How One Property Can Cash Flow 2 to 3X More Than a Rental | Jim Boad E36

What if one property could outperform your traditional rental by 2 to 3 times… without buying more real estate? In Episode 36, Keith Andrews sits down with investor Jim Boad to break down the sober living and group home model that is quietly producing massive cash flow in today’s market. Jim shares how he went from standard rentals to building a portfolio of high performing homes that can generate thousands more per month per property. They dive into how the model works, what investors get wrong, how these homes are structured, and the difference between being an operator versus a passive investor. You’ll also hear real numbers, including how a typical four bedroom home can bring in significantly more income than a long term rental. If rising prices and interest rates are killing your deals, this episode will open your eyes to a completely different way to invest.

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Transcript

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in the group home field that you can go, can go elderly care, you can work with kids based in foster, you can work with veterans, can work with people with mental disabilities. I mean there's a lot and there's a lot that need licensing which I don't know if I said earlier or not this takes no licensing. Today I'm joined by Jim Bode. Jim helps people build cash flowing group homes while creating real impact in their communities. Today we're going to be diving into how this model actually works, where the opportunity is, and what most investors are missing. Jim, man, welcome to my show. Awesome. So I got to start with your background because that's usually what we do here. Figure out like. I know you got into real estate, but then you there is a major shift to what you're doing today and the business that you built around it. So if you could kind of lay out the groundwork of how you got to where you are right now. Absolutely. I'm going to do the condensed 25 year version of it. So, you know, I've been an active real estate investor for 25 years now, started out just doing straight up fix and flips. Moved my way through through that and to doing fix and holds started doing a bunch of new construction. You know, we ended up building the real estate team throughout all that time, all kinds of the fun stuff that come along with being an investor. And then, know, that went really well. It actually went great. And then I've always wanted to kind of give back, but I was just always busy crushing something else. was next year I'll start that project. Next month I'll do that after this next build out. And it just never happened. But when COVID hit, it kind of gave me a forced hand. And it wasn't that that was my intention, but... All of my tenants just stopped paying rent during covid and I just really had to scramble and figure things out And I ran across a coaching program for group homes and they were talking about how they were recession proof How they were still cash flowing even in that covid market and you know Just first and foremost the appeal of that made me jump right on it But then when I realized, sober living could be a part of this, because drugs and alcohol definitely touched my life as a youth. um And I jumped right on it. So as quickly as I could, I bought their little coaching program. About a week later, I started turning my vacant properties into sober living homes. And then within 2 years, I had 14 of them active up and running and, now they flux because I'm still pushing out any of my smaller homes, like any of my little 2 bedroom, 1 bathroom duplexes that I had. They don't work as well for this model. So I'm selling those and building like 5 bedroom, 8 bedroom, 10 bedroom homes and really just all in on this model. I don't even have a regular residential rental anymore. You said you're actually building these are new homes specifically for this this niche Correct. So I can jump into a little bit about what I'm doing on that I'm building them as bigger homes, but I'm also keeping them There's a few things I'm doing that are different, but I'm keeping them really transferable so I can turn them back to residential homes if The market shifts and this is no longer a viable option for some reason if I just don't want to do it anymore Or when I do retire if somebody doesn't want to buy that home and keep it as a sober living home But like the only major differences I'm doing is like in where the master bathrooms would be I I will frame out so you can have a master bathroom entry and then I'll sheet over it and then I'll put an entry in the hall so then that way the bedrooms in the house but it's just it's sheet rockets cover this one open this one boom now you've got your master suite back Yeah, well, I you know, I know a lot of people are looking for creative ways right now. You mentioned COVID right people not paying rent. Well now we're in a situation where you know, the old methods aren't working because the prices of homes are just too high. And then you have the interest rates where the numbers don't work unless you just put a ton of money down to actually cash flow on these properties. So I know that The cashflow, obviously, because you're running a business out of the house is gonna be a lot more, aren't, I mean, this is just a misconception I think a lot of people have, myself