How to Make Money and Help People with Sober Living Housing

Hello and welcome to the Raise Capital Legally podcast and YouTube channel, where we talk about topics of interest to real estate syndicators and fund managers with an opportunity for live questions and answers before we sign off. I'm Krisha Young, co-host and business development director for the firm, and this is attorney Kim Lisa Taylor, founder of syndicationattorneys.com. Before we get started, please note that the audio and video from this event will be posted on our podcast platform YouTube channel, website, and social media, and will be made available to the public. You can go ahead and ask questions at the end of the broadcast by raising your hand or typing it in the Q&A. Please note that information discussed during this event is of a general educational nature and should not be construed as legal advice. Now, today's topic is how to make money and help people with sober living housing. Please join attorney Kim Lisa Taylor and co-host Krisha Young as they interview Devana Kame and Reed Stadelman Our guests will tell us how they have created sober living facilities that provide both a community benefit and provide rental income. This is part of our Beyond Multifamily series where we introduce our audience to alternative asset classes that they can turn into profitable business models, or you can just invest with our guests. Hello everyone.

Hello. Thanks for having us.

So I got excited about, uh, you guys when we first met at, uh, it was Dustin, uh, Heiner's Real Estate Wealth Builders Conference in St. Louis, right?

Yeah.

Yes.

And, uh, I, I got excited when we talked, first of all, because I was getting, uh, planning at that time to go hike the John Muir Trail, and you guys had just come back from, I believe, Mount Kilimanjaro.

Yeah.

Yes. Yeah.

Instant, you know, things in common. It's like, you know, love the wilderness, love to hike, love adventurous things. And so we had some, just some really great conversations about that. And then we started talking about your business. The reason I even go into this is because a lot of you that are thinking about how you're gonna meet investors and when you're at an event should follow that path. Look for things you have in common. You can have great conversations about those things, and then eventually you're gonna come around to, hey, what do you do? And then it's really easy to start talking about your business at that point. So I think it's kind of a little example of how you can meet someone and develop relationships at conferences that kind of you use to further your business or their business or help people going down the road.

And in this case, it's literally follow the path like you're talking about.

Exactly. So I asked you, I remember, Davanna, saying, how come this business? And you had a really passionate story. So can you tell us about that?

Yep. So, um, there's a lot of addiction in my family, and growing up I was surrounded by, uh, addiction. Um, somebody very close to me passed away of an overdose in 2007, and, um, after that I was actually really angry at addiction. I didn't want anything to do with it. Um, but then when I kind of, you know, came off of, of that, I I had this thought like I could either be angry at it or I could do something to help. And so I just went, started going down the path of what I could help with. And I've been in different sober— I have not personally been living in a sober living, but some very close family members of mine lived in different sober livings. And so those experiences, I would leave feeling so upset inside because I just— they weren't what I thought they should be. So when Reed and I decided to do the sober livings, we were like, we could do this better. How do we do it where we're providing a nice place for people to feel comfortable, grow, and actually like be successful after they leave our houses?

Wow.

Wow.

Okay. So how does it work?

So, uh, sober living is a mutually supported living environment. So it's a place where if you're in recovery, most of our people come straight out of, uh, drug treatment. rehab facilities. And then that's like the next step from, from that. So they come in, they live together, they mutually support each other. They're all going through the same thing. So, you know, they come home from a day, and, and if they're having a hard day, they can talk to each other. We do have managers that live in each of the houses that help just support. We don't provide any counseling or therapy. They get that outside of our houses. But it's really just a mutually supported environment for them to live in while they're going through the recovery, where they have accountability and structure as well.

So I have a little bit of familiarity with these types of houses as well. Not from a long-term standpoint, but from like a shorter rehab facility. Just had some experience with that. I wanted to know, like, they would have regular meetings, right? So like every day you would have meetings like an AA-type meeting or a Narcotics Anonymous-type meeting or something like that. Is that part of something that the tenants tend to do, or do they go to these meetings on their own, or is that even what they—

Yeah, so we suggest that they do For us, it's 5 meetings a week if they're not working. Excuse me, I'm getting a little throat thing. If they're working or going to school full-time, then it's 3 meetings a week. Some sober livings are very strict with if that has to be AA or NA. I'm of the mindset that I want it to be something that's actually gonna work for somebody. Most of the time it's AA or NA. But sometimes other things work for people too. So I will allow them to mix and match different modalities. So maybe they go to church one time a week, or maybe they go to church multiple times a week, but they're allowed to use one of those, and then they can mix that and match that in with the AA or NA. Or if they do therapy, or if they do some other type of program, as long as it's working on themselves and their sobriety, they can mix and match a few different ones in with their AA. NA meetings.

I love that.

They're just suggestions, right? It's not, uh, like you don't kick somebody out if they don't do it, as long as they're clean, right?

Yeah. Um, I guess like by law you can't make it mandatory for them to do specific things, but it's highly suggested. And I think the, the people that we bring in our house are there on their own accord. They want to be there. They want to be doing better. So we've never really had an issue with somebody pushing back saying, I'm not going to do meetings or, or things like that. They, they all take the same. In fact, I'm sure most of them do way more than 5. 5 is just the minimum.

How do they manage, like, you know, who cleans the house and buys groceries and, you know, who cooks, all that?

