I Started a Sober Living Home and Here's What Happened

Sam. Okay, everybody, so we're not going. We are not doing this until 3:30 but we just set this up to allow people to start jumping in. Today we're going to be talking to Andrew Lamb, putting him in the hot seat on how to buy investors, renovate.

Manage.

Sober living homes. Welcome, welcome. We are Getting started at 3:30 so thank you for showing up early. Hayden. Okay, countdown, five minutes. Hi, Anna. Thank you for joining. Thank you for coming in early. Love it. So by the way, as we go through this live experience, we are streaming it straight into the community as well. So you guys will have the ability to re watch it right there. But we set it up this way so that you guys can ask questions. Right today is really to put Andrew in the hot seat and ask him some questions about his model and a system and what is sober living homes and how do you get into this and how did he get into it? And we did do a whole podcast interview with him on it and so I'm going to encourage you guys to kind of like listen to it, watch it and, and learn from that. What's up, Mr. King? What's up? What's up man? We got. Thanks for turning your camera on. Gives us some energy. We got Andrew in here, the star of the show today.

Yeah, I'm excited. I'm excited for this.

This is.

Yeah, it's gonna be cool. I've got this project home we're working on right now that I've kicked around a couple things like the midterm, travel nurse, that kind of thing. But I do think it would probably be a really good fit for, for this topic. So here to learn. I'm stoked.

Yeah. Awesome. Well, he's getting serious, man. He took his jacket off. Look at that.

Getting pumped.

He's getting pumped, man. He looks like he just left the gym. Got some traps on you, man.

I can't get rid of them no matter how long I stay away from the gym.

Are you serious? I want that. What do you talk about? Hey, I like. Dude, look at you like the headphones. Look at the lights on there. That looks sweet. That is a sweet setup. I love it. So we're going to give it a couple minutes. It's 3:27, 3:30. I just wanted to make sure that I set it up and did it right this time.

Yep. Is there. Did everyone need a password to get on?

No.

Okay, cool. Someone asked in the community chat so just wasn't sure.

Got it. Let me, let me go there and see. I did include a password in Case it requested it because it, it did provide one. See if anybody is asking. Okay. How's your day going so far, Andrew?

Great.

Awesome, man.

Yeah, it's. I feel like it's just starting. It's only 12:30 for me. So.

This is my last meeting of the day. Right. Bookends. And then, and then I go and I get, get a massage after this, then go back to work for a little bit, knock out some administrative stuff. Very cool. So it's winding it down. Right? Okay, well, we might as well just start getting started now. But it's 3:29. I see my friend Ben Bonita's on here. Haven't seen Ben or talked to Ben in a long time. So, Ben, good to have you on here, man. I don't know if your mic works or not, but if you could turn more than welcome to chime in whenever you want. Okay. So, Andrew, we did a whole podcast last week around what you do, how you do it. I'm going to encourage everybody to go and listen to that because it was not only how he does it, but it, it's also his journey into this. Right. And why he settled on this piece. And we're going to cover some of the highlights on that today. But we, we kind of learn more about Andrew, which is cool. Right? We had a good time afterwards. I called him and I was like, man, kind of crazy. But just fun fact, I went to the same elementary school that he went to. You know, obviously I'm a little bit older than Andrew, so we didn't see each other that, but went to same elementary school. Andrews Air Force Base in California, like years ago. Right. So kind of my uncle was the, the principal for that school for like 20 years, which is kind of crazy.

That is crazy.

Yeah.

It's a super small world. It's, it's always cool having stories like that. Yeah.

So, Andrew, let's talk about sober living homes. Right?

Yeah.

Is that the right term for it? Like what is it? Talk to us a little bit about the concept and then we're going to open it up for questions and I'll help facilitate those questions. So firewall.

So a sober living home is, I mean, it could also be called a recovery residence. It's a place that is a drug free, alcohol free environment for people who need transitional housing. They're coming out of all different kind of walks of life. What's cool about sober living is you're not, you're not limited to just one source of residents or like you could advertise and I'VE seen people do it on Airbnb, that you have a room for rent or on Facebook Marketplace. But it is providing a safe, clean, sober environment for people. There's house rules, there's some kind of, you know, monitoring what's going on there. Probably drug testing, like there's different levels of homes like this. But the way we run it is we have a house manager, we do drug tests, we make sure, like, we verify it is a sober environment for our people. But we also have a ton of systems to basically let it run itself for the most part, and we just step in when we need to. But it's, it's a really cool thing because you're providing much needed housing in the community for people who honestly can't, can't afford or won't qualify for traditional housing, even if that's just a one bed, one bath apartment. And it's people who honestly don't usually have family to turn to either. Like they've been kicked off the couch already and they're just trying to rebuild now that they've maybe hit rock bottom and they're trying to get back on their feet. So I love it because I love people and I've definitely had a lot of chances to interact with people in a variety of ways. But it's just really cool to make an impact on someone's life and in your community while still getting paid really well. And for the most part, I mean, I've seen homes like this across the country range from 500 people or $500 per bed per month up to, let's call it 1400, $1500, depending on the program that the person is in, which is a lot of cash flow for us. That's 10x traditional cash flow in our area.