included, like, I don't wanna do something like that. It's gonna be a ton of work and licenses and like, it's like, where do you even begin? And you know, you're absolutely right. There's a lot of misconceptions in this. And I think where I like to start is kind of expressing to people what it is and what it isn't. Because most people, say it, and they kind of think of one of two things. They either think that you're opening up a rehab clinic where people come and stay for 30 plus days, and they get sober, which it's not that at all. People have to come to us sober. and we're definitely not a clinic. You can't come to us actively using drugs. um So we're the bridge from getting sober to staying sober. Because most people will come they'll go do a you know a 30-day stint in an inpatient drug clinic They'll get off of drugs, but it takes so much more time than that to actually get away from that addiction addiction is strong so we provide that stable place with rules and It surrounds you with people that want to start one piece what to be sober So everyone in that home is actively working towards the same goal So you have a little bit of built-in community of people you can lean on when hey, man, I'm having a hard day. Let's go to a meeting. oh Yeah, so what is your actual involvement in the business? Yes, and that's an amazing question. So at this point my actual involvement in the business is all top line. um I Basically run the real estate at this point because I built a team that does all the day-to-day operations The cool thing about this business is if you want it to replace your income, it's a pretty easy one for you to jump into and run yourself if that's what you want to do because you get two to four of these homes, you're replacing almost a six-figure income. So like the cash flow on these is amazing. If you're only doing this for the cash flow, it's not the business for you. You've got to have some heart into this. You've got to want to believe in the mission that, we're here to keep people sober and help people rebuild their lives, not just make. Yeah, yeah. So it's not something I could just, like, could just transform one of my single family rentals into a sober living home and then just like right now I have a tenant and one of my long term rentals. All I worry about is, hey, did he pay rent? Yep, he paid rent. Did he pay rent? Yep. there's a maintenance issue. Okay, I'll send someone over there but I'm not actively involved in that household. It sounds like for sober living that If you want to do it right, you're actively involved in that household. Is that correct? If you want to be the operator yes Or be the investor no you can still invest in these and have a very passive role in this but because because it's one of the things I'm really working hard on now to is connecting operators and investors because Because you do need somebody day-to-day run of these so like you could Turn your home into that and you could just hire staff out to do it And it's a model that I show you how to do but like you also could run it yourself or you could just lease it uh the uh And for him, he loves it because for him, I have no real estate obligation. I pay the mortgage payment every month and I just run my homes. the investors that work with him love him. He pays a little bit of a market rate. He pays on time. You don't deal with the headaches. There's a lot of advantages as a landlord to these types of homes because... You're responsible as the operator to take care of all the day-to-day stuff like if I'm the operator in one of your homes I'm not calling you with talk clog toilets. I'm not calling you with clog sinks I'm only hitting you with major. Hey the heat pump went out You got to take care of that, but I'm gonna go on clog the toilet in the middle of the night or have my maintenance guy do it So it alleviates all that Okay. I mean, obviously, HOAs could be a problem with these types of homes, right? Absolutely HOA's could be a problem and let's let's jump into it neighbors initially No one likes that you're doing this in their neighborhood at first because they have so many misconceptions You're bringing drug addicts into their neighborhood. You're running a flop house You're running a halfway house and it's none of these things. This is a well-structured well-run home when they're done, right? There are slumlords out there that run these homes, but there are slumlords that run rentals too. And I've personally lived next to rentals where the people drank, partied all night, smoked pot and drank beer on the patio. And all I could do is call the cops and it's not like they got, they made them move. They were just really bad neighbors and they could own the home and be really bad neighbors, tearing cars apart and leaving junk everywhere. so you don't totally get to pick your neighbors. But when you understand that A well-run sober living home has curfews, it has quiet hours, you know, there's chore lists so everyone's supposed to be keeping the yard done and the garbage cans back. They're not allowed to do drugs in the house. So if somebody's on the back patio doing bad things, you call and we kick that person out of the home. So we end up being your best neighbors when they're run properly. Is there always somebody that's like in there or are the clients that are living in the house just living with each other? Is there like always