Yeah, so they're responsible for their own food and cooking for themselves. Cleaning-wise, well, let me back up a little bit. They also, because they are a community you know, support living together. A lot of times somebody will say, hey, I have some chicken, and, you know, I have some tortillas, or whatever, and they cook together. But it's not like a structured cooking thing where everybody has to cook together. So they can do it if they want, but most of the time they do it separately. In terms of chores, because it's a structured living environment, we do have chores assigned to everybody. Our house, we like it to be very clean. So we have AM and PM chores. So a lot of people will think, wow, you have, you know, 24 guys living in a house. It must be so gross. No, it is absolutely spotless. When you have people doing AM chores and PM chores, that's more than, you know, most people do in their own houses on a daily basis. Yeah.

And they kind of enforce that on their own, right?

Yeah. So the managers help, you know, just look out, make sure that everybody's signing their chore list, chores got done. The managers there are there to just oversee and make sure everybody's You know, staying on track with what they need to do with the house.

And then you're responsible for general maintenance, taxes, insurance, utilities, those regular things.

Yeah, for us personally, because we're owners and operators and we own the property that we have, we're responsible for all of that. I think a new trend that's kind of coming is Investors that have houses will lease the house to somebody to do a sober living, and then I'm not sure how they structure it, if the person leasing has some responsibility or not. But for us, because we own the property, it's— we take care of all of that.

Okay. Any pushback from neighborhoods? How do you deal with that?

So we've been doing this for 11 years, and we've been pretty darn lucky with all of our neighbors. In the beginning, we had a couple Couple neighbors that you know said, "Hey, what's going on? We see a lot of people there," and we just educated them on what the house was really about. And then they became—they love us—that they became great neighbors. The our guys help you know the old man next door empty his truck with his tools or help him bring the garbage cans in and stuff like that. We try to be very good neighbors in our neighborhoods. My last house that we bought, we had a lot of pushback from that neighborhood, and that turned into. City council meetings, you know, neighborhood conversations and things like that. But at the end of the day, you know, we're allowed to be there, and we— all we can do is try to answer questions and, you know, help them understand what we're really about. And then it's up to the neighbors to decide if they want to accept that or not. But we're allowed to be in the neighborhood.

So Yeah, it's really important to know, you know, know what you're able to do and understand the laws around this, because there was a lot of pushback on the last one. And if we weren't familiar with all the laws and what we were— what's allowed, they could have easily, you know, had us turn around and decide to do something else, because there was a lot of pushback.

So, so, and does that— is that more likely to happen, say, in the place where there's a homeowner association versus where there's not? Or, you know, what are certain areas that you would avoid just because, you know, it would be problematic?

I probably would avoid homeowners associations personally. Legally, they can't tell you you're not allowed to be there, but they can create, you know, headaches for you that are You know, you gotta figure out where you wanna fight, right? At the end of the day, I probably would avoid that. I know some people who do it, and they're fine. But yeah, personally, I wouldn't wanna do it. It's really a hard thing, because you never know when you go into a neighborhood what— which neighborhood is gonna be upset with a house like this coming in. And I, and I, I have to be open-minded. I have to understand that they have concerns. There are bad operators out there, just like anything, right? There's really good houses, and there's some bad houses. I personally, because I'm, I'm so entrenched in the sober living area, I think there's more good houses than bad houses. But you only hear about the bad houses, just like on the news you hear about the bad police officers. But there's probably more good police officers than bad police officers, right? So You never hear on the news like, oh, wow, this house is doing so great. It's— you hear when there's a problem. So I think that I know people who go into really nice expensive neighborhoods who have never had a problem. I know people who go into, you know, B, C-class neighborhoods and might have a problem. You just never know who the neighbor is next door to you that might have an issue. But my suggestion is educating them. showing them what you're really about, being a good neighbor. Number one, keeping your yard clean, making sure your house is nice, making sure that you're having your people follow your rules, your management's good. All of that helps keep your house as a good neighbor in a neighborhood.

So what's a typical house that you would look for?

Does it have a certain number of bedrooms, or, you know, For us, because we've been doing it so long, I tend to go for the bigger houses now, just because it doesn't feel like more work to meet up 24 people in a house than 10. But the first house we opened was 10, so we started with a smaller house. You can really do it in any size house. What it comes down to is, for us, is like bathrooms. So when I look for a house, that's the first thing I look for is how many bathrooms in our house, because those are harder to add or to work around. Usually county codes, I think, I'm not sure if it goes by state by state, but our county is 6 people to a bathroom. So if you have a 2-bathroom house, 3-bedroom house, you can possibly have 12 people in that house. But my suggestion is don't just find a 3-bedroom, 2-bath house and stick 12 people in there. Make sure that the rooms can accommodate that amount of people and do it. My big thing is quality houses. There's a lot of people that will get a house and just stick as many people as they can in there. without having it be comfortable for the people. So my Reed and I both are really big on quality houses and living. So just because you can put 12 people in a house doesn't mean you should.

Just the— there's also square footage issues depending on the county or the ordinances that you have in the city that you're at. So you can't just stick, you know, 12 people in one bedroom if it's a big bedroom or something. There's certain minimum requirements for square footage per person per room, and it depends on the city or the county that you're in. So you really have to look that kind of stuff up, just as we said with the bathrooms. So I mean, for example, our city is, you know, you have to have a minimum of 70 square foot per the first person, and then every person thereafter you have to have another 50 square feet per person. So, um, and then you have to have certain exit requirements for windows and doors and all that kind of stuff. So it gets really complicated, but, um, you have to look all that up and make sure that you're not doing something that is— you can get caught for.

Some of the bad operators don't go by that. They just do whatever they want. But Reed and I follow the, um, very high standards.

Yeah.

And when you say you're legally allowed to be there, is that federal law, state law, county law? Yeah.