So think about that. 10x traditional cash flow for the same asset. How did you get it? How did you get involved? How did it, how did it start?

I was flipping homes and decided I wanted to hold on to them. And I knew there had to be a better way than just a traditional long term rental. I had one of those already, which was doing well, making $600 a month in cash flow. But that didn't necessarily move the needle for me. So I had done the math thinking, man, I could burr a lot of homes, which if anyone listens to biggerpockets, it's been on there for two or three years, maybe more now, of buying rehab, rent, refinance, repeat, which is essentially what we did. We just used a private lender to buy so that I didn't have to use my own money, but I needed my. I wanted to make $20,000 a month in cash flow so I could, like, just stop working if anything happened to me. My family's taken care of. And the math I did was.

And for those that don't know, he's got a lot of mouths to feed. He's got four girls.

And I'm in California, so it's expensive. And I have. I have five girls.

Five girls.

Oh, my God, five girls. I'd do the same thing. I lose track every once in a while. So I was like, man, I'm gonna need to buy like the first year I need to buy four homes. The next year I need to buy like two a month and then I need to buy three a month to really get to where I wanted to go within the time frame I wanted to. And it was just a lot of work. It was kind of overwhelming. And I was thinking, you know, $300 a month cash flow. And because I was going to buy out of state and all this stuff, I got to accomplish that goal within 12 months of doing these sober living homes. And I didn't need to buy out of state. I didn't need to build a huge team. I have one employee. It's pretty awesome.

Well, that, that obviously is a motivation for all of us to continue listening to that. Right? Because that's a big deal. Like, we've done that math as well and been like, okay, it's going to take us a lot of houses. This is a long term game in order. So you just, you just kind of crushed one of my, one of my beliefs, right, that this takes like a long time to kind of build, meaning to get the kind of cash flow that you need from these residential assets in order to make it work. Right? Like we put those 15 year notes and it took us 15 years to pay those notes off. And then obviously cash flow comes in at that point.

But.

But you kind of. You kind of crushed that. I remember the first time I talked to you about that, you were like, ben, you know, we're 10xing what normally comes out of this. And then I just started doing the math in my head and I'm like, okay, I need to understand this. We need to bring this to everybody within the community to kind of unpack this for a couple of reasons. One, you're doing good. First and foremost, there's purpose behind this, which is really cool, right? You get the ability to be able to do this. Now, I would imagine this isn't for Everybody, like some people might listen to this and say, no, that sounds scary hard, you know, all the rest. But for those that are not scared off, you know, this is I think a massive opportunity for somebody to build cash flow at a much faster rate and wealth. So let's, let's unpack it. And what I'm going to do is I. This is really for you guys to come in and answer like to ask Andrew questions. And so Corey, I'm going to put you on the spot because I know that you were excited about this and you probably have a lot of questions and you're on mute right now. So you might want to unmute yourself. Yeah, you probably have a lot of questions and, and those are probably similar questions that other people have. So why don't you fire away? Sure.

Thanks. Appreciate the opportunity. First, I guess questions that initially come to mind is just around the management piece. Right. So like you self manage. I'd like to understand more of what does that look like either from a day to day or like a tenant placement. And then one of the other questions I wrote down in here too is just like, are there programs or other providers that I could essentially lease the property to? Like I'm essentially leasing it out to a business and then they are the ones essentially like.

Right.

Like subleasing the beds or the spaces or whatever. And then so that for me it's a truly passive thing and somebody else just manages it. They manage people coming and out, testing all that stuff.

So to both, yes, you can do it both ways. I've seen it done both ways. We are starting to move into that direction as well of being the provider that partners with the owner. So as more people learn about this and maybe they're further along, they have properties, they just want to increase their cash flow. They don't want to run the whole thing, they don't have the time. We can come in and partner and essentially almost like short term rental management, run the whole program for a percentage of the gross. But we're constantly marketing and filling out the property and taking care of maintenance and all that stuff and you just get to participate. So I actually ran a pro forma, I've been talking to several people about this and it still gets the homeowner two to three times what their typical cash flow would be. So that might be something we could talk about in the future. But we started off managing because there wasn't anyone doing that in our area. And I wanted to build wealth so I wanted to own the homes. I didn't Want to rent them. I wanted to build an equity, kind of force the equity by adding value, buying a fixer upper, rehabbing it and then refinancing out. So that's what we did. And we did five of those in, in 2021 and that's what started this whole thing. And the very first one was my own listing that I purchased from my client and decided I was going to flip it. And then mid flip said rates are below 3%. I need to hold this thing. How do I do it? We continue to manage because it's just great vertical integration. Right. If you're doing multi family and you happen to own the property management company, why not? Because you get, what's that called? You get an advantage when you have like economies of scale basically is what it is. So I could probably rent and pay thousand above market rent and Pay, you know, 3, 500 for $4,000 a month for a property so that I can.

Get the.

Landlord to rent it to us. But I prefer to own, only have a mortgage payment, not have to worry about that. And then because we're fully vertically integrated and we're very lean, I maximize my cash flow. That's why that's where we're getting the 10 mm.

