How He Started 2 Sober Living Homes From Scratch

Yeah, I know. You came in kind of guns blazing and.

Yeah, yeah, came in. I was already kind of doing the co living rent by the room thing and it was just chaos because I had, you know, I was renting my rooms out to guys and then I was crashing in one of the rooms a couple days a week. When I was in that town, it was, I just basically had a bunch of addicts that were not in recovery. I just didn't enjoy it. I didn't feel like I was helping anybody and it was just chaos. So that's when I pivoted and I heard a podcast with you on it. And then my wife and I decided, yeah, this is much more what we're looking for. Because my wife has had some, you know, she lost a brother to suicide, lost a sister to opiate addiction. And then I'm a medical provider and it checked all the boxes of what we wanted. And so we, we picked up a rental arbitrage and I was going to start that. August 1st, I took possession. July 1st, I got a month of free rent. And then all my guys at my house that I own, they all moved out. We're doing both at the same time. We went full in July this month. And I'm, I mean I'm at break even on both houses before my first, before rent's due on August 1st. And now I've got, I'm heading up there now because I've got three guys coming to look at two bedrooms at one house and one at the other. So I think we're going to be full like in August.

That's amazing. So the, the free rent thing, did you learn that from us? Cause I know we talked about it. I did.

I can't remember his name, but he talked about, you know, ask for a multi year lease and then if they say yes, ask for a free month. So I got a. Your lease with one month free actually.

Question on that because a lot of people come in there, they overthink it and they're like, oh man, if I go and ask somebody for a lease and a corporate lease at that, they're going to ask me for all this documentation. I just started the llc, they're not going to like that. They're going to want to see all this stuff. What was the process like for you?

Yeah, so I mean, I did run into some property managers and I found that, hey, if this house is listed by a property management company, it's probably going to be a blocker. They don't want to go ask the owner So I just started looking for houses that were being rented by the owners. And I found these two doctors. So I'm on the east coast. They did their internship in Norfolk and now they're in San Diego for the next five years. I told them what I wanted to do and they're like, man, it sounds great. I feel like I kind of got lucky. I don't know if I'll, I'll find that exact awesome scenario again. But they've, they've been fantastic. They didn't ask me for anything. I mean, I've provided them because Virginia requires explicit written permission from the owner to run a recovery house. And then I sent them my conditional accreditation because as of July 1st in Virginia, you have to be at least pursuing accreditation with var. They haven't asked me a thing. I mean, they're, they're both in residency. They're probably busy as can be, but. But it hasn't been a big deal.

No, that's what I found. Like you said, going to property managers can. They just don't want to do anything that's non traditional, I guess.

But they start, they start saying everybody, everybody who's ever going to live there has to be on the lease. I'm like, that's not even possible.

Yeah, it's a. I know who's going.

To be here next month.

Way better. If, if your LLC is on the lease, has the corporate vc.

Yeah. Yeah.

Then you're good to go. Very cool. So in that break even already.

Yeah, I mean the, the numbers out here probably going to not make sense to you on the west coast, but so my. More. The house I own, the mortgage is 2600. The house I'm renting, the rent is 2,500. They're both four bedroom, three, three bath. So it wasn't hard at $800 a bed to get to break even, you need three people.

Yeah, yeah, that's it. And then the rest is essentially profit because it's a fixed cost business model arbitrage. You're keeping that spread, so that's amazing. Where are these people coming from so far? Have you connected with local organizations?

No, I've made a lot of good connections, but I haven't gotten one client from a treatment center, a mental health center. Even though I've made all those connections with reentry programs, everybody I've got found me on Zillow or on Craigslist or through Turbo Tenant. You know, when you put up your house on Turbo Tenant, they push it out to all these platforms. It'll Go to like, you know, realtor.com and rent.com and all that stuff. I'm just getting them that way. And obviously you have to wade through a lot of trash. I mean, I have hundreds of people a week saying you're renting a four bedroom house for 800 bucks. I'm like, no, I'm not. But, but all I need is a few that actually read and that's who I've gotten.

That's so true. I did the same thing early on. I mean we, we got a good amount of placements, but I didn't want to wait. I was paying 10% in hard money loans.

Yeah, yeah.

So I needed to fill up pretty fast. And so we, we did post on Craigslist. Not the best idea because it is, you know, it's almost like putting up to find one person. You're going to go through probably 100 different.

