to be replaced, they\u2019ll let us know every month.<\/p>\n
But you did have to kind of teach that because a lot of people don\u2019t even realize how worn things get, they\u2019ve just been using it and it\u2019s acceptable to them, so you kind of go over and say, \u201cLook guys, when it looks this bad, we need a new one.\u201d<\/p>\n
We need a new rug that doesn\u2019t have stains on it. We\u2019re okay with that. But I think they\u2019re also so used to other sober livings that that\u2019s just the standard. Yeah, I had to teach them like, \u201cWe\u2019re okay with replacing these and I want it to be nice for you guys.\u201d<\/p>\n
Yeah, the tenants, like we said earlier, they\u2019re the ones that are selling the house, they\u2019re marketing it for you and so, if you are not constantly keeping it updated and doing more than others\u2026 We\u2019re just doing more than everybody else. And so, they\u2019re letting everybody else know that. And so, that marketing, for everything we\u2019ve put into it, they let everybody else know, yeah, \u201cWe got this and we got new whatever. We didn\u2019t even have to ask for it, it just comes.\u201d So that\u2019s how we keep-<\/p>\n
Also though, when I first started this, I kind of got a few mentors that I was like, oh, let me ask them how to do it. And their advice to me was, \u201cPaint it all beige. Go to the thrift store and buy everything, because they\u2019ll thrash your house.\u201d And I was like, \u201cReally? That sounds so depressing. I wouldn\u2019t want to live it else like that.\u201d So I did just my life, it\u2019s like what I do in my whole entire life, I do the opposite of what everyone tells me to do. It\u2019s a little rebel in me.
But I did the opposite. I bought everything new. I did it all nice. I painted the walls, it looks like a Joshua Tree, like one bright thing, paintings. And they come in and they\u2019re just like, \u201cOh my gosh, this is amazing.\u201d They feel so good when they walk in. And I\u2019ve never had one person in the nine years I\u2019ve done this thrash my house, maybe they\u2019ve broken a cup on accident or something or dropped a plate or something, never one time have I had somebody thrash one single thing in my house, ever. So it just worked out good for us.<\/p>\n
I love the story that you guys have to share because\u2026 And it goes back to your point earlier, Devana, about these are still people and folks in sober living facilities, much like people that are on food stamps or they\u2019re Section 8, they get a bad rap because there\u2019s a minority of folks that don\u2019t treat the properties well. But in reality, these are people who are almost your best in this because they need this just as much or if not more than you need them as a tenant. So I love that you\u2019re able to share that.<\/p>\n
Having that mutual respect with each other, like they know that I respect them as a person, they are so loyal to me, I\u2019m telling you, if I pull up and I have supplies in my car, I have 10 guys unloading my\u2026 I mean, they\u2019re so nice to me. And some of them have a tattoo over their eye, they look like they\u2019ve been in prison, they don\u2019t even understand what they do to my life, like how much they teach me in my life too. So without getting emotional, I love\u2026 They\u2019re my best tenants. And because they\u2019ve burned so many bridges, they don\u2019t want to leave a good home. They don\u2019t have anywhere else to go. They\u2019re either going to go back on the streets or junkie sober living. So they\u2019ve been really good.
And you would think with 20 guys in the house or 17 girls in the house, that it would be like, oh, when you walk in, but I\u2019m telling you, the way I have my chores and stuff, I tell them, every single day, a mother or a parole officer or anybody should be able to walk into this house and be proud to look at this house and go, \u201cWow, this is clean.\u201d And when I walk in, it\u2019s always clean. And we have AM and PM chores, so it never really can get that dirty. And they do, they do their little chore and it stays clean for that many people.<\/p>\n
Well, Devana, you guys have shared so many golden nuggets about how this not much talked about niche has been successful for you guys and for the people in your home.
Before we wrap things up, I do just want to take a question from the audience. So this is a Rookie request line. Typically, we pull a voicemail. Today we decided to pull a question from the Facebook group. But if you guys do want to get your voicemail played on the show, give us a call at 8885ROOKIE, leave a voicemail and we might use it on the show.
So today\u2019s question comes from Sarah L. And Sarah\u2019s question is, \u201cI work in housing for the city of Boston and I\u2019m looking to open a trauma, sober or domestic violence house of some sort for females. I see firsthand the need and the funding available, but I\u2019m having trouble finding a mentor and or advice on the topic. I\u2019ve tried to reach out to the state, et cetera, and keep getting redirected. I want to start buying rental units and would love it if I could open up a nonprofit. Even if you\u2019re not familiar with nonprofits, I would really appreciate any advice.\u201d
So here\u2019s kind of the second part of her question. \u201cShould we use all 100K to put down on another property or try and buy two?\u201d Her and her husband both still work W2 jobs and they have a few young children. So what\u2019s your advice to them? They\u2019re looking basically for advice on how to break into the space and get some better information.<\/p>\n
Yeah. So looking for a mentor, should I talk about that real quick? Looking for a mentor, there\u2019s a couple of national organizations that somebody could go to to just even Google and look up information on sober livings or domestic living. There\u2019s also a really big need for women and children and men and children like single fathers that have children that need a safe place. So there\u2019s a lot of different little niches inside the sober living housing thing.