Let me, let me ask a question for the group. What is the ideal buy box for somebody for a sober living home? Right. Like I remember I started thinking about this and you started going through and describing what, what makes a great home for this. And I realized that my house missed two, two out of the five or two out of the six that you had. So yeah, what are those?

So definitely location matters. Location's huge. It needs to be near public transportation where they can either walk or bike to a bus stop. Most of ours are on bus lines or it's just a couple blocks away, not super far because a lot of people don't have transportation or they're getting out of jail, getting out of residential treatment. They had a dui. Like they don't even have a license. They need access to that close to stores. So if they need to walk and get groceries, they can. So if it's a way out in the country, you know, 10 minute drive, it's probably not going to work unless you somehow have a way of bringing all that stuff to them. I mean there's always ways around things but you're going to have to figure that out cost. But I know programs that will not send anyone to you unless they verified walk through the location and verify there's a bus line here. Like I'm starting to get some screenshots sent to me of like, hey, is this close to a bus line? And I'm able to tell them other than that, I'd say four bed or bigger. I don't think you need to hold out for a five, six or sometimes there's crazy stuff going on with seven or eight beds because those are few and far between and they tend to cost more. And I think you can do just fine with eight or nine people in a four bedroom house. That's going to be two to a room except for maybe the master bedroom where you can put a third bed. So it's going to be a little larger and they can share one bathroom versus sharing the main hallway bathroom. I like single stories. It keeps the utilities low. We do cover utilities and that's why we charge more for rent. We provide Internet, washer and dryer, some household supplies like toilet paper, detergent, dish soap, stuff like that. But overall, I think our total expenses on most of our homes, considering we, most of our interest rates are below 4% and that we bought the properties around 4 to 450, it's about $3,000 a month kind of all in for expenses on each property for us, but we can gross 10 to 14,000amonth. So we have three properties right now that are grossing or netting 7,000 in cash flow each month after paying my employee as well. And we have seven total properties.

Okay. I know when I was interviewing you for the podcast, there were some interesting things, right. That I picked up along the way. Like hey, there's cameras on the outside, you know, of the house and there's cameras in the kitchen because, you know, somebody might be, you know, taking somebody else's food. Like there's these other considerations that we normally don't think about all that much when we're doing regular rentals. You know, there's house, house rules and those house rules can't be broken. And if you break them, you essentially put your, your license. It's not a license, but you, you, it's not a lease. They don't have a lease. It's kind of like a license. Right? You have a license to a bed or something like that.

Yeah. So let me tell you, if I can do this in California, you can do this anywhere. Yeah, very tenant friendly California. I know people who, who know the game and they will stay in a place for six months with squatters rights and, and not have to do anything and move out as soon as the eviction hearing comes up so that they don't get a judgment or an eviction on their record. Judge just throws the case out because they've moved out. There's nothing to worry about anymore. We avoid that. We avoid that to. By having a license agreement, not a lease. So they have a license to a bed. We have house rules they have to follow. We have. I mean, that's basically it. We're somewhat strict on who we allow in the home now. Like, we have an intake process so we know how much clean time they have, what's their drug of choice, what their plan is moving forward. Because they need to essentially have a treatment plan or be an outpatient treatment to stay with us. And we just want to make sure that everyone's, you know, no one's sitting at home in their room all day long. We have a rule that the TV doesn't come on before 2pm Stuff like that. They need to be employment ready. If they don't have a job, they need to be looking for a job or we help them get one. And we've done that plenty of times too. But the license agreement really says you have access to a bed. And at any point we can revoke that access and you need to remove your belongings and leave and it is held up. And we've had the cops come and take people away for trespassing because they do not have a lease. Now there we've had to train a couple of police departments, which lets, you know, two things. Number one, not all police departments treat this the same. And number two, we've had to call the cops before, but every single time we've been able to show the signed paperwork that literally the first line says, this is not a lease, and we're good to go.

Andrew, we're getting some questions coming in, so I want to kind of start from the top down. Is there a limit to how many beds you can have in each room?

Some people will say that there is a limit to three, three beds maximum. Now, I know people who have two bunk beds in rooms, and I believe that the federal equal housing rules allow you to kind of do what's reasonable. Some cities have tried to impose limits and, you know, federal law supersedes local governmental law. So I think it's okay. I mean, I'd say consultant attorney, I'm not one, but I think it's definitely possible to have four to a room.

Okay.

I don't like to do it personally. I don't want people to feel like they're back in jail in a cell.

I totally get that. You just Gave me an idea. Oh, my God. I've got to go take action on it. I'm so excited. Anyhow, I digress. Okay, let's see. Okay, you already answered that, man. My house is perfect then. Okay, great. Is it not better to offer the house to the city or county program so they can assume the responsibility to run the place?

So this is what I'm finding. Most cities, most, most local municipalities are terrible at running housing. If you look at, you know, housing projects, that's what, that's what it used to be, right? And it was terrible, terrible place to live. They couldn't maintain safety. They didn't have the staff, all that stuff. So they now have funds that they route to us to provide the housing as a private provider. I've looked into Section 8, I've looked into other programs. They are all below market rate for rents. So it didn't make sense for me to do that. That's the first place I called local housing authority and they were telling me it was going to be like $600 less than average rent if I had them come in with a master lease. So I decided to find other options.