What is it? We fall under the Federal Fair Housing Disabilities Act. So that's how we get protected.

So campers can't prevent you, but they can impose things like parking restrictions, things like that too, right?

So anything that's code enforcement, right? So if you're not following code enforcement in your neighborhood, then they can They can get you for those things. That's why I say keep your yards nice, make sure your trash cans get pulled in, make sure you're being a good neighbor. You're allowed to park on like it depends on the parking for your street. Where we live, it's all public parking. So we are allowed to park you know as many cars as we need to on a public street unless there's some restriction with like street sweepers coming between this time and that time. You have to follow all of Those rules and make sure that your house is up to code for everything, just like a normal person would. But it's a normal single-family home with a family. Whatever they can do, we can do, if that makes sense.

And are there— is there any time when they come in and say, oh, if you're going to do this, then you have to have sprinkler systems, or, you know, does it turn it into some kind of a commercial venture versus residential?

No, because of the Federal Fair Housing Disability Act, they would have to do that to every single family.

Got it. So, yeah, further restrictions on you beyond, say, the parking. And how do you handle that if you have 12 people in a house? Do they all have cars, or are they typically in urban areas where a lot of them won't?

Yeah, no, not all of our people have cars. Some are building their lives back and don't have a car yet. I would say, like, in our house number 2, we have We have a lot of long-term people in that house, so probably half the house has cars. And it also depends on the groups that come in. Sometimes you have a group that's there that has a lot of cars and some don't. But we, we park in our driveways and then park a few on the street, and it usually is fine. We're not— we try to be respectful too of not parking in front of people's houses as much as possible.

And we haven't— overall, we haven't had an issue with parking, but we've been making it very clear To our tenants, you, you need to be aware of how many people are near our home and make sure that the people across the street, or, you know, adjacent to us, have enough room to park their vehicles. So they're all aware that then they're trying to make sure that everybody has enough space. So people at our home might park further down the street so they can give other people, you know, reasonable room. It's important for them to take care of everybody else on the street as well. We want to be the good neighbor. We want to be the best neighbor on the block. I want the nicest house. I want to take care of everything the quickest. Trash bins are not out, you know, long time. Everything that we can do to be the best neighbor is what we're, you know, asking of our tenants.

So, and, and that being said about the neighbor, we can try to be the best neighbor we can, but sometimes you're still going to have neighbors that nothing's going to be Nothing you can do is right, even if you do everything perfect. And then you just have to say, well, that, that's for them to, to struggle with because we're not doing anything wrong.

Yep.

Do you guys ever do like community events, like neighbor events or anything like that? Like, can you do something like that to like raise awareness and have like, like a lemonade stand or something like that, or whatever, like for people to get to know one another? Like, is that something that's appropriate or would be good for neighborhood relations?

Yeah, I mean, I think you definitely can do anything like that. Our guys and girls tend to get jobs right away, and then they're really busy in their own lives trying to work and get their lives up on track. But there's definitely opportunities in the community to do community service, volunteering, um, things like that, for sure.

Part of the recovery community is about giving back, and so Like Davonna said, they're, they're, they're all individuals trying to have a job, try to take care of themselves and get back, you know, in life. But that's part of what they're looking to do is to give back to the community. So when they have the ability in general, they're trying to help and provide support for others as well. It's not, it's, it's not about yourself. It's about supporting others in the recovery community. So.

And then how long do people typically stay?

So it depends on your, on how you, uh, your funding. So for the first 9 years of us doing this, we were just completely private pay. And typically we would have, I mean, still today I have our longest tenant is 8 years, right? Um, so anywhere between 1 year and 8 years we have for our long-term ones. If you're getting more state or county funding, then it would depend on What the length of that payment would be. So if they say we pay for 6 months, then maybe the person would want to go to private pay after that if they are doing good and whatever. And some people might say they're moving out. So I think it depends on if you take private pay or if you, if you're taking a certain funding that stops at a certain amount of time.

So how do you charge? Is it per bed?

Yes.

And month-to-month leases, I'm sure, I'm assuming, or agreements.

We, our agreement is not even month to month. It's, you know, if they want to leave today, they can, they can just say, hey, Devon, I found another place, or I'm moving back home. I don't want to put that extra stress on them of having a specific time period. Some people are trying to, you know, get back with their wives or their husbands or their family, and I want that to be whenever it's good for them. So we don't have— they can, they can tell me today that they're going to leave and I'd be okay.

And that doesn't put you into some kind of a hotel status with the city or county because of how— what you're doing?

No.

Okay. And I think so, like, how do you figure out, like, you know, do you have to have a 6-bedroom house to have 24 people in it? Do they, you know, how do you have bunk beds? How do the logistics of all that work?

We're, we're looking— I mean, it's because we have so much experience now, and we understand the amount of area that we want people to, to have to live in. It's, it's easier for us to, to look at now. Like Davana said earlier, we're looking for larger properties, larger homes. We'd like to park as many people on the property as we can. Size of rooms make a difference. I have a construction background, and so If the layout of the house is not conducive to how we would want to put people in the house or, you know, make it comfortable, we'll move rooms, take walls down, add things. Like Davanna said earlier, we try to find places that we don't have to do a whole lot. So adding a bathroom or moving bathrooms are expensive, you know, stuff like that that take, you know, water and everything, that's more expensive. So we try to stay away from that. That being said, we have added Bathrooms to homes. We've moved bathrooms. We've done all of that. It's just we're always looking to do less than more because things get expensive. So it's—

Do people typically share a bedroom, or—

Yeah.

You kind of try to create separate spaces for everyone?