Should I give the\u2026<\/p>\n
Names of the-<\/p>\n
No. So NARR is a really good national organization. It\u2019s [email\u00a0protected]<\/a>, N-A-R-R, .org. And then, thehouseofruth.org is really great for domestic situations. They\u2019ve done a really great thing with how they help women with domestic violence. So those might be two places people can go and look for information or even find mentors. In terms of the putting all hundred thousand dollars down-<\/p>\n
I\u2019ll speak to that. If you are starting in this space, a niche of whether it\u2019s sober living or domestic violence, help or whatever, I would suggest not going to two locations at the same time. I think you really need to get your processes and everything figured out. We didn\u2019t go into too much in the rest of the podcast, but the beginning of our journey with our sober living, I would say the first six months to year a was pretty hectic. It wasn\u2019t just an easy jump in and we got it figured out, we had to create our processes over time. And I wouldn\u2019t want additional levels of stress with multiple locations, that\u2019s just me.<\/p>\n
When you don\u2019t know what you\u2019re doing.<\/p>\n
Yeah. There\u2019s not like a standard way that you have to run your location, specifically in the sober living, there\u2019s a lot of different ways, a lot of different rules and processes that other places have, we had to figure ours out and we had to figure our niche within the niche of how to manage and how to get our backlog. So I would suggest picking one location. And the idea of putting all hundred thousand in or not, I\u2019m not sure on what size location-<\/p>\n
Yeah, it depends on the number, the house.<\/p>\n
Yeah, that\u2019s a tough one to ask. I mean, the case that we brought up where we put almost 200,000, that was almost double what we put into one of our other homes. So it just depends on the project or the location and what you think you can get out of that. I think that\u2019s all I got.<\/p>\n
Well, for our Rookie exam today, because we have both of you on, we are going to kind of tailor it to you guys. And we want to know, what is your next step with investing? Where do you guys want to take it?<\/p>\n
So we\u2019re looking always for another house, for another sober living. Right now, in California, they say the prices have come down, but these big houses we\u2019re looking for are still really high. So we\u2019re constantly looking. If another good deal comes up, I would jump on it.
We\u2019re also going to start, a little nervous, out of my comfort zone, but I think we\u2019re going to start looking for out of state, something out of state with maybe another midterm like what we\u2019re doing with our ADU. And we already have all of our plans to start building another ADU on one of our other properties, so that\u2019s something we\u2019re deciding right now. We\u2019re in that beginning of the year phase, we\u2019re like, \u201cOkay, what direction should we go? We have all these different options.\u201d So yeah, we\u2019re kind of really trying to decide. Do we build the ADU right now? Do we buy something out of state? Do we get another sober living? But those will all be something, I think, we focus on this year, just I don\u2019t know what order they\u2019ll come in.
And then also, we have another property we bought this year that is right here close to eastbound, but it\u2019s an acre property and we kind of bought that more of a personal property, even though it has a house on it for a long-term tenant. We\u2019d like to build a big shop for, we have a 1948 travel trailer that we love, so just to house our stuff, extra tools and things. And so, it\u2019s a little bit more of a personal project. We\u2019ll probably build an ADU on that one as well. So we\u2019ve got all these little things, we just don\u2019t know what order we\u2019re doing them in quite yet.<\/p>\n
Well, we appreciate you guys for sharing your story. Before we wrap up, I just want to give a shout-out to this week\u2019s Rookie Rockstar. This week\u2019s Rockstar is Emily Murray. And Emily says, \u201cWe are newbies and proud to have bought four properties this year. I just hit my 10-year anniversary at my hospital. It\u2019s a well paying job that I\u2019m thankful for, but my 10-year bonus was $100. After I fumed for hours, I decided to turn that into a positive and donated the bonus to a fund for patients with the financial struggles.\u201d So congrats to you, Emily, and the goals to buy four more properties in 2023.<\/p>\n
You guys, thank you so much for coming on to the podcast, we really appreciate it. Can you guys let everyone know where they can reach out to you and find out some more information?<\/p>\n
Yes. So my Instagram handle, I have a couple, but Investing Mama is my one for investing. And then, the one that I love to travel and do my investing on is Bee Organ Mama, like the little insect, bee. My email is devana, D-E-V-A-N-A, that\u2019s how you spell my weird, crazy name, so [email\u00a0protected]<\/a> or [email\u00a0protected]<\/a><\/p>\n
Devana, we didn\u2019t touch on this at all, but I had seen it in the show notes, is that you, actually, part of the reason you wanted to start this because you wanted to be a stay-at-home mom too, so that was a big why for you, right?<\/p>\n
Yeah. I was a stay-at-home mom and I wanted to continue. I wanted to find something that I could continue to do with my kids. And my son, he got dragged and had to rip open houses, and he goes over with me all the time. And it\u2019s such a good experience for him too, such an eye-opening experience for him to meet these people too and understand that there\u2019s diversity in the world. And-<\/p>\n
Thank you guys so much. And we really appreciate you coming on and sharing so much value with everyone. And hopefully, there will be some people that have a passion for it and really want to help people that continue to make this great business model that you guys have made where it\u2019s cash flowing and also helping other people.
I\u2019m Ashley at Wealth Firm Rentals and he\u2019s Tony at Tony J Robinson and we will be back on Saturday for Rookie Reply. (singing).<\/p>\n