Do you need to provide computers, Internet, landline phones?

We do not need to provide landline phones. Most people in our homes have what's called an Obama phone. When Obama was in office, he basically said that having access to a cell phone is a basic human right for Americans. And you can get a really cheap phone that's basically covered by like Medicare. And we actually have a hookup. There's a guy locally who will go to them and hook them up with their phone. He just needs to fill out some paperwork. Like he has a Social Security number.

I had no idea. I had no idea. Okay.

I had to learn, too.

Where are you finding tenants?

You can find them all over again. They don't have to come from a specific program. We just like working with local programs because they pay more. They have these funds. Typically they're coming from some kind of taxes or a federal block grant or a state block grant. So they have more than enough millions of dollars to be able to fund this because. So if you have some kind of substance use disorder, that's what it's called across the country now it's considered a mental health issue. So they now will diagnose you and provide you treatment, outpatient treatment and housing, because those are the two things. Like if you don't have an address, it's really hard to get better or access any kind of services. And then they want to make sure it's clean and safe. So that's why they put them in houses like ours that are completely drug free. If it's just a typical rental, there's no rules. So they want to make sure that the person's actually monitored, that the rules are kept so they pay more for that.

Got it. Okay, next question. What kind of insurance do you have? I'm thinking you need good liability insurance.

Yeah, it's. It's a good idea to have your typical insurance on the home. Or if you are a landlord, I would have commercial liability or not a landlord if you're renting. Because typically if you're doing this and you're renting, you're renting as a corporation. And your corporation should have some general liability insurance. I also think you should always have an umbrella policy, personally, should you either meet the cap on your insurance, your rental or homeowner's insurance, and need some additional coverage. Now, my agreement states that everyone's basically waiving their rights and they agree to indemnify us. Like they agree that living there, we're not responsible for anything that's stolen.

We're.

We're not responsible if they use drugs or if someone else uses drugs. We're just providing housing. Housing and utilities. So there's nothing they could technically sue us for. And if you're providing a service like providing affordable housing, I believe. I know in California there's a law, but I believe it's a federal law that there's like almost a do gooder or Good Samaritan protection there that says simply by. By providing this, you have some protection against lawsuits because they could have chosen to go somewhere else if they could, but for the most part, this is the only option for them. We're providing a service.

Got it. Are these houses co ed?

No, we will never do a coed house. I've just heard horror stories. You don't want two people who have already proven that they've made bad life choices together. So we just do male houses, female houses, and then actually, I take that back. We have one OED house, but it's actually for family. So it's single parents, and they tend to look after their kids more than they're looking to hang out together. So they tend to keep to themselves and protect their kids. So we have one house that actually has a single dad with four kids that were living in a motel and we're about to be homeless before they moved in with us. A single dad with two kids and then a single mom with two kids. In one six bedroom house.

Wow. God, you're doing so much good with this. Just thinking about like housing kids that could end up being homeless. It's like, I'm like, it's just amazing. Do you need an employee to live there to make if in case house rules are broken?

You don't need an employee. And what I mean by that is someone that you pay like with payroll or something like that. You do need somebody who's responsible and can be your eyes and ears. So from the very beginning, the way we did this without any employees, through, let's call it, our first four houses, was I was basically the manager. I lived very close and this was on purpose. I bought homes close to mine that I could walk to. And so I was doing a 75 hard as we were building these out, which meant I had to do two 45 minute workouts a day. And one of those was a walk to my properties every single day just to check on them and say hi and see what's going on. Sometimes people are at work, sometimes they were there, but I caught some stuff while I checked in. I later replaced myself with ring cameras that are in all the living spaces and at all the exits and then hired somebody on a base salary and then a profit split to be able to make sure that there's somebody that can always reach out to. So I didn't get the 11:00am calls.

Yeah, it makes a lot of sense. Okay, so we have here, let's see. Do some neighborhoods not allow this like the ones in an hoa?

Again, you're, you're pretty well protected by federal housing laws that say an HOA cannot tell you that you're not able to house people like this. They have a diagnosis. They are a protected class. So simply by living in your house, there's a lot of protection. You don't have to announce it to the neighborhood. There's nothing they can do. And it's been tried many times. You have a lot of people who, as soon as they hear about something like this, they say, not in my backyard. And unfortunately for them, fortunately for us, there's a lot of protections. So there is actually a just last month in the state of Illinois, I believe, a lawsuit where a city was trying to prevent an operator from opening a sober living home. And it went to the US court system like the doj and they said you cannot block them from doing this. And you actually owe the operator damages for slowing them down and stopping them and paying all their legal fees, they got $800,000 awarded to them by the city. So HOAs can't tell you either that you can't do it even. Well, one piece might be. And this is tricky. They might say there's a rental restriction or there's a waiting list for you to be able to rent out your home in the hoa. But at the same time, we have a license, we don't have tenants. So it's kind of a gray area. You'll have to figure out with an attorney in your state in our area.