like a someone that's managing the home? There's there's two models that I teach people how to run and it's it's the self run model where you tag somebody who lives in the home and they're kind of in charge and like the house leader and Then there's the model that I prefer and that I really promote is that you hire a team or you become the team? Whichever whichever one works best for you and the reason I don't like the first model is is it's twofold one Power sometimes changes people when somebody's in charge sometimes they can become a little different and I've seen that happen more than once But then to the ultimate goal of this is for you to bring people into your home Allow them to get strong get sober build up those muscles again so they can go back out and they can live the rest of their life wherever they want to be and Not need the services of being in that sober living home. So you're gonna you're starting out Knowing that you're going to turn over your leadership and if you know that's just a bad business model that I'm going to be changing leaders every three to six to twelve months and you don't you don't want to be there Yeah, yeah, that makes sense. Who's paying the bill on this? This is where it gets really awesome in most places, is that almost everybody that comes to us comes to us with between two and six months worth of payments. There's a lot of state and federal funding for this, and there's also funding outside of just like sober living home type funding. There's transitional housing type funding that guys can get and use. So there's lots of local nonprofits that will pay and keep people in homes. I've had some people that really needed to be in these, and they've been in my homes for almost three years and payments have been paid by an outside source for them for almost three years. Okay, what is the typical stay? Anywhere between four and six months is a pretty typical stay. like I said, I've had people in there for years. And also I've literally had people that came and were gone on day one. So, but four to six, I really like people to be with us for six months. And it's not about the business side. It's about the sobriety side. It's just, it takes time. This isn't a one shot, I went to rehab, I'm good. It's very rare people that have the ability to come from addiction and just go, I'm done today. Yeah, yeah. So you're really providing a really good service for these people to keep them on the straight and narrow and at the same time, you're able to profit from it. There's something about just helping people that's more rewarding than any amount of money that you can make for sure. But then the fact that this is something that you can actually build a business around, I think that's pretty incredible. It's the best business i've ever owned on all of those fronts. I've never done something so emotionally rewarding You know to watch somebody come from the lowest place they've been in their life to a rebuilt life where you know Maybe they've got a new set of teeth now and they've got their smile back or they've got a vehicle and they haven't had one or literally they've been sober for over a year and they hadn't been sober for 15 plus years up to that point like It touches you in places you didn't know you had. And how many of these homes do you have right now, you said? Right now I was I was up it's kind of fluxed because I'm constantly selling so like And and rebuilding and putting in so right now we're at we're at eight homes but my eight homes hold more people than my My 14 homes held and then I have a 12 lot development that I'm getting ready to build out and I'm gonna be doing almost all of that for like sober living or some type of communal housing um so and How often are you like at each one of these home personally? Personally, I don't go to them very often I do Popeyes and say hello and just kind of see how things are going But I have two team members and they they run everything from the okay to the outputs to doing drug tests and everything so And so you've created a program now that will help people that are interested in this on how to get started and like how to even get these types of clients, how to get everything set up from a licensing perspective and everything else. Absolutely, I have boiled it all down to all of the things that work all of the things that don't work and how to do it the the fastest and most efficient and Really we get up we get pretty deep into a lot of the things to on how to run your home really well and actually help people Achieve the mission because at the end of the day if the mission of this is just money I implore you. This is not the business Is it for you? Yeah. Nah, just go, you do an Airbnb or whatever, which still are very intensive. But like, but this, isn't going to work well unless you just want to be that top line investor and bring in a great operator. Okay. And what's the wear and tear like on your properties? You I'm gonna put it right in there. Sometimes it's better than it was with just tenants because one, everybody wants to be here. um Two, we have the ability to remove people pretty quickly. So it's not like it takes months where they're in there stewing on the fact that like, I hate this guy because he's the evil landlord. It's just like, do something wrong, we're moving them out that day. So they all have responsibilities to help keep our home clean. Like