In general, we try to have everybody have at least one other roommate. So And that's for accountability reasons as well. You can—

Yeah, a lot of times people will say, well, how does that work with that many people in a room? But they actually like it because it— they have that community. It's accountability. So somebody's not isolating in a room by themselves. And a lot of people don't know this, but the opposite of addiction is not sobriety, it's connection. And so when they have When we have 24 people in a house or 10 people or 17, whatever your number is, it actually works really good that they have that connection that they, you know, isolated from for so long.

Oh, wow. Yeah. And I can see where that would make a huge difference for some people just knowing, hey, I'm not going to come stumbling in because somebody's going to know. And so you're, you're, you're just like, yeah, I just don't do that.

Exactly.

There's empathy there. There's like empathy and understanding.

Uh-huh.

And you said something I thought was interesting. You said the— it was the auspice of addiction is—

The opposite of addiction is connection.

Opposite of addiction. That's a really interesting comment. You know, I'm sure that a lot of our listeners, you know, whether they're on the call with us today or they listen to it later on, will know people that have either know people that have addiction issues or families that are dealing with addiction issues. I can't even imagine that somebody grew up in rural America and has not had some experience with it because it does seem to be rampant in those areas. So I think it's an amazing thing that you guys do.

Thank you.

And I can see how it can have just such a great impact on the people that experience it. Are your homes only geared towards adults?

Yes, the 18 years and older. Um, and I, I, I do want to say this. I think the stigma in our country is people who are struggling with addiction are like, you know, homeless people under a bridge creating, you know, lots of mental health. And that, and that is, that does happen. But a lot of them are just your sons and daughters and moms and dads and They're, they're not all bad people, right? They're, they're maybe they've done some something bad in their life, like some type of crime associated with their addiction. But when you get them clean and sober and they're in a house, if you walked into any one of my houses right now, you would not, you would not look around and say, oh, these are all drug addicts. You would. They just look like family members. They, they're, they've— to me, they don't even understand what they give me every day. Like they, they are the most driven. If you can get off of heroin from it, I'm going to get emotional. Sorry. If you've been on heroin for 10 years and you can come off of heroin and get your life back, there is something in that person that has drive and determination and whatnot. They just have to put it in the right direction. And a lot of people turn to drugs and alcohol not because they're bad people or they even came from bad houses or bad families. It's it's that they were running from something. Maybe there's a lot of trauma to deal with, or they want to numb. They want to disconnect. They want to do all that. If I'm a big proponent on fixing what you're running from in the first place, and you know sometimes the drugs aren't even the problem, right? The drugs are just the solution, really, in some people's cases for a long time until they're not, right? So I just, I want people hopefully to look at addiction and not just look at the person and say, oh, they're worthless, or they're a loser, or they've done this, that they're actually a person that, that when they're clean and sober, they're a completely different person than when they're in their addiction. And so when we— I love to go to my houses and a lot of people say, well, aren't you afraid to go to the house with 24 guys? No, I, I've never in 11 years had a bad experience where someone's tried to hurt me or anything like that. I love— I get so energized going to the house because I see them working so hard and what they're doing in their lives from where they came from. And it's just, it's an amazing feeling for both Reid and I.

100%. My favorite thing to do is, you know, rolling in. I do a lot of the maintenance stuff in the homes, so go in to fix something and I end up staying a couple hours just talking to people, you know, We always end the conversation with a hug. And it's, it's very rewarding to be a part of people's lives and to share and to be empathetic with where they're going through in life and be excited for people. It's really rewarding. We love it.

I remember hearing a statistic one time, a long, long time ago, that they said only 1 in 7 addicts stays clean for more than a year. Um, do you think that because you're offering this kind of longer-term supportive environment that it really contributes to a greater, uh, percentage of success than those statistics?

I think so. For us, we have way better statistics than that in our houses personally. Um, I think, I think a lot of people don't realize, so they go through treatment, right? It can be 30 days, 60 days, even 90 days. But when you come out, Your aftercare is just as important as your treatment, right? Because now you're, you're faced with the world without that, those 4 walls around you in treatment and having a sober living, a good quality sober living with support and good management helps, helps you navigate all of life that gets thrown at you with us in a supportive environment. Instead of just going back maybe to your old environment. And so I think that the aftercare— and so this is why I don't have— why Reid and I don't put a limit on how people can stay at our houses. So some sober livings will say you can stay 6 months or you have, you know, they have a limit. I don't because I— it's not up to me to know when they're ready to go back to their— to that life.

Sure.

I want them to be ready because For me and Reed, it's so important for them to be successful when they leave our house. I care about them. If you know, sometimes you know they have to make their bed. They have to do all this stuff, and sometimes they're like, "Oh, Devana, why do we have to sign our chore?" Blah blah blah. And it's not because I want to be super strict just for our house, but when you leave, I want to see you successful. It would be way easier for me to just collect your check every month and let you do whatever you want. But for me and Reed, I say me, but it's the two of us, we're really invested in making sure that they can be as successful as they can after they leave our doors. Yeah.

And I do think that that's important what you said, that if you don't have a safe place to go where you know you're going to have that supporting environment, then I think it's very easy for people that are, you know, have been in rehab just to go back to their old environment, to their old friends and the people that were kind of fostering that usage pattern and not, you know, maybe get the support they need just by kind of getting away from that for a while and then not going back and experiencing that until they're strong enough to handle it.

Yeah.

