Earlier I posted DRESS THIS CURB APPEAL and got some great feedback on my newest purchase.

I thought I'd give some real life numbers on this deal.

Bought a fixer 20 years ago for $30k. Spent $30K rehabbing it into something really nice.

Rented it for a while then sold it for $120k.

That buyer lost the house, so I bought it from the bank at $60K.

Rented it for several years then sold it last a few weeks ago for $235k.

1031'd the money plus $20K cash into the newest DRESS house posted earlier.

So I made about $150k on the rent, $60k on the first sale, and $175k on the second sale = $385k profit so far on one house.

Deduct the $20k I'm adding to the replacement property = $365k profit.

Renting to sober living agency for $2900/mo. I just provide the house and maint, the agency handles the residents and their program.

So we're bringing in $34,800 gross rent/year minus prop tax, ins, main = $26,400 on my initial $60k investment = 44% ROI with no ads, no showings, no turnover, no vacancies, no collections, no evictions...autodrafted into my account,

plus the $335k we earned earlier.

BRAD

Oh, and NO TAXES on the sale of the relinquished property into the 1031 so I bought the replacement prop with pre-tax dollars.

Hmmm, I thought it was only me who after I sell a place, I end up monitoring it as I pass on by. And one thing happens after you study a place long enough, it either gets better or you start to see the small signs that show it will be coming back. Now I have never been able to pick up a place from the bank, but I was able to forecast a couple of foreclosures.

I have been able to use barter to sell three houses. After a couple of years of holding the note and doing the management for the out of area buyer, when the financing balloons came do, he consolidated the three places (each with 20% down in cash and 20% down in barter credit down to just one free and clear place. So I got two of the three places back.

You are the master!

Brad,

How did you find this company & confirm that were legit and well-run?

(I had a roomer who said the "sober house" he was in was anything but "sober" & he was anxious to leave because he actually wanted to stay sober.)

Ken,

Zero drama. This is a professional agency, be wary of independents or church groups trying to do their own thing.

Each home has a live-in manager who has a job outside of the house but lives in the house.

Strict rules – each man must be employed and pay rent to the agency, no visitors, no hanging out on the front porch, smoking outside in the back only, chore chart, daily AA meeting, drug tests...

local factories are shorthanded and hire them on the spot plus pick them up each morning.

The men have proven themselves by completing Rehab and complying with the rules. Some fall off the wagon or cop an attitude in are out quickly. It's a time of transition in their lives. The agency does more background, counseling, and managing than we do with a normal family.

They only do men because they found that women are much more difficult.

My city loves this! My homes have been on the front page of the newspaper three times showing off the good being done in the community. It's considered a group home, in fact my city created a new category for group homes allowing up to 10 unrelated persons in a dwelling.

Yes more wear but we go with hard surfaces, but no more then some families.

A few extra steps like exit signs, handrails in tubs, a ramp at one of the houses. They provide fire extinguishers and security cameras throughout the house.

They need bedrooms, bathrooms with showers, two or three refrigerators, large living room for group meetings, bus route nearby.

We deal with one supervisor who oversees all the houses and house managers, Plus there is a hierarchy of bosses and accountants over the supervisor.

O why no verall this dovetails into my plans for income from real estate with less involvement. and wifey and I feel we're doing some good for humanity.

Wow! Great turnover ..and over.

"O why no verall this dovetails into my plans"

should have been

"Overall, this dovetails into my plans..."

I was dictating on my phone. So much for AI accuracy!

Lucy and J,

Ask your CPA to estimate/calculate the taxes you'll pay on the sale of your property. Know your numbers.

In MY case I would have to pay 1/3 of the selling price to the government.

1031ing into a DST is super simple and instant if you don't want the work of finding and caring for another property, and deadlines make you nervous.

BRAD

Thanks for the numbers, Brad.

"I think I need another deduction/car!"

Otis,

Yes, the leases are signed by the multi-million dollar agency, with deposits so the agency is responsible for damage.

6 years in with 6 homes, average 8 men per home = 48 men, no damages to report.

For perspective, the boss flew in on his jet to see the homes! He wanted better furniture and carpet-free so we pulled the free donated furniture and they paid to install LVP throughout and new furniture. He also paid $5000 for us to install a 3rd bathroom.

Not every group home is equal. This is a great, responsible agency with trained, paid, professional counselors and house managers. Some group homes are run by well meaning but unsupported volunteers.

I know you are in a much larger area than I am, but six sober homes?

Sad that they are filled when you think about it.