That that restriction typically is just for condos, not for townhouse HOAs. At least I haven't seen that.

Could be different. In my city, we do have an HOA that says, you know, only 10% of the homes can be rented out and there's a wait list.

Wow.

So it's. It'd be interesting to see what happened if we did something there. But I like to avoid HOH at all costs anyway.

Sure. Do you need a license for this?

You do not need a license. You do not need a certification. As long as you are just providing housing, you are not subject to any kind of state or federal requirement to. To have a license or. Or any licensed employees. Like, you don't need an rn, you don't need a social worker, anything like that. Now, as soon as you step out of just housing and you try to provide other services or group sessions or something like that, that does require a license, I would not go that direction unless you're doing it through a partner or a separate entity.

Got it. Okay. Anna says she's got a pool. I know you said that. That could be a liability, but what if it's fenced? Right. Does that help?

Yeah, if it's fenced, it helps. If it's got alarms, it helps. We have a pool at one of our properties, which is really interesting how we got into that property in the first place. But we just have them sign a waiver. So we just included in our license agreement a waiver basically saying, if you don't know how to swim, don't go near the pool, and we are not responsible for you.

Julio said, how do you avoid rental rules and leases? It's because, Julio, it is not a rental. It is a license for the bed. For a bed. So it's not constituted as a rental. That's how you avoid it.

Yep. It's essentially, it's just a business.

It's a business. And is it like a one page document, two page document, three page, four page? Like how big Is that.

It's a good question. Our license agreement is. It's all document and I'm actually going to look it up because I don't know. Okay, it is seven pages.

Got it. And. And I said, how do you find a program to work with? So.

So maybe market research.

Yeah, market research. There you go.

Yeah. Market research is going to be the number one way. And what that means is googling and making phone calls. So it's, it's. I like to find the who, though. I started asking around, who should I know who knows this area? And I was told, you need to talk to this person. So I called the director of a local shelter who happened to know everybody. I didn't know she was like that connected, but she knew everybody and made personal, like referrals and recommendations for me. So if you can find that one person, that's awesome. But in the case that you can't, for instance, I just had somebody in Riverside county, which is la, ask, hey, can we partner? Can you help me with this market research? So we found 250 leads just going on Google and yellow Pages and whatever blasted out an email, saw what bounced, communicated with the people that didn't bounce, and already started getting referrals for that area, even though we don't have a house, all within like four days. So if you just find the list of people who are involved in transitional housing, reentry housing, things of that nature, you'll get to the right people or they will refer you to the right people. Like, I just got a recommendation to my email, went to the wrong person. They connected me with the director of housing for the city and then they reached out and said, yes, we'd love to have you in our program. We'll put you on our list.

Yeah, because I imagine there's a big need for this, right?

Huge. Yeah. And that's why. So we went from zero to five in one year because there was a huge need. I thought there was no way. But they kept filling up. The houses just kept filling up. So now we might be at a slight equilibrium. Part of that's just because there's not enough case managers and this world has a lot of turnover because it's so hard and it doesn't pay well if you're a social worker anywhere. But despite that, like, we've also gone to Facebook Marketplace and got private pay people to come in and live with us too. So when referrals are low, we find a way to find other residents.

I see one here, it says, so the rent comes from the city or program and the client signs up with a program. Who pays? The client, who pays? Is it the client or the program?

Yeah, great question. I think it depends on your area. So I know in LA there's a couple that has several properties, but they tend to do the. Let's have, you know, two bunk beds in every room and let's get duplexes. So they have like 30 people in one property, all paying out of pocket as much as they can afford.5 or $600 a month. Because if you're on SSI in California, which is just regular Social Security income, you don't have a job or some kind of like SSDI, which is disability, you're not making more than about $900 a month anyway. If you have storage, if you have insurance, if you have phone bill, whatever, you don't have much more than five or six hundred bucks for housing. I like programs because they provide outpatient services, they provide a lot of case management. We don't have to worry about our people. They're getting job training, skills, all that stuff. But we also get double the 600 because they're in a program and that program has funding for this specifically. So whatever that program is, it's going to be different in your area. But you want to just connect to the people who are in charge of running things like that.

Got some good questions here. One question from Christina. How long do people normally stay? And I think you already answered. Do they pay by credit card that you get paid by the program? Right?

Yeah.

And do you have an entry fee or for bid bed linens, et cetera? Mike?

Yeah, great question. So let me answer the last one first. We do have, we started doing a non refundable move in, move in fee. So it's not huge, it's 250 bucks. But it accounts for the times when we do need to replace bedding because someone stole it, fix a dryer, change out refrigerators, whatever. So it just helps us with anytime that happens, which it can happen fairly regularly. You have that many people living in a house, but for rent, will someone ask? So we do have programs that pay, but we also have a few that pay out of pocket or there's a program that ends after nine months and now that person has to start paying us rent. And I use schedule my rent.com for that. It's really simple. It's like next to nothing for the, for the program. And they can pay by credit card achieved or even like MoneyGram and you know, Western Union.

Fascinating, man. This is so cool. Okay. Each program has a different amount that they pay per bed. Correct. So I would imagine there might be different programs that have different pay schedules.

Yeah.

