How to Rent Homes to Recovering Addicts for a Profit

It is a sad fact that many of those that are leaving a drug and alcohol program or have been incarcerated, have no place to call home upon their release. Most do not have the cash available to rent or buy a home for themselves, but there are many options available to find housing.

Renting a home or part of a home to recovering addicts for a profit is a win/win solution. A halfway house gives them an address while providing guidance that is needed to help them retain their sobriety.

Renting to Recovering Addicts and Those in Need:

One of the most difficult things about starting a halfway house is finding a property to buy. Here are some tips of what to look for when investing in a sober home or halfway house:

  • It should have at least 3-4 bedrooms.
  • It is good if it is on a lot of land and no neighbors are too close by.
  • Close to public transportation and job opportunities. 

As long as those physical requirements are obtained, investors are setting themselves up for a positive response and reoccurring income. 

With all the people needing this type of transitional housing and help following stings in rehab, most sober living and halfway houses are at capacity most of the time.

Financing Your Sober Home:

Halfway houses can be an exceptionally good financial investment because of the need for these types of transitional settings. In most cases, the home is owned by the investor, and the staff runs the treatment programs. They are also responsible for the residents and to help prepare them for jobs.

Where to go For Financing:

According to, a sober living home investment may be between $200,000 to $500,00. Most lenders structure these loans as hard money loans and typically have higher interest rates than other bank loans. They also may require larger than usual down payments. It also states that investors may see 50% to 60% loan-to-value ratios when they look for halfway house loans. 

The positive is that because there are so many in need of this type of housing, that it will be filled nearly all the time, so the investor will begin making reoccurring income nearly immediately.

What do You Do After Your Purchase the Property?

So, the investor has found the perfect property in the perfect area for the halfway house, now what?

Opening the Halfway House:

All states have their own guidelines when it comes to the opening of a halfway house. These requirements can vary from state to state. Those looking to open a halfway house in different states need to review the individual requirements of each.

There are many things that investors have to determine before and following the opening of their halfway house. Some of these tactics include:

  • Number of beds
  • Related costs per bed
  • Obtaining grants for sober living homes vs being privately funded
  • Facility startup costs
  • Municipal codes
  • Insurance coverage
  • Return on Investment (ROI) forecasting
  • Business plan implementation
  • Hiring staff
  • Marketing efforts
  • Program material drafting
  • Get an IRS EID
  • Check on local zoning laws
  • Establish if it will be a male or female house
  • Keep records of all expenses

Is Investing in a Halfway House a Good Investment:

As long as the investor has qualified staff on-site to work with the residents, owning a halfway house can be a smart investment. So, renting part of the home to a recovering addict or someone recently out of prison can be a very lucrative venture. 

Before residents can move into the home may need upgrades. Often the investor needs to add an extra bedroom or bathroom and expand the kitchen area to accommodate all the residents. After that investment is completed, investors can sit back and collect their reoccurring rental payments

Your Resource for Halfway House Information:

Keith Humes is considered an expert when it comes to starting a halfway house. He has been successful himself and now helps others with information on how they can succeed in buying real estate for halfway houses. If you would like to learn more about how you can get started, contact Keith at Open Up a Halfway House and start your journey to help recovering addicts in your community.

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