You know, so I can see where this is really, really good, can contribute to the success of people long-term. And I, you know, I've seen people that have been in programs You know, like, you know, AA or NA for, you know, 30 years, and they go every week, and they, you know, because they need that, you know, that community that they build, that's, you know, their safe space that they can always call on those people to help them. So I'm sure there's a lot of people that live in your homes that even when they do go on into the world, probably have some great relationships from the experience that carry them through. Yeah.

I know a couple. Sorry, you want to say something?

I was just, I was just going to say, yeah, it's great when you have somebody that leaves the home come back, you know, because they just enjoy all the other people that they know at the house. And so our places can be like a center or a connection place for a lot of people to come back. It's great to see people that are doing well in life after they've left our place. It's the most rewarding thing ever.

Do you guys ever do any kind of alumni events? Hey, you know, we lived in the house. We should come back and, you know.

Not, not necessarily events. I actually just started an alumni Facebook group because it's fun to, to see, yeah, all of their success stories. We, and a couple, well, more than a couple, but we also get a lot of people that come through our house that why they're in our house, they, they want to change careers because maybe the career they did, maybe it was Something they said, when I go back, like truck driving, for instance, I don't want to go back. I use so much in that industry. It triggers me to go back. So, so they'll— a lot of them will go into the addiction. They'll get their CDAC, their different licenses to become drug and alcohol counselors and work at the rehabs to give back that way. So I have a few right now that, that are doing great work. Yeah, after leaving her house in that industry.

I have seen people that have gone through programs like that, and then they come out and they just want to spread the word. They will, you know, they're, they're so converted and how much better they feel about their lives and what they're accomplishing than they were before that they just want to spread that word to everyone. So that's, uh, that's really awesome that you're giving them this really cool environment.

Um, so, um, Right, like there's a lot of autonomy here in terms of like how you guys are flexible with what types of meetings they go to. Like they get to choose, you know, if they're doing something that's spiritual or whatever, therapy, you know, like that, that brings a lot of autonomy and empowerment and independence that they might not have felt before, you know. So like it bolsters their confidence in a way, which I think then allows them to face the internal and external challenges in a different kind of way with like a new skill set that, you know, are grounded for them.

So do you—

Well said, Krisha. Yeah.

Do you get referrals from rehab organizations?

Yeah. So we've been doing this for a long time. So we, we have a good reputation with the rehab facilities. Different places. So somebody could— if you're— if somebody's interested in doing this, then they would probably try to make a relationship with the detox centers, the rehabilitation centers in the area. Um, I even think like if you're doing a women and children's home, which is so needed for anybody out there that's willing to take that on, um, making a, a good relationship with CPS, social workers, Different places like that for women who need to get their children back but need to be in rehab or sober living before they can do that.

So, and I— you have both men and women in homes?

So we don't have co-ed. So we have right now, we have 3 men's homes and 1 female home.

I could see it could become a little more challenging to deal with.

Yeah, some people— I do know people who do co-ed, but Reid and I like peace in our life way too much.

Yeah, yeah, I don't think that would be the— I don't know, I— we, we don't think that would be the best idea. You're very impressionable when you come out and you're raw and you're open and you're feeling for the first time, and you're potentially getting involved with somebody before you realize, you know, what you really want in life. I, I don't know that that's the best time to be making decisions like that, so we chose not to go that route.

Yeah, don't they say you have to, like in AA and stuff, like there's a year, like they recommend, like don't date, don't get intimately involved with anybody for at least a year?

Yeah.

Yeah.

And not necessarily, you know, not saying that every co-living house or co-ed house is, you know, everybody's going to get together, but, but there are relationships that form and, and feelings. And, and also, I want to take into account the— so say there's men that live in our house, for instance, that, you know, a lot of them have wives, and that would be really uncomfortable for them to be like, well, my husband's newly in recovery with some, you know, other women in the house. I just We just don't want to add or contribute to anybody's stress or pain or anything like that. It's just better to keep it separate.

And that makes, that makes a lot of sense. Um, and so the type of rents that, uh, these referral sources sometimes pay for a period of time, it sounds like—

So there's, there's a few different options. Um, private pay obviously is like old school, you know, They pay for themselves. Then there's a lot of state, county, state and county funding depending on different programs and, and depending on your county. Some counties don't have very much funding and other counties have more. So it's, it's completely, it just differentiates from county to county.

So as far as from, you know, besides from the emotional and the social impact stage, which is clearly your passion, you still have to make money. You still got to make a living. And so how do these types of investments stack up compared to other types of investments? You know, like if you were just to rent the home to a family or turn it into a duplex or something like that, how do you see the economics panning out?

Well, it's really difficult to put like an exact number on it because it also depends on where you're at. So Just real quickly, an example would be the county that we're— that we have our sober living homes in will make a certain amount. And in per bed, you know, we can charge like $850 per bed. In other counties, you can charge $3,500 a bed. It depends on the location that you're in. So Anyways, for us, I would say in general, you should probably be making double what you would get from your standard family to triple ballpark. But you do have more expenses. You know, you are— you have more people in the homes, you're using more utilities, you are paying for more things. You do have cleaning expenses and, you know, different things that you wouldn't typically have for a single-family home.

More maintenance on the house when 20 people are using faucets and that kind of stuff.

Things will break easier or more often than your typical single-family home.

