Are you earning as much as you could from your rental property? If you’re a landlord or real estate investor exploring higher-yield strategies, it’s time to consider the group home model. With the potential for 30–50% profit margins and reduced vacancy risk, converting a single-family rental into a group home could be your most lucrative move yet.
Traditional Rental: Income and Limitations
Let’s consider a standard 4-bedroom single-family rental. In most markets, you might charge $2,000/month. After property taxes, insurance, maintenance, and management fees, your net profit might land around $400–$600/month—roughly a 10–15% margin.
Case Example
- Monthly Rent: $2,000
- Expenses: $1,400
- Net Profit: $600
- Vacancy Risk: 100% if tenant moves out
Group Home Model: How the Income Adds Up
Now, imagine that same 4-bedroom home is licensed or operated as a group home for 5 high-functioning adults. Each resident pays $800/month. That’s $4,000/month in gross revenue.
Group Home Case Example
- Monthly Revenue: $4,000
- Expenses (including utilities, basic management): $2,000
- Net Profit: $2,000
- Profit Margin: 50%
- Vacancy Risk: Losing one resident = 80% occupancy
Rental vs Group Home: Side-by-Side Comparison
| Metric | Traditional Rental | Group Home |
|---|---|---|
| Monthly Revenue | $2,000 | $4,000 |
| Monthly Expenses | $1,400 | $2,000 |
| Net Profit | $600 | $2,000 |
| Profit Margin | 30% | 50% |
| Vacancy Risk | High | Lower |
What It Takes to Convert to a Group Home
Converting a home doesn’t always require major renovation. For homes serving high-functioning adults, the setup can resemble a boarding house. You may not need 24/7 staff—just a property manager or house coordinator. Some investors self-manage, others hire help.
Key Considerations
- Local zoning and licensing rules
- Minor modifications for safety or accessibility
- Tenant screening and house rules
- Optional support staff depending on resident needs
Why the Effort is Worth It
Yes, there’s more to manage. But the financial upside—and the social good—make it worthwhile. You’re not just increasing your income; you’re providing stable housing for those who need it.
Interested in this strategy? Sign up for our free webinar to hear how investors are doubling rental income with group homes.
Frequently Asked Questions
1. Do I need a background in caregiving to run a group home?
No. Many group homes serve high-functioning adults and operate similarly to shared housing or boarding homes.
2. How do I find residents for my group home?
You can partner with local agencies, nonprofits, or list your home on specialized housing platforms.
3. Is licensing required?
It depends on your state and the population you serve. Some group homes operate without formal licensing if no medical care is provided.
4. What are typical monthly expenses?
Expect $1,500–$2,500 depending on utilities, food (if provided), and staffing. Expenses are offset by higher rent per resident.
5. Can I finance a property with this model?
Yes. Many lenders approve standard mortgages. Once operating, your group home’s income can support future financing.
6. How much time does it take to manage?
With systems in place, it can be similar to managing a standard rental—especially if you hire a coordinator or property manager.