And are there management companies? Yes, there are management companies. You could just provide the housing. That's something that Andrew and his team are now starting to potentially put together for clients.

Yep. So yeah, you could, you might be able to find something that's considered, and we talked about this before, an Oxford House, which is really a self led. It's just six people, four to six people who want to be sober. They can get a charter from this nonprofit organization called the Oxford House and follow some basic rules, but there's nobody monitoring them. There's no one really checking in. It's very self led, self managed. The whole house could be using. No one would know because they'd all be in on it together. So I don't necessarily like that model. We have the more monitored. Like we again, we have ring cameras, we have rules, we drug test. I have an employee. We have house leaders that we designate who don't get paid, but they get special privileges. So they might be able to park in the driveway, maybe get a gift card every once in a while. Like we want to thank them for their service and they like the responsibility. It actually does help them move along in their recovery by having someone trust.

Them again, something just to answer further delve into Christina's question about how often are your places full or not full. Right. Vacancy rate is a very real thing. And what you were telling me before was you've renovated your properties to an extent where the program sees what you've done and is and, and, and wants to place people in your properties because it is a superior product over maybe somebody else's product.

Yeah. If, if you are getting a program to send people to you, it's typically because they've done a walkthrough. Like they aren't just going to blindly send people. And so the case manager, whoever comes out to do the walkthrough for us, because we fixed them up, beautiful quartz countertops, you know, luxury vinyl plank floors, brand new cabinets. All of it's like Chinese pre manufactured stuff, prefabricated. But it looks really good and it's like it could be, you know, it's flip quality. That's what we started off doing. So they walk in and they're like, can I live here? Do you have another one I can rent? Can you sell one to me? So if they feel that way, they feel more than comfortable sending people in their program to You. So that helps a lot. Now there's others who they don't do all of that fixing up. Like they're not going to put 40, 50,000 into a home because they don't have it. But if you can do anything to help it feel more comfortable and welcoming, it's a huge benefit. But also I can send out pictures to new programs and they call immediately with referrals. Like, there's no question that they want to send people to us. They know we're not slumlords.

Mm. Have you explored doing this with people with disabilities?

Yes. So one of the programs actually does both sober living and mental health and disability. So we've had a few people who didn't have substance use issues but have had like minor strokes, other, you know, minor mental health issues. And something you'll find is a lot of people who are homeless are dual diagnosis. A lot of times they're homeless because they are self medicating, some kind of mental health issue. So it's usually a dual thing. There's far more people than I ever realized who are diagnosed schizophrenics and if it wasn't for their drug use when it was really bad, you would not know. They just get a monthly injection and they're fine. Crazy that I never knew this or have PTSD or something like that. So it's really opened my eyes to the fact that everyone has a struggle and you just have no idea what it is. And to treat everyone with a lot of grace. I saw a question about drug testing. We drug test about weekly. We drug test as soon as somebody moves in to make sure that they're clean. They go on a seven day blackout depending on the program, which means they can't leave other than to go to work. We never allow guests to the home unless it's a caseworker or an actual spouse. They have to be married, so they're just chilling out, getting adjusted to our home when they first come and then about once a week after that. In the beginning I didn't do it as much and we got into some trouble with people using and no one in the house wanted to be, you know, a snitch. So unfortunately we had some people doing some really bad things for a while and I had no idea until, you know, someone's so bad that you can't miss it. Now do they either have to go to the hospital, have to go to detox, which if someone is dirty, we send them to detox to get cleaned for seven to 10 days and then we welcome them back. We don't just kick them out. Now, if they were doing something crazy like they were actively using in the house, they were bringing drugs into the house, trying to share with other people, we're not going to welcome them back. But if they use elsewhere, they relapse, they tell us they're open and honest about it, we will welcome them back once they're clean.

Wow. There is. There is a lot as I, as I think this through, Andrew. Somebody really has to have a heart to want to serve because there's a. There's a lot of dysfunction that you're going to have to work through and see and, and heartache that I would imagine you might experience.

Yeah, it's. It's sad. Especially it's sad when people don't, like, you can't want it more than them. There's some people who just aren't ready to get sober and, you know, they choose to not go to, to detox and to move out and live in their car versus having a nice warm bed and people looking after them in a community that's rooting for them. So it's unfortunate. There's definitely a whole different side to humanity. A whole different side. Like, it's crazy how many people. Somebody the other day stopped me. They're a friend of somebody else who's living in one of our homes. And they're like, are you Andrew? I think we went to high school together. Like, it's just such a small world. You wouldn't expect, like, some people that you literally grew up with to be in this situation. And I'm honestly, when you're doing really well in real estate and, you know, you're a business owner, you're just in a different place and kind of in your own little world. So to see what's happening all around me really made me think, like, man, how long have I just been, like, floating up here and not looking at how can I help and give back?

Do you do private coaching?