And I want to add this, it also depends on your numbers, right? So the house we bought 10, 11 years ago for, you know, when the houses were good prices and, you know, we're at 3% interest, is going to make a different profit than somebody buying that same house today. With interest rates today, so it all depends on you know areas and and that those things come into factor. And I do want to preface this because this is very important to me. I think in as real estate investors and looking for for different ways to invest money and make money, I think it's important. I'm a capitalist, so I love making money. There's nothing wrong with that, right? But if you're going to get into this industry, I would suggest not getting into it if you're just looking for the money. Because it is not, it's not hands-off. It doesn't come without like heartstrings. You know, you do deal with people that leave your house that might overdose when they leave your house, and you've, you know, grown attached to them. You do deal with, you know, a lot of issues that you wouldn't deal with maybe with a normal, just renting to a family and not talking to them until their lease is due again. There is more involvement. You do need to have compassion if you're doing it in the right way. So I would say it's a great place to get into if you have a passion for helping others and wanting to make a good, you know, money off of a house that maybe you can't with something else. Also, because I think sober livings are getting, you know, we got into it when it wasn't popular. No one, no one thought about doing this, or there people were doing it, but it wasn't like the investor side of people doing it. I would say that make sure that you— there's— because it's getting more popular, more counties are getting more saturated. So if you're gonna go into a county and it's already saturated, it's kind of like the Airbnb thing, right? Everybody wanted to do an Airbnb, and all of a sudden certain counties were so saturated that it started getting harder and harder to make money, and the competition got harder. Unfortunately, There's— we're probably, unless we do something big on all different levels, addiction is going to be here. But I am starting to see in certain counties there are more beds than heads, and then other counties there's not enough. So, you know, research kind of where the need is and then go from it with a heart perspective of wanting to help people first, but knowing you're going to probably make a little bit more money than you would on a single-family home.

Yeah, I think there's enough money to be made there, uh, to where you should be putting more money back into the people and the property than you would typically put into a property. Uh, you should be upgrading it not just because you don't want it to deteriorate. You should be upgrading it so that you have a better quality of life for these people. That's really important to us, to continuously put back in, make things better, um, upgrade, you know, the facility so that, um, People really have pride in where they live.

When we first started, I remember meeting somebody who had a bunch of sober livings, and he said, Devana, don't put a lot of money into these. Just buy some thrift store furniture. They're going to thrash your houses. You know, it's blah, blah, blah. And, you know, true Devana fashion, I'm going to rebel against what somebody tells me to do. And so I went the whole opposite. We, we, everything brand new.

Yeah.

Our level of quality is we wouldn't put anything in our houses that we wouldn't use ourselves quality-wise. So we might go above and beyond what some other operators do. But I will tell you, in 11 years, I've never had one person thrash my house. I've never had one person do anything, anything like that, because they take pride. They get there and they feel like, wow, this is such a nice place. I don't want to— you know, if you have pride, And where you, what you're providing, they're gonna have pride as well. It's kind of like the broken window theory, if anybody's ever heard that. And so, you know, when we have anything broken, we're over there fixing it. When rugs start looking dingy, I replace them, you know. And that might not be the popular opinion for other operators because every penny you put in is a penny out of your pocket, right? But I just feel like we're still making a decent amount while being able to hold the quality of our houses very with high standards.

How do you finance your properties? Are you able to get just regular single-family financing, or do you disclose what you're going to be doing? How does that work?

So, so far, everything that we've done has been by ourselves, and it's been conventional financing.

So, you know, you don't have to disclose that you're doing assisted living. It's protected under the Federal Fair Housing Disability Act. I— you just— it's just an investment property like anybody would finance.

It's a single-family home with a single family living in it, that period.

Because with addiction and because they're protected in the Federal Housing Disabilities Act, it is like people— and I'm going to word this wrong right now because I don't have it in front of me, but it's basically people that are not blood related but living as a family unit.

So yeah, standard financing, conventional loans, you know, or jumbo loans or whatever you need for the size of home that you have. All of our properties, we've put 20% down. I know that there's other options out there. That's just what we've been able to do and it's worked well for us.

But I think any way you would do a normal house, you can do creative Creatively or conventionally.

All right. Well, so since we are talking about financing, do you want to mention that if any of you want to go out and develop some sober living homes, you can certainly syndicate it? That is what we help our clients do is create syndications where they can bring in money from investors and do these kinds of things. You certainly will have to disclose to your investors what you're doing, and some of them may be very passionate about doing it with you, but some of them may also have an opposite reaction, and that's okay. It's Just make sure that what you're doing fits with what your investors are looking for. And if it doesn't, then it's better to not have them try to invest with you. But if you could just tell, Krisha, maybe just tell them about our books, how they can get copies of our books, and then we have some questions for you guys.

Okay.

Excuse me. A couple of questions here. Yeah, I love this topic. This is so awesome. And I just wanted to say what I love about these Beyond Multifamily conversations that we're having. and something like this is that we're really marrying that capitalist, like, let's make money, right? Because that's important. It's fun with like this social impact. You know, like there's— you're changing people's lives here and, you know, really having a positive impact on society as a whole. Right. And, you know, if I was an investor, I would really like lean into something like this because it's like, not only am I going to make some money, which is going to improve the quality of my life, but it's through that there's also this like improvement of somebody else's life in there as well. So I, I just, I just love these, um, this topic. Um, speaking of being able to invest and, and get into deals and stuff, if you're in the market for that, we do have, um, 2 amazing books here that Kim's written. Um, this one here is our sort of like beginner's guide, um, here that you can grab. It's a little blurry here, but How to Legally Raise Private Money. This is like the beginner's like how-to guide, an introduction section on syndicating and the legal aspects of all of that, which you can grab. And then we have more of a desktop reference here that goes into detail for when you are seriously contemplating, you've done your underwriting, you got deals on the table, and now you're really needing to get in the weeds of how to do this legally and properly. You can grab copies of both of those books on Amazon. Excuse Or you can text the word syndicate for a free copy of the of these books to excuse me our phone number eight four four seven nine six three four two eight. So that's texting the word syndicate S Y N D I C A T E to our phone number at eight four four seven nine six three four two eight.

