Turn your properties income from $2,500/mt to $12,000/mt...

Over the past few months MyProp Members have been asking, what strategy would work to have new higher end properties in Las Vegas, San Diego, and Sacramento etc cash flow? After doing my due diligence on a number of these areas, I found that we can buy these types of foreclosed properties in Las Vegas for 50% of their original price in 05/06. The same is true in certain areas of Sacramento. Wow – I would say that those prices are cheaper than what the builder paid to build them.

Thinking about this I contacted some of the more experienced MyPropFolio members, like Bob Shaw to find out how we can make these local properties cash flow. After talking with Bob who buys properties in many different States and lives here in California, he told me about a group home that he currently manages in California. Group homes are for people, who need support in their lives, and there are different levels of management involved. Examples of these types of properties are:
• Houses for nurses who have come to the US for the Philippines to work but do not have any credit history or history of income – low management
• Older people who don’t want to live in retirement homes but don’t want to live on their own – medium management
• Half way homes for recovering alcoholics, drug abusers etc – higher management
• Homes for Mentally Retarded - Highest management.

The premise of these types of homes is that you rent out the room rather than the house and you can charge a lot higher amount for taking on the additional management headaches.

Another investor I know owns a number of properties/facility in Sacramento where he rents 4 of his 5 rooms for approx $3,000 per room. He would have rented the entire house out for less than 1 room in the traditional property management model. This facility is only offered to older people, who are in good health but don’t want to live in a retirement home. So I hear you saying – where is the catch….

Ok so now you are making $12,000 rental income for the property, but your expenses have gone up as well, you need to organize the following things:
• Get the required permits/certification for your facility (This can take 1 mt in some states and 6 in others..)
• You will need an administrator to act as your “Property Manager”
• You will need to have a live in staff member
• Depending on what you offer, your live in staff member will need to prepare food, travel etc.

I must admit, I am not an expert in this area but Heather and I are looking into using this strategy for some properties in Vegas. I would love to hear your experience and maybe we could get an expert on a Wednesday night call if that would interest you.

Have a great week
Alan