The Sober Living Investment No One's Talking About | Andrew Tyree & Gracious Wellsprings

All right, Andrew. So that red light just came on. A lot of people get really, really nervous because this is high-stakes podcasting. How are you feeling? Do you want to go forward with it? You feeling okay? How are you feeling over there?

I need to back out. I can't, I can't do this. No, man, I'm great. I feel, I feel very good.

Awesome. Awesome. Well, let's go ahead and jump into it. I'd love to start with a real quick, just 90-second pitch. Who are you and what does your company do?

Sure. My name is Andrew Tyree. I am the co-founder of Gracious Wellsprings. We are based in Los Angeles and we are sober living homes. We started in 2024 with 2 houses. My business partner Michael and I started with 2, converted them to women's sober living houses, and then now we've expanded to an additional 3 in the last couple of months. So yeah, that's us.

That's awesome. That's awesome. So I guess let's maybe go back. What is the origin story of this? How did you guys get started? Just walk us through those first sort of steps out of the Sure.

Yeah. So I'm a real estate agent by trade. I'm a real estate agent/investor. So I've always been very interested in the kind of side of real estate of investing and cash flowing properties and things like that. So Michael and I, business partner Michael and I, we met in sort of like a, what would it be like a meetup almost like an online meetup for people doing sober living homes. He and I both kind of got interested in doing this. Strategy of real estate investing. Both he and I have family members who have either gone through recovery or have died from addiction-related things. So we both had sort of a passion for it. He hit me up to be his real estate agent to purchase a sober living home. And as we were kind of touring around and doing these things, we very quickly realized, I was like, I don't think you should buy a house via me, even though I'm losing out on commission. I think we, I think you should rent one. I think I should rent one. And we ended up kind of renting houses right next door to each other, pooling resources, then realizing that we together were better off. So yeah, we started with two houses. One was supposed to be a men's house. One was supposed to be a women's house. The women's house filled up. There was a ton of need for that in Los Angeles. The men's house he was living in there as the interim manager never filled up. So we moved him out, moved the woman that's now our director in. and the whole thing kind of took off in, in 2024.

Wow. Wow. That's, that's really amazing. Let's talk a little bit about maybe like what does economics sort of look like in this? I mean, uh, you know, we're, we're talking today because you are out fundraising for this. Um, so obviously outside of just the good impact that you're doing in the community, you know, uh, you know, we, we'll check that one off right now. We'll talk about that a little bit, but just what kind of like economics are we looking at in this? Um, you know, when, when we start getting into a sort of a, an idea like this.

So we, first of all, we've bootstrapped all of the 5 so far. He and I got together, pulled resources to open the first 2 to just sort of like test it and see how it went. We ran the 2 for a year. They basically, so it does about $7,000-ish of profit per house each month. So it ends up being quite profitable, all in costs in it, like return on investment is really good. We're currently doing a leasing model, which we eventually want to end up buying the properties that we're currently leasing. But right now we're, we're leasing them. Leases in Los Angeles are quite expensive, but there's enough rental coverage or kind of like per client coverage that it covers that and expenses and each one. Yeah. Cash flow is about like $6,000 to $8,000 per unit. Nice.

Nice. So I guess in this type of scenario, it sounds like because it's being bootstrapped right now, you really didn't go out and try to imagine certain locations or maybe you did, I guess, talk us through just how did you think about locations where you wanted to be? You know, what was some of the, what are you looking for that says, hey, I think this house would make sense for us to, to, to, to jump into?

Super good question. So sober livings work kind of in tandem. We're sort of the supportive housing along with outpatient programs. So we had to kind of base everything within a close enough Uber ride to these outpatient programs. So I live not in West LA, but I live closer to Pasadena. I live about like 40 minutes from where our sober livings are. Michael lives about an hour north of our sober livings. So they're not necessarily location, like great locations for us personally, but we did a ton of research to, you know what I'm saying? I'm like, it's not an easy commute. Luckily we have like staff kind of running the day by day stuff, but we did a ton of research on where the need was specifically in relation to where these outpatient programs are. So we had done a ton of research beforehand, sort of on the impact of sober livings in general and, and how they work and how to set them up and then Really quickly we're like, okay, we need to be as close to these outpatient programs as possible. And we ended up, but we're both from Los Angeles. We ended up being in the number one city for recovery in the United States. So we were like, oh crap, like bonus. So we ended up saying, okay, West LA is the perfect spot. Proximity to public transportation is really helpful. Proximity to like walkability to grocery stores, things like that. And then really the proximity to the, um, like to the outpatient programs was the most important.