And if you can't remember the phone number, it's 844-SYNDICATE, S-Y-N-D-I-C and the number 8. Okay, awesome.

Well, the word syndicate and think of us.

So you've— so you have some people that have asked some questions. Krisha, do you want to go ahead and—

Yeah, Rob Garcia, super quick question here. What city are you guys working in?

Or cities? We can— can I just say Southern California?

Yes.

Yes. Okay. Otherwise I get bombarded with a lot of— okay.

Well, and California can probably be one of the more challenging places in the country to do things like this. So I would imagine if people are doing it in other parts of the country, it might even be easier than some of the things that you guys have experienced.

Yeah, it's, it's needed. I don't think— I, I think California in particular has a lot of sober livings. I'll say that. Um, our area is getting pretty saturated, but there's some other states— I get people that reach out to me from other states, and there's such a huge need, such a huge need for, for sober livings in other states that don't— that, yeah, that don't have as many.

Okay. There's a gap.

Other questions? If anybody has any questions, go ahead. You can put it in the Q&A or you can raise your hand if you want to speak.

All right. So Casey said, I'm struggling to find an attorney that's savvy to this member model. Everyone's just landlord-tenant versed. I'm happy to work with Kim, but I thought Kim was strictly syndication. I'm in CA, California, where The tenant lobby is strong. I'm looking for an attorney who's strong in this business model. Any suggestions? You want to answer that one, Kim?

As far as structuring the deal so that you can bring in investors, that works in any state. It doesn't matter. You know, we're able to help people in any state because what we do is primarily under federal law. I am licensed as an attorney in California and Florida. So if you wanted to do an intrastate offering where your deal and all your investors and you are only going to be in one of those states, we can certainly help. We do have attorneys that are licensed in other states as well. So what, Kentucky, Louisiana? There's another one in there somewhere. But oh, and Michigan. So, you know, we're, we're able to help you on those. But if you're going to be raising money from people in multiple states, Then you would be following the federal law, and we'd be able to help you anywhere. As far as the legalities of actually, you know, getting the homes, I don't know that there's that much that you would really— do you need a real estate attorney, Davana and Reed, to help you with this?

No, you don't. I mean, if you— I think I just saw her question pop up about getting people to leave with tenant laws in California. Um, I will say this, I can speak on this a little bit, but, um, we— I've done this for 11 years. We've never had to have an eviction, never once. Um, usually if somebody drinks or uses, they don't necessarily want to come home and live with 17 other sober people. It's just not— they'd rather go out and do their thing. Um, so we've never had an issue with having to do that. But I do think, you know, if, if you wanted to, you could just get a real estate attorney if you needed to do that. And then there are specific attorneys that just deal with sober living and group homes and that kind of stuff. So if you really needed to get into the weeds with something, you can do that. But I think that for tenant laws, you could just do a real estate attorney. I don't think you need anybody specific.

Right. And it sounds like you've got an agreement that you've set That pretty much— does that encompass like house rules and things like that as well?

Like, you know, how do they sign? Yeah, when they— when we do the intact— we— in intake, sorry, we, um, we, uh, yeah, we have an agreement they sign that they can be asked to leave and we can ask them— or they can leave at any time and we can ask them to leave if there's something that they're doing that, that goes against our house rules. Um, and I think we've so far have had a really great experience with a mutual respect. Like, a lot of times it's also how you deal with it. If somebody, you know, in the 11 years, if somebody's like, well, I have nowhere to go, then I, I try to help them. We have a resource guide that gives them resources to shelters, resources to, um, rehabs. We have a sobering center, you know, different places that We can help find or guide them to a place that they— if they've used and drank and don't have a place to go, there's a lot of different resources out there that can help with stuff like that. And like I said, if they just want to drink and use drugs, then most of the time they just want to go with their friends or go hang out or even go back to the streets if they— if that's what they want to do. But we try. So I will say this, if somebody comes home drinking or using, or if maybe they don't come home, they just call me and go, oh, I messed up. You know, the first thing I do is not put shame or guilt or judgment on them. But okay, what do you want to do? If you want help, I'm going to give you a bunch of resources to go get back right back up on, you know, your feet. If you— I can't— I have to respect your decision. Some people will say, yes, Devon, I don't want to do this. I messed up one time. We get them in a direction of getting help again. And then sometimes they're honest and say, no, I'm just not ready. I want to Continue to drink and use, and then I have to respect that decision until they're ready. And then I always say, all right, call me when you're ready.

Yeah. Interesting. Steve had an interesting comment. He said the sober living houses that are clean— let's see, sober living houses that are clean, honest, and transparent about helping people are the ones that seem to last. So 100%.

It's, it's kind of, you can quickly tell which is going to last, who's going to last, who's not.

I see a lot of houses popping up every year, and within the first conversation of that with the owners, I can tell if they're going to be there next year or not.

Wow. Yeah. And then he goes, the, uh, the ones who do it solely for the money, the fly-by-nights, never last. Um, talks about a friend that has a sober living house and, uh, where she goes out of her way to care for the House and have watched them grow from 1 to 5 houses. And, you know, how you treat people really, really matters. And I think that's, that's true of anybody. I mean, you know, it's certainly true if you, you go into an apartment complex and you let it run into the ground. I used to do HUD housing surveys for multifamily properties that had— were run basically by slumlords, you know, and there unfortunately are a contingent of people out there that will just buy properties, let them run into the ground, let HUD foreclose. Take all the money and run. And we saw that happen again and again where they weren't maintaining, and then eventually HUD would do an enforcement action on them. And that's what we were doing, was helping, you know, get the information that HUD needed to be able to take that next step and get that landlord out.

