It has been a while since we wrote in this blog here at Group Home Riches. What have we been doing? Well, we have been busy running our day-to-day business which involves looking for more group homes to acquire along with other real estate and business endeavors, and creating an awesome group home business plan. That is the beautiful thing about the Special Needs housing industry.
If you start a special needs housing business or a Group Home business, you have the opportunity to focus on additional income and revenue streams. Although we are not huge proponents of “flipping” real estate, what you will find is that after you build out your group home team- manager, porter, housekeeper and all the trades associated with keeping the place up to par (HVAC, electrical, tape/float, sheetrock, flooring, paint, etc.) you will pretty quickly be able to handle the general contractor related duties if you want to flip something. But to do all of this you will need a group home business plan.
The other beauty of the Group Home business is that because it frees you up to focus on looking for more deals, you will periodically come across Flip opportunities. We recently found one for $45,000- a steal of a deal – and are currently into it for about $4,000 in labor costs and another $2,000 or so in materials. We already have a contract on it for $117,000. These deals are out there in all cities throughout the U.S.
But let’s get back to the topic at hand which is what this blog is all about – and that is – how to start a group home. Hopefully, you have signed up for the email newsletter. If you haven’t, please do that. You will quickly learn that the first thing you need to do is get a house. Buy it or lease it. Lately, we have seen a lot of the following question to us here at Group Home Riches:
How Do I Start A Group Home Without Any Money
I corresponded the other day with one young lady named Dana, and I responded to a few of her questions. One of her questions was the above. I asked her if she had gone out to network with others to tell them what she wanted to do. One (VERY EFFECTIVE) way of obtaining the capital that you need to get this business started (and it is not much) is simply by going to a local real estate networking event and looking for landlords.
PARTNER WITH LANDLORDS
Tell the owners that you are looking to start a group home, you have your entire business plan in place (we will get to that part shortly) and that you need a house to operate the business out of. Your proposal to them is that you will pay rent each and every month and give them a percent of the profits. What percent do you ask? Well, everything is negotiable. But I would say anywhere from 25% – 50% would entice them. Why would you do this? Well, let’s think about this quickly and the positives:
– No upfront costs (deposits)
– Access to more properties quickly
– Faster deal making
OK, now to the next question. How are you going to convince – yes, convince – a landlord to partner with you?
The Group Home Business Plan
I cannot overstate how important this aspect is. When I go into the bank to obtain loans for the real estate we are acquiring; the bank isn’t just going to say, Sure! Here is $5,000, $50,000, $500,000 or $1,000,000. No way. The bank needs you to court them, much like you would to someone of the opposite sex. So a teaser needs to be given to the banker – or in your case – the landlord. Your job is to give them a Lays Potato Chip. Remember, you can’t eat just one!
Well, it is the same concept with your teaser. You need to let the landlord know that you will be taking care of all tenant-related issues – HVAC, Repairs, Electrical, etc. and also, that you will give him a percent of the profits over and above the rent. Think about it, if one property brings in $5,000 gross per month and after rent and expenses you are left with $3,000 – and you offer to give the landlord 25% of that, the landlord has now increased his income by an extra $750 per month!
Landlords Love This
This is BIG money for the average landlord, and you can even make their lives easier by maintaining the property well for them. That is the most important thing – creating a one-page teaser – and making sure you practice your elevator pitch so that you can recite off the top of your head EXACTLY what you plan to give TO THE LANDLORD – in return for partnering with you.
But remember, when you first go out with someone that you are interested in, you don’t try and kiss them on the first date! Take your time with them. Show them a little bit about who you are and why you are special. Most importantly, show them what YOU CAN BRING THEM! It is that easy…..and when the time is right, you will be ready to show them a business plan that will get them excited and ready to go. That is what you need to do.
Do You Need a Plan?
In future posts, we will talk about the importance of the group home business plan. Not only do they help planning out but also for showing others where you are going. Those “others” will be investors, partners, bankers and others. Finding an trustworthy parter is a great work around having limited capital.
If you need a group home business plan, we provide them for all of our members! We provide three different business plans to help ensure your success.
- The Long Plan – a Template business plan from one of our group home business for banks
- The Quick Business Plan – A business plan designed for you and your team
- The Quick Marketing Plan – A plan of activities designed for you and your team
Get Your Group Home Business Plan Now!
If you are looking for additional information on how to start a group home, halfway home, transitional living home, sober home, foster home, ICF/MR home, DADS Home or other type of care home for people with disabilities; check out our free course on starting your very own income-generating group home by clicking here or going to www.grouphomeriches.com and clicking on the Free Wealth Building Course...