No doubt. Yeah, it was, it's at least 100 to one. But I am finding people that are outside the area. Like I have probably my best tenant moved here from Atlanta. He would have never found me.

Yeah. So it's good to cast a wide net. But I think you will connect pretty soon with some local organizations that are ready to fill you up.

Yeah, I just got a call today from Catholic Charities and I don't even, I don't even think I reached out to them. They reached out to me today and they're going to, they're going to bring a guy by tomorrow and may have another one and they pay for his housing. So I'm like, well that's, that'll be my first one where somebody's funded because everybody I've got right now has jobs. And so, you know, they're paying, they're kind of paying their way.

That's good though that they have a job. You're not doing a promise to pay thing. You're not doing a, you know, move in and then two weeks, we'll see. They're paying when they move in.

Yeah, yeah, they're paying a 250 non refundable plus their first week, which is 200. But I have opened it up to like, you know, because I started having a little bit of panic. Like man, I got to get to break even. So if it's somebody who's not necessarily in recovery or dealing with an addiction, like. Cause there's a lot of active duty Navy guys. I have a guy coming tomorrow and he's like, man, live on this boat one more day. And I don't drink, I don't smoke. I love the rules. Can I just pay a premium and pay 1100 for a private room? I'm like, yeah, I'm totally open to that. But I mean, we're going to go over the rules. You're going to take a urine test to make sure we're all on the same level playing field. But I'm not opposed to having somebody who's. Who's just likes a no drama, no substance house. I think at this point, you know, I don't want to be super stringent and say, you know, you have to have an addiction.

Yeah, well, there's nothing wrong with that. That's actually how we filled up all of our houses extremely fast. Yeah. Not everyone has a substance use issue, but they are all willing to abstain and follow the rules and be subject to drug testing, especially when they move in. So we know they're clean when they move in. And so I don't think there's anything wrong with that. It's actually why, you know, we talk about sober living homes. We don't say we're teaching everybody how to start recovery residences because that's not the sole focus.

Yeah. I've been advertising it as sober co living, and so it seems like people get it. And I've only had to dismiss one guy. And so he came out of an inpatient program. He didn't make it a week. He disappeared for like four days, came back high. And so. And so I just told him, look, you're not coming in the house. I had already changed the code. I'm like, I'm not going to leave you on the street. I'm going to put you up in a hotel tonight and I'm going to call your counselor in the morning and try to get you back into inpatient. I never heard anything. I mean, it went. It went as smooth as it could go. I mean, it was a big, dramatic thing out in the front yard of him, you know. You know, just. He was high. You can't. It's like trying to reason with your toddler. You can't. So as soon as I said, I'm going to put you up in a hotel, everything just calmed right down. And he was fine with that.

I mean, it's a good move, it's smart. And this is why we have these calls before people join our community, to make sure you actually care about the folks who are going to be in the house. Yeah, yeah, like this. Instead of, you know, horrible things happening where people are made homeless, you're kicking them out. Don't care what happens. Like, that's not the case. We actually do care about our people.

I want good. I want good outcomes. You know, I've had really good connections made with. I don't know if they have this out in California, but the courts here have something called drug court or recovery court. And so I've. I've made some good connections there that I told them. I like that scenario where you've got a nonviolent offender. You're giving them an ultimatum, hey, go do our program and get clean or go to jail. I have somebody else that's helping me, you know, monitor the situation. They have to go to the court every week. They get tested every week. And then the case manager calls the house lead and finds out, like, how's life in the house with this guy? And they report that to the judge every week. So I don't have anybody from there yet, but I've gotten in connection with all the mitigation specialists, so I think we'll be able to get some. Some residents that way, too.

Yeah, I think so. Drug courts are nationwide. We have a direct contract with ours. In fact, they just refer to single dad today. It's a really cool way to get people who they have built in incentives.

Yeah, ye.

Because it's keeping them out of jail and keeping some stuff off the record, typically. But they have a ton of support around them, too. They have, like, a case manager and some other people, and they usually will pay the cost because they're getting grant money, and so the individual doesn't have to pay on their own.

The one other connection I've got is called. Well, out here. It's Virginia Beach Community Development center, but they just house homeless and disabled vets. I had a long talk with the lady because they really believe housing first. They really don't care if the person's clean. So I had to have a little discussion about that. I'm like, well, I actually care if they're clean because I'm. I can't bring somebody who's like, you know, who's dirty into the house with a bunch of people that are struggling to keep themselves sober. So, you know, she. She basically just said they can't be forced to do an outpatient program, but you can, you know, expect them to be clean and they can't have any substances in the house. And they do pay. But the only. Weird. I wanted to get your take on this. That program will not pay for shared room. They have to have a private room, which kind of like, if I have A guy who's got a substance use disorder, and I'm going to let him. He doesn't have to work because his room is getting paid for and he just gets to isolate in a by himself. I kind of feel a little funny about that.