Piece. Gotcha. Gotcha. Let's talk a little bit about, you know, maybe like firsthand, what did you see a bottleneck or did you just see something in addiction treatment that, that you said, hey, we want to, you know, not only do the— is there a program that's kind of in this or is it just housing? Is it just a real estate deal? I guess like what were you sort of seeing that just, you know, that bottleneck or what did you see that says, hey, we should do this? Maybe it was, was it just, you know, personal experience with your, your, the people around you? Like, well, what were you guys really seeing at that time?

It was kind of all of the above for me. Like I had done, so I've been a real estate agent for years. My wife and I started, we bought a house in a neighborhood, neighborhood called Highland Park. We bought a duplex and I was like, oh wow, this like very early day, this was like 10 years ago. And I thought to myself like, okay, the idea of like real estate investing and making something profitable, something that could be a liability, making it into an asset with the rental piece of it, something unlocked in my brain probably 10 years ago. So we, I had a travel company at the time. We bought the duplex. I was like, wait, great, amazing. Like round one of sort of unlocking this sort of like real estate investor part of my brain. In, when the pandemic happened, I got a real estate license and then I really quickly started just diving, really diving deep on Airbnb stuff, on short-term rental things, just like kind of researching all different ways of real estate investing. Never really loved any of them. And luckily because Airbnb kind of came and went, didn't come and go completely, but in the investment space, it's not as good anymore. And then sort of got into Section 8. So taking investors, getting them small apartment buildings and helping them in the process of renting to Section 8 low-income families. So for me, I was like, oh, this is really great because it's kind of community-based. It's helping people that need, that need it. Really good for investors because it's like on the, you know, on the first, every first, the whole rent is paid. They pay higher market rents. So I kind of come from a mixture of like real estate investee stuff and like bleeding heart stuff. And then like you were saying, I had members of my family, really good friends that have either passed away from it or have gotten clean. So I was sort of exposed to this idea of treatment centers and things like that. And I was like, oh, I can kind of combine my like wanting to do good for people with that, it makes a lot of dollars and sense real estate investing-wise and business-wise. So it was sort of a combination of all of our, same with Michael, past experiences of that kind of stuff that, you know, it kind of all blended together and made for really great things.

Yeah. Do you think that there was a moment, you know, maybe a story or something that happened that maybe had you go from important cause or like just an important thing or just like, hey, we could do this to a potential scalable business where investors could get involved? Like, was there just something that you just really saw and said, hey, I think we could do this at a much bigger scale?

Well, like where we're at now. So when we opened the first two, we were kind of like the blind leading the blind a little bit, right? Like we were going to do two men's houses. Then we were like, oh, there's more women clients that we need. So we moved them in. There's that, that whole thing. We're like, oh dude, like we should change to a women's house. Then we were like, we should change it to women's houses. So we've kind of noticed that there was that. And then, so we were like, we're going to ride this out for a year, hired a really great manager. We're going to see how this goes for a full year and kind of tinker with it and figure out what, where we need to go. At the end of year 1, last, like August, we're like, okay, we're going to get one more property. As we got that other property, the landlord was like, the house in front and the house right next door to you, do you guys also want those? So we're like, yes, we went from 2 in a year to a 3rd in that same year to like 4 and 5 within a month. We were like, oh shit, there's— we opened the doors and they filled right up. And we're like, oh wow, not only is this like good economically, it's doing good in the community. There's a need for it. And then the thing that happened after that, after we bootstrapped all 5 of them, we're like, that's good. Like, we're good. That's a lot of expansion in a year and a half. Like, we're good. We need— we can chill for a second. All of these outpatient programs just outside of Los Angeles started hitting us up. Being like, you guys, we come from both, like me, real estate background, Michael, kind of investment business background. We run the thing like a business. There's systems in place. It's very like tightly run and organized. Whereas a lot of these other sober living businesses are not run as well, dare I say. So we came in and kind of like systematized things, got things kind of in a working order. There's you know, it's all very like, it's run much more like a proper business as opposed to like a side gig. So as we're making relationships in the last year and a half with all these, almost 2 years now with all these other programs, the programs then started asking us to open. Currently right now we're being asked to open 5 or 6 houses, which we're at 5 right now. So we're going to double in Redondo, which is about 40 minutes south of where our houses currently are. There aren't sober living or well run down there. So the big shift now isn't us opening doors and then finding clients. It's the programs asking us to open houses for them. They're like, we have 40 clients. We have nowhere to place them. Can you make the house for them? So a big shift happened in, I don't know, I guess like in the fall as we're opening our own bootstrappy ones, people are asking us to do them. In other locations around LA, which were like, okay, great. Like now you don't have to do client acquisition at all. They're like, build a house, we'll give you 40 people. We're like, great. So now here comes this, this is where this part comes in where we're doing fundraising because our current bottleneck is that there's other, these programs dying to give us clients and we don't have enough capital to open these, you know, it'll be 10 plus more locations this year. So. That's our current problem is that there's, so there's, you know, so much demand for it that we need some capital to kind of like be able to open all these doors they need.