So there's, on that note, like there's pros and cons to doing it the 2 different ways that you can do it. Because we own and operate, we take pride in the houses that we own. There are investments as well, right? And we don't want those to go down. And we take pride in our people that live in our houses. Like I was saying before, the new trend that people are doing, or they're leasing these houses, they don't have a whole lot of skin in the game because they're just leasing. They're going, they're throwing some furniture in a house, and they're like, let's, let's roll, you know, ride this wave till we can You know, make our money and then get out. But it's, it's unfortunate. So what I would say as an owner of a house, if you own a house that you want to lease to somebody for sober living, maybe do your— I don't know, vetting process or whatever to the person you're leasing. Find out what their intentions are, because what's happening is these people are just coming into neighborhoods that don't— that are leasing houses, don't have the heart for it. They don't really have an investment, right? It's not their house. They can take off whenever they need to at the end of their lease or whatever and leave the neighborhood. So it's how they're treating the neighborhood. It's how they're being neighbors. So if you own that house, it's going to reflect back on you at some point, you know. So I would just say if you are an investor who's going to lease to somebody, really make sure who you're leasing to is doing it for the right reasons because it's going to help the sober living industry and otherwise it's hurting the sober living industry. It's bad operators coming in and it gives everybody a bad name. So just be conscious of that.

Well, and I think you have to be conscious of where you're putting these or where the houses are located. Like, you know, you don't want to put a bunch of people who are trying to stay sober in an environment where there's a liquor store across the street or, you know, yeah, known for a big party area or there's, you know, you know, bars everywhere, things like that. I think you've got to be cognizant of the fact that you're trying to help them Yeah. Not help them fail, because that doesn't serve them or you, right?

Yeah.

So, you know, Eric's asking, are the residents sourced through places of worship, state agencies, word of mouth?

Yeah, all of the above.

All of them. Yeah.

So, wow. Well, this is amazing. I know there were points where I got a little choked up just thinking about it and thinking of the people that I've known that have experienced those challenges and how much this kind of an environment could have been helpful for them. And I'm not sure it even existed back when I knew the people that that happened to. So, well, good for you guys. What if somebody has some questions specific for you? Are you guys willing to share? Do you have a website or something where— or a way that people could—

Instagram's probably easiest. I'm Davonna at— or sorry, Davonna Invests.

D-E-V-A-N-A-A-N-S. And do you have, or have you ever considered doing, uh, some kind of a coaching program for people that want to create sober living?

So I, I have— my book is pretty much written. I just haven't decided if I'm going to publish or not. I go back and forth, um, because so many things are changing. I just keep thinking I'm going to put it out and there's going to be all these things that need to be updated, but I did coaching for a while. I'm not opposed to it. I just have so many projects on my plate right now that I— it's hard for me to like be pulled in that many different directions. So I, I kind of pulled back from coaching to continue to build our business and try to help as many people on the ground as possible through what we're doing. But not opposed to it, but I don't have a whole lot of time. Perfect.

Just, we, we have, as you know, I've written a couple of books. Uh, talk to you about that at any time. Um, we are, uh, creating our own little book accountability group because we have some other people in our, uh, clients and, uh, in our staff who are writing their own books and trying to keep everybody moving forward. Because I know this book took— oops, this book took 9 years.

Yeah.

Months. 3 months. So, I'm trying to get it down to where I can, you know, get them done a lot faster. So, yeah.

Well, I can say this that might help point people in the right direction. I sit on the board of the Sober Living Network. And so, that's a national agency. We do, you can call and do, if you want to do a house, I think, forgive me, I sit on the board and I don't know, it's either $159 or $179. I'm not sure, but I think they do training. We do do a training for owners and operators to kind of help guide them in the beginning. So that— I don't make that money, it goes to the organization. There's also NARR, which is the National Alliance of Recovery Residence. I'm not sure exactly what it stands for, but NARR. And that is— and so they usually have affiliates in each state. So like for California, it would be CCAP. Is there affiliate? So you could also, you know, buy a house and become a member of that organization. So there's a few organizations out there that you can get some more detailed information from.

Well, that's amazing. What was one you said? Sober Living.

The Sober Living Network.

Network, and then NARR.

Yeah, and like in California, it's CCAP. But each State will have like, we're CCAT. There's another one that might be, I don't know. Every state has an affiliate of NAR and they have their own, you know, 4 letters. I'm not sure what they are.

Yeah.

Well, this is amazing stuff. Thank you so much for sharing it. And thank you so much for doing it. How many houses do you guys have?

So right now we have 4 houses with a total of 71 beds, but probably by the end of next month we'll have 77. 6 beds because we're doing a few little construction projects to each house to add a bed here and there. And then we also do co-living with another house. And then we're— our big project is moving into adding residential assisted living to our portfolio to help with elderly care.

Yeah.

Yeah. Well, That's, uh, it's an amazing story. We thank you so much for all that you do. Thank you, Krisha, for helping us today. And, uh, we wish you guys the best and, uh, hope you have many, many more houses and many more success stories that, uh, that come out of them.

Thank you.

Thank you very much for having us. We really enjoyed our time on your show.

Thank you.

Can't wait to hear about your next adventure. All right.

Thanks.

All right.

Thanks, everyone.

Bye.

Bye.