there's chore lists, there's guidance, and you know my people are walking through the homes on a a you know multiple time a week basis where if I went into one of my rentals once a year that was a lot. Yeah, yeah. So, well, I mean, I guess it's good because you're always in there knowing what's going on. um And if you have people that are working for you that are managing some of these homes, they're in constant communication with you as well as as the owner of the business and the property. Absolutely. Just just to follow up on that people don't have to be in these homes. So it's not yes It's not like they're incarcerated they can leave whenever they want. It's their choice So like the people that are here want to be here. So they tend to take pretty decent care of the homes That was the other question I was gonna have. If you have like, you know, what's the average number of clients that are living in a home on your average home? So the way we break it down is we do two people per bedroom. And the most important reason we do two people per bedroom is because you are so much less likely to relapse when you actually have that in-room accountability. The majority of our relapses have come from solo rooms. it really, really matters. You really need a lot of accountability when you're coming through the initial phases of getting detoxed and... You getting sober and then the other part is of course financially it makes a lot more sense when you have two people per bedroom because I mean You're doubling you're doubling the potential income for that property So do these people have vehicles and stuff that are parked around the property? Because I could see where with neighbors and stuff, that may be like something that you get some complaints about. Absolutely, you know, it's about a 50-50 mix We have a lot of people most of people that come to us right now to come to us without a vehicle Okay, you kind of know as people start getting vehicles They're kind of getting closer to they're gonna be able to get out on their own soon, too Because it's it's kind of a big deal when you get a vehicle a lot of the people that we get that come to us are coming from the lowest point they've been because you know, They're coming out of a 30-day rehab I mean they literally will come to us with a bag of clothes and if they're not coming to our place potentially homeless. What about meals and groceries and all of these types of things? How does that work in these homes? We don't do any consumables. So, toilet paper, dish soap, cleaning supplies, that all falls on them. Because we do need them to re-assimilate to. You have to start getting to where I'm buying stuff for myself. the majority of people come in and are absolutely qualified to get food assistance. You know, there's a lot of resources. There's free cell phone resources. There's free iPad resources. There's a lot of resources. And where I live, we have a pretty robust Bus system, so I mean I live 90 miles from Seattle, but with like two transfers you could get to Seattle You can travel pretty easy around here and all my homes are really walkable to our downtown So all the guys can walk to their to their drug classes they can walk to any of the appointments they have so So let's talk about the dollars and cents on this. What are we looking at as far as like, you know, and I'll just use Colorado for example, because I'm here, I would say the average four bedroom home, if I was going to rent it out to a long term tenant, I could probably rent it out for 2,500 bucks a month. What are we looking at with these types of homes and the overhead that's involved? Absolutely, so you'd be able to take that same home and if it was full like where I'm and let's just be really clear Everything's demographically challenged. I mean you go it I can buy an $80,000 house Well, I can't expect to get the same I'm gonna get here But yeah, like where I'm at, know, my average house in my area is about 350 to 400 for a house like that So my mortgage isn't much off from where that one would be. And that's about what I could rent a home for. 25 to 27 for a four-bedroom home around here. I might be able to sneak 3K out of it, but I'm probably overcharging somebody that can't really even afford it. Where I'm at in that price point, I get $8.50 per bed. So... 850 per bit, okay. a four bedroom house with eight people in it, bring in 6,800 a month, minus my mortgage payment. And I spend about 12 to 1,500 and other utilities and things, because I pay all the utilities, I pay internet, I pay all those fun things. So where I'm at on that is I'd cash flow $2,500 to $3,000 a month off of that house. that's. But you still have to pay somebody, Unless you're the one that's actively doing it. But I have two part-time people because even hitting my house is almost every day. It's not a full-time job to run these homes like and we're super high touch but like My people that work with me come from addiction backgrounds and they really want to make sure people are staying sober. So like you can do a lot less touches than we do. I mean, but like we have a 10 minute walkthrough form that we give everybody. So like you should be able to go through the house and do a quick walkthrough on the house and it should take 10, 15 minutes because you're not there rifling the house. You're not a prison warden. Like you're there to make sure that they're