I do have a course. So it is group coaching. And the way we're doing it is we are launching a course April 1, and that gets access to a Facebook community. Me in the group personally coaching and asking, you know, doing Q&As like this as we release each week and giving a lot of group coaching time for. For six weeks when we launch that it might turn into some kind of mastermind later. I've twice now had someone come and tour our homes. Just yesterday, someone flew up from Southern California to walk through it, and he's going to start paying a little bit so I can help him launch there too. And he's getting access to the course for that. But that's, that's really how I'm doing it. Not necessarily one on one, but group coaching for sure. You can go to sober livingriches.com and get started there. There's both a full pay and a payment plan option there.

You know, I think about it if I was you, not that you're asking, but I think that this would be an excellent way to partner with people across the country. Right. Where, you know, you take an equity share as you kind of work through that process with them. Right. Silver riches. Sober living riches. Is that what you said?

Yeah. So I kind of just gave you like, there's a, there's like a sales page that has like a free training that you can't skip through. So I just gave you the link to skip through that and get to basically the page where you can just sign up, which includes the, the first video we were on. If you guys haven't seen that in grid already, you can go like, watch that video here on this page.

Have you applied to CDBG funds to cover the cost of the group home?

So I think what you're talking about is like a block grant, which typically the, the programs that are paying for the stays of our people, the funds are coming from that. So I haven't personally applied. Typically you have to be an agency or a nonprofit. We did start a nonprofit that maybe can do this. But then also I was told that Mo Anderson is like, y' all don't have time for a nonprofit. So what I love about Vanessa Pollock is she got a charter through an existing nonprofit. So they do all the paperwork and all the accounting and she just gets to, to run it like hers, and it has her name in it for marketing purposes. But for us, I'm trying to figure out the best way to do that. I don't know of any nonprofits locally doing this type of housing besides like shelters.

Interesting. You know, there's. I'm part of a, a non profit that helps launch other non profits. It's. It's called the Core Foundation. And the Core foundation, essentially for 10%, they do all the accounting, they do all the setup, they do everything right. So it's, it's pretty cool. They're called core causes and you may even want to Google it because they do, they do all the heavy lifting. They take 10%, but the 10 is worth it. It's like a management fee to Manage, you know, the entire process. And, and I, I was thinking, how do I, you know, is like, would we want to do this in a non profit? Right. What's the benefit? That doesn't sound like you have to. Right. But is there a benefit for it? Like, I, I don't know. I guess if you, if you set up the non profit to go get grants, right, for, for, for this, I guess that would be the benefit. But yeah, I don't know.

So, yeah, there are grants that are available. There's some local hospitals that have reached out every year and said, hey, do you have grant funds? What ends up happening, interestingly, is they will actually fund like county probation and cover their bills for a while. So they'll, they'll pay our invoice directly, even though we submit it to county probation. So there's always ways to get the funding. But I am looking at now how do we directly get the funds to not just pay our invoice, but maybe allow us to expand our staff, offer internships, things like that.

Interesting. You settled on sober living homes, but this is kind of part of a broader market, I would imagine. There's lots of categories, right? Yeah. What are some of those categories?

I would say the sober living niche is getting a lot of attention just because there's funding for it and lots of changes to laws and just about every state. But also, you know, it's a, it's a subset of your larger group home. A lot of people think group home and think foster care or something like that, like a youth home. But group homes are all around us. It's people who have disabilities, it's veterans. It could be a battered women's shelter, domestic violence, just a home where people of a certain background can gather and get some support and be part of a community rather than being on their own and having to navigate just like applying for apartments and regular single family homes. So. And it's cheaper, right? You're paying for a room instead of paying for the entire space yourself. So you can run any kind of group home and it, and have essentially the same protections and not have to abide by, you know, weird ordinances or things. As long as it's zoned residential, you should be fine.

You know, that's important because there might be somebody that has a heart for, for veterans and they really want to help veterans transition into, you know, when they come back from war, I mean, they come back, many of them come back broken. And so they can help them transition back into civilian life. And if they've got A group of people around them or, you know, I know in our area there's a place called Cornerstone and they own a lot of the houses actually in our area. So I would imagine this is kind of what they, they do as a non for profit. But it's, it's a lot of spousal abuse. Right. Like that happens and people need temporary housing because of that. And it's women typically fleeing the home with kids and they need shelter. Right?

Yep. I just put one in the chat. There's something called the HUD Bash program. It essentially is like Section eight, but it's, it's just for veterans. Depending on your area, they might have some stipulations like you can only have one person to a room or someone has to do a walkthrough and you have to get put into a system and get approved for it. But it's a way to get paid maybe 6 to $800 per person if you're housing veterans.

What question have we not asked you? What should we know? These are great questions, by the way. So good to get the collective mind share to ask questions, the hive mind to ask questions. Because these are questions we didn't cover in our podcast. And I'm like, dude gold, you know?

Yep.

Anything that I didn't ask you?