It is interesting. That's why I like the shared room model. It's that built in accountability. So I'm curious if they only have that stipulation because they're using HUD dollars. And many times HUD does have that requirement of paying for a unit, a whole unit, which they consider a bedroom, but it's worth asking them and seeing. Hey, if the client's okay with it, would that then be fine? Because it's better for the individual.

I went ahead and did the application to be a vendor for them, and then I'm going to have further discussions about. Around that. Because if the person really is serious about recovery, they'll probably embrace shared accountability. I'm of at this place where, you know, I feel like I'm out of panic mode. If you would have seen me two weeks ago, I just needed, like a hug every half hour. It was like. I've never experienced that kind of emotional roller coaster, but because I knew I was at my max, like, you know, on my job, I mean, yeah, out of my paycheck, I could afford to carry two houses for a little while, but I don't want to. So I was just feeling that. Now that I've kind of gotten over that, I'm looking to. I think I want to start looking for house number three and house number four. But then I really am over my head. Like, if all. If I. If I became all vacant all of a sudden, I would be in a. Yeah, that.

The way we work and build these relationships prevents that from ever happening. Right. Unless you let in the wrong person who then scares everybody off. But that still would just be one out of, let's call it four homes. So you can still be fine. But our intake process that we teach typically prevents anything like that from happening. I put it in place when it happened to me because I had a house full of 10 people, larger house, and one guy moves in who our probation department didn't tell me wasn't just in jail for a little bit. He was in prison for four years. Oh, wow. He's on probation instead of parole because it was a nonviolent crime, and gets into our house and basically just scares everybody off. He's like walking around the house pretending he's got a shank and looking through the blinds. And getting all, you know, paranoid and nobody wants to be around this guy. And so we ended up empty. Thankfully, we had two other full homes at the time. This was one of my first three houses. So the first year we opened up and we were learning a lot. That's when you put in that intake process. And now we know everything about everybody before they move in.

No, I use your. I use your intake form, and it really. It really is helpful. And I do. I do like that. When you're even now, do you have people that are constantly, like other operators or just other investors that are just constantly wanting you to change what you're doing, like, start. Start providing services and start doing this, like, you'll make so much more. And I just, I. I mean, I'm just like, I'm not really getting fomo, but I'm wanting to just tell people, like, look, man, I don't. I don't want to not talk to you, but I want to do this for a while and really just master this. I can be your step down house. I don't want to start have. I don't want to start having a crisis intake house or something like that. But. But I'm constantly getting pitched like, you should do this, you should do that. I'm like, yeah, but I'm doing. I want to do this for a while.

Yeah, I think it's smart to do this for a while. Especially, like you said, like, you. You have a job right now. This isn't taking all of your time to run it like this. If you start a license program, that is a lot of time and energy and effort until you're able to hire, like, licensed staff and certified counselors and stuff like that. And so running a sober living home that does no treatment is a lot easier to manage remotely than any of those other things. Now we added on what we're doing now with like, Medi Cal and different wraparound services at the request of some of our county agencies, they said, hey, have you looked at this? And I was like, what's that?

Yeah. Yeah.

And so we went down that rabbit hole, and today what we do looks a little bit different. Were considered more of a level three certified type of home instead of a level two, because we have those extra services. But it was only because we had years of experience just running sober living first. And that's what made everything smooth, adding on these. These higher levels of service.

I appreciate your time and thank you very much for the. For the good tips.

Yeah, yeah, you're welcome. We want to see you be successful.

So I appreciate it.

Hey, actually, the beginning of this call was actually really good. Do you mind if we use it as kind of a case study?

Yeah, absolutely.

Okay. Not everything. I don't want to tell all your business and stuff, so we'll edit it. But there were some really good nuggets, I think, at the beginning that could help a lot of people.

Yeah, go for it.

Awesome. I appreciate it. Let me know if there's anything else you need, but I'll reach back out to you and let you know kind of exactly where you're at with things and what it would look like to move forward.

I appreciate that. Thank you very much.

You're welcome. All right, I'll see you.