Yeah. Yeah. What's been the hardest sort of leadership decision that you've had to make, you know, sort of so far, so far in the company?

We've luckily been, we've kind of honestly have like really lucked out. The woman that we moved in, her name is Erin, to be our original house manager. She's been promoted now to like director. She's awesome. Luckily, Michael and I have very opposite skill sets. So he does some things really well. It was kind of a weirdly easy partnership. I think the only things that we've, that I personally have, you know, have had a little bit of difficulty kind of getting used to is the ebb and flow of clientele in, in treatment. It's just kind of a thing like people come and they go. Sometimes they stick around for those couple of months. Complete their programs, reunite with their families. Sometimes they disappear in the middle of the night and go out and, you know, relapse. There's a, it's a difficult, like, I don't know how to say it. It's like a difficult kind of clientele to figure out or a difficult, it's not charts and graphs in this, in this particular instance, right? Humans that it's Christmas time and a bunch of people are like, I'm going home and I'm going to drink. Like there's a lot of kind of like human elements in it that you can't really predict that well. So luckily with us staffing it really strongly with people who have gone through these programs and gone through these systems and have maintained a year plus of sobriety has been really helpful, but it's very much a feast or famine and up and down. It's seasonal, which are things that I didn't really account for. I didn't really predict.

Hmm. Yeah.

Yeah.

Interesting.

Yeah.

We just a minute ago, we were talking about sort of the working with the treatment centers or sort of that referral relationship that, you know, them sending them people to you. How dependent is the business really on those relationships.

Yeah. Good question.

When you look at it.

So quite, quite, especially in our first year, I would be, I'm, I'm the on the phone making the relationships with the programs and with the clients to like make sure that we have infill. Mm-hmm. Our first year was very much that. And then now we have maybe about 60/40 where the programs send us people and now there's a lot of Past client referrals, people are calling us from the internet. We've— I've done a lot of outreach with like community centers that do like housing for people. So we're kind of on these hubs of someone coming out of jail can call this hub. This hub can be like, oh, these people handle housing, see if it works for them. So the first year was me, a lot of dependence on sort of programs sending us people. In this second year, we've noticed a lot of client referrals. Sometimes clients will relapse again and come back and try sobriety again, which is great. So we'll, we'll have like people come back through to us. A lot of word of mouth. We're getting a lot of like SEO, kind of like Google reviews, that kind of thing. So people are finding us on the internet now because I wanna level that playing field where we're not completely program dependent. We're getting our own clients to be able to then give to the programs as well. So I'd say. It started with 100% referral dependent and now it's maybe like 60% referral dependent and about 40% we get naturally.

That's great. That's great. You know, one of the things that just popped in my mind, are there regulations in this space or, you know, the state of California checks in or what does that look like? Is there anything like that for, for what you're doing?

So the shorter answer is no, but then the longer answer is we are really exact about it. So we're registered with like National Association Association of Recovery Residences has a California version of it, and we had to make basically like safety plans, exit maps in case of a fire, fire extinguishers, like that, like kind of safety-ish protocol to be able to be licensed with the state of California. But like I was saying before, us versus kind of other places, other places, they're like, we don't need a license. Who cares? We're kind of like, We don't need a license, but we want to be as like kind of proper with it as possible. So we're licensed with multiple sort of like state and then governmental like regulations, but it's technically not like you don't have to, but we, you know, we are.

Okay.

Yeah.

Gotcha. Interesting. Interesting. What do you think one of the biggest misconceptions maybe investors might have on sober living as an asset class or, you know, looking at investing in this? What would be a misconception they might have?