So I think there was one question about do, does each program pay a different amount? Most programs pay whatever we set. There's only one program that's decided they're going to tell us what they will they want us to charge or what we're going to be able to charge for them. And they have like this whole point scale that they came up with. I'm honestly trying to get out of that program and get away from them because they make it so hard and they never pay on time. But mostly programs are going to take whatever you charge as that's whatever you charge, whether it's 800-900-1300, whatever. They'll decide if it's reasonable. But you can, you, you can come up with the number. I acquired a lot of these homes with a private lender. It did not take a lot of my own funds. So anyone who's thinking like, you just have to save up a ton of cash, I was, I fell into that trap. I thought it takes money to make money. I had six figures saved up, which did give me the confidence to kind of run full speed, but we didn't need to use it. I have a great private lender who I met. He's honestly another flipper. He's Done over a hundred flips in my area and he just said, hey, I want to lend more. So I bought a lot of these properties, 100 financed. I paid 2 points and 10 interest. And he did everything else. He paid for the purchase and the rehab. And I just have a great contractor who's very affordable.

And then you're, and then you're burning them back out into, you know, into longer term loans.

You're letting them in a 30 year fixed.

30 year fixed. But they've got a season for a, a year to try to get the better rates or what?

No, most you only need, I mean if you're going through a traditional bank, you need six months of seasoning. Typically if you're going through like a hard money lender that has a DSCR loan that's still a 30 year fix, just a higher rate, sometimes as low as four months. I've worked with Lending Home now, I think they changed their name to Kiabi. They, they just needed four months of seasoning and they, they've also, I've worked with them before to purchase the home and refinance out three months later. Three or four months later.

Julio. I'm going to save you on this, Andrew. That's his, that's his, that is like his inside secret, asking for his private lender's contact info. So we won't ask you for that, but he'll give you the bigger, the bigger lender stuff.

Yeah. And he wouldn't work with you anyway. He only works in our area. Stuff that he can walk himself.

Private lenders are local, right?

For the most part. But you know, he came to our meetups and so came to our GRID meetings here in town and actually got introduced to a lot of other people. So if you want to find somebody like that, go to a meetup, go to a RIA and ask around who's a private lender and see if this is something they'd be interested in. Awesome. Yep.

How do you find out if there's a need in your town? What type of research can you do? Also, do you learn about how, how do you learn about your competition?

Ooh, great question. So you can actually Google, I mean people will, will create a Google my business profile and you can see if there's somebody that has a recovery residence or sober living home. There's also an organization called NAR, the National association of Recovery Residences. If somebody is a member of that. Basically it's like nar. If you're a realtor, they provide a code of ethics and they have Kind of a directory. They just kind of make sure you are following certain ethical rules. So people who do that are in their directory. See if there's somebody in your area. There's no one who is NAR or their state affiliate in my area. Like they're kind of far away, 40 miles away in each direction. I haven't personally signed up, but I do like the idea and I'm starting to look into it.

We're going to start winding down on the questions. But did you have any mentors when you began?

I did call somebody who runs a house and has run one for about 14 years in a neighboring city, a female home. And I paid her for her time and she let me. She came and saw my property and said, you're going to need this, you're going to need that. Here, take this. Like I paid her and she gave me her contract. Her all the stuff, right? All the secrets. So I'm all about that shortcut. She was awesome. But she also did things differently. And there are some things that she does where I talk to program operators and they're like, yeah, don't do that. That'll get you in trouble. So I like learning from a lot of people or figuring out who's learned from a lot of people. So I've kind of. I picked the brain of a lot of local and, you know, people in other states and we started taking bits and pieces and kind of putting it into our own system and product. So our license agreement has some stuff that she used, has some stuff that someone else uses in Texas and different places, but it fully protects us because every clause I see that we don't have, I'm like, let's put that in here.

My friend works for Napa county homeless program. Would it be worth talking to her about this? I'm not looking for Section 8 tenants more so similar to what you're doing.

But for homeless, always a good idea. And I like asking who else should I know? So even if they're not the person, they could connect me with the person who does know or has a program that pays more. Like I'm still learning about new programs in my area and there's always new programs getting additional funding. They typically end fiscal year. So June, July is about when you'll hear about more funds becoming available. So it's always good to reach out kind of mid year and see who's doing what these days. And block grant funds, that kind of stuff gets renewed then.

Got it. And then last question here. Do you have all that stuff in your course, license agreements, rules, etc.

Yes, everything. Everything that I have. Anything I can do to add value. Contracts, rules, policies, the way we set everything up. Our shopping list with links to either Target or Amazon. Our supplies list, all of it. It's. It'll be there.

Awesome. Cindy's like, I'm signing up. Awesome. Well, guys, thank you for this live. Andrew, thank you for this live. This has been awesome. I learned so much. This is why I love the collective mind, because the hive mind, like, such great questions. I didn't have half of these questions in our podcast. Right. Yeah. This is amazing. Thank you so much, Andrew and Rob. Yep. Rob, didn't know you had a podcast. We'll definitely listen. Yes, we do. Right? We're trying to grow that and build it larger. It's been our pleasure, guys. Andrew, anything else? If somebody wants to find you, they go to that. That link, but also maybe a social media handle that they could follow.

Yeah, you can go to Latlink. You can go to the Andrew Lamb when I put that in the chat too, on IG or. I mean, not on TikTok yet, but I will be, I'm sure. So I try to keep it simple everywhere, but that's the best way to find me online. DM me or. Or sober. Livingriches.com okay.

Thanks, brother. I appreciate you. Take care, everybody. Yeah.

Hope you enjoyed.

Bye. Bye.