maintaining the house properly, you know, cause you're not only that. You have six or eight people that live in a home. You're not gonna catch them all at the same time We really promote work. So you've got guys that work night shifts. You got guys that work day shifts You got guys that are in school They all have tons of meetings they go to so like if two or three of the guys are home when you're walking through the house at any given time Other than a curfew time like you're not gonna see many of them So it's an in-and-out. I mean you could you know when we had 14 homes run and I still only had two part-time people so Okay, so if someone's listening that wants to start what's the first step they should take? Well the first step you should take is go to Jimbo.com and get on a call with me and we can kind of talk about because what I really am doing right now is doing a 15-20 minute call with people seeing where they're at what they want to do and making sure it's a good fit because I'm not here to glamorize this and make it like you're just you're just gonna open up a house it's gonna fill itself and you're gonna collect $7,000 a month like no there's work to this and appreciate that. There's far too many people peddling these get rich quick. This is the answer to everything. It's easy. I do appreciate that. And it's why it's so important that you got to believe in the mission if you believe in this mission You can get paid more than you've ever made but you're not gonna get paid just because it's it's a cash machine You got to be doing you got to be doing the right things You've got to be actually helping people get to stay sober if you're not doing that. You don't deserve to be paid What attracted you to this niche in the first place? um It is indeed You know, grew up around addiction. I was blessed enough to see it and Understand it wasn't what I wanted. So I didn't follow that path, but I watched it wreak havoc on my family personally and What really? put me to this exact model because there's a lot of other models in the group home field that you can go you can go elderly care you can work with foster you can work with yes you can work with people with mental disabilities I mean there's a lot and there's a lot that need licensing which I don't know if I said earlier or not this takes no licensing so there's Really? Okay, I didn't you did not say that. That's that's interesting. There are five states that have some requirements and do require do require some licensing but mainly to take any type of Funding you have to get that licensing in these other states like Florida is a big one But it's possible to do and you actually get compensated a little bit better in your competitions less because there is a core requirements, so But what really put me into this was I had a nephew that came and stayed with me and He had been to some of the really beautiful luxury Rehab places and just none of it worked and he came and stayed with me and lived directly with me and my wife and he came to work with me because I have a small construction company so like he worked every day and it was the longest that he had been sober in a long time to and getting to see What this really did it was like? sober living I 100 % personally know that this changes lives because yeah, it does I This kid I love him, but man, he was a wreck when he came to us. We'd go down and check his room We found a full case at Dia in his bed one day. I mean just crazy stuff like by the end of it was cleaning his room, you know up early every day like it's just his life completely shifted to what What a fantastic great life could be so that's it sounds like something that definitely will touch not only just touch your heart. There's also some money to be made. And the fact that you don't even need a license. I did not realize that that's pretty amazing. So if people reach out to you, what was your website again that they can Jimbo.com if they go to your website, you could show them the ropes. uh basically walk them down to, this is how you get clients, this is how you get funding, this is how you put the whole thing together, these are things that you need to watch out for. You can lay the groundwork for them and help them get started. Absolutely. Well what I've got coming up May 19th I start my first 60 day build out that I'm gonna be doing and it's gonna be an intense 60 days We have you know, we've got all of our weeks planned out where we're go through this step-by-step together You're gonna get a lot of direct access to me where I'm showing you exactly what to do what not to do We're gonna get on and script and make phone calls together and just do literally everything you need to do So I can have you up and running in 60 days. So Awesome. Well, I appreciate the time that you uh made for this today. I enjoyed talking with you. Definitely interested in it. Something I'm gonna dig into. I think I will call you on the side about this because I do have some more questions and maybe some interests too. I have one home in particular I've been thinking about this actually before talking to you uh because I think it's in a perfect neighborhood. There's no close neighbors. So we wouldn't have to worry about that. But anyway, I'll definitely be in touch to everyone else that's out there listening. Go to his website, jimbo.com if you're at all interested. Until next time everyone, God bless.