That it's run like a flop house, I think is a big— people say that a lot of times. They'll be like, oh, is it a halfway house? Is it a flop house? It's— we're trying to like kind of get away from that stereotype where it's like, you know, people getting high in the bathroom and stuff like that. Ours are run in a way where it's like people actually have the opportunity to improve their lives, to remain sober, to— we have like, you know, mental health clients as well, just some like stability and consistency in life and in their home setting for those 3 to 6 months to kind of have a life reset. It's, that's what we're aiming for. That's what we do. It's not like a place where people can like go and score drugs and like get high and use the system and all that kind of stuff. Ours is much, is run not like a flop house, but really like a transitional home to get back into society.

Gotcha. Gotcha. Gotcha. So what, you know, right now, where do you see milestones being maybe 6 months from now, a year out, maybe 18 months out? What, what, what are those big milestones right now that you're looking at?

Currently, so I believe this year we'll probably, so we're at 5 houses now. This year we're going to try to get another 10 houses with kind of this investment round that we're doing. And just like a friends and family kind of that I, you know, I'm in contact with people that I've done real estate investing stuff with before. I think that this, in these next 12 months, we'll be able to open another 10 houses quite easily. That's only just with like the requests for people wanting us to open houses near them. Like I was saying, the ones that are kind of in Redondo, like south of LA, a couple about an hour north of LA. So just with those, we'd be able to open 10 really easily. If the fundraising round goes well, we would be able to open another 5 to 10 on top of that. I wouldn't say easily, but like we could get to 25 houses within the next 18 months with a, with some push, with winds hitting correctly, you can kind of like 5X this business really pretty fast. Okay.

Okay. Gotcha. If somebody wanted to kind of dive in and learn a little bit more, I mean, where ultimately should they go to, to, to check out what you guys are working on?

Our website is graciouswellsprings.com. There's a contact us, you can do andrew@graciouswellsprings.com is my email address. Yeah. Gracious Wellsprings is the name of our, of our company here on the shirt. Yeah, that's, that's a good spot to do it. Um, I, I would do that. The investor page, I believe, can you put like a link maybe in the, in the show notes about it? I don't have that off the top of my head.

Yeah. Yep. Yep.

That'd be good.

Yeah, I could. Yeah, I'll definitely have a, have a link to there if anybody's interested.

Yeah. Cause that link will go directly to like sort of the fundraising part of it. And like what's involved in that and goes through details of that. The website itself, Coast to, uh, Gracious— cut that part actually from when I just said Coast to Coast. The graciouswellsprings.com website is— would be the best way to contact us and get ahold of us.

That's great. That's great. You know, what, what's keeping you up at night as we kind of wrap up this interview? Like, what's the biggest thing that right now you're like, we gotta get these 2 or 3 things really done correctly to, to grow this?

The fundraising thing is big. We just got certified to be a nonprofit, which is cool. So we can start applying for like nonprofit loans. The big kind of bottleneck or the big thing, because we just launched the, we just launched the thing, I believe last Tuesday, like the, this investor round. So I'm currently doing, you know, interviews like this. I'm making calls to investors that once that sort of happens, and there's already been some investments secured, which is amazing. In the first week, there are a couple of people that threw some money in, which was awesome. Once we get a little bit more settled that, in, in like the investor part of it, we can start opening doors quite quickly. It's a little bit bottlenecked purely because there's just not enough cash flow to start opening these doors that are needed. So that's, that's kind of our big one.

Gotcha.

Yeah. Okay.

Awesome. Really cool. Well, Andrew, I appreciate you taking time out of your day. This is a really unique project. I was excited to talk about this. I've also had some people in my life that, that are around me that have gone in and out of these homes. I'm here out here in Michigan and we've got a sort of a network that Somehow I learned more about than I had ever thought I would. So when I first saw this, I was like, this would be an interesting conversation because it's an interesting sort of angle that you guys are taking into the investment space and trying to kind of go after a community that really does need as much help as possible. So Andrew, I appreciate you taking time out of your day.

Awesome.

All my investors out there, you guys know, go to the show notes. We'll have all the links to the website campaign page. Go and check it out. But Andrew, thank you so much for your time and I appreciate it.

Thank you. I appreciate the invite and yeah, this is a great chat. Thanks so much. Awesome.

Thanks so much. Yeah.