Property Management of Income Property Done Differently With Transitional Housing
Some of our students have found unique ways to reduce the time needed to manage transitional housing. Transitional housing is defined by renting out individual furnished rooms in a single family or multi-family dwelling to those persons who are in transition. We are not referring to migratory workers or students, but to an additional vastly underserved tenant population, former offenders of soft crime.
All tenants share common areas like kitchen, dining room, living room, laundry conveniences; and both private and semi-private bedrooms are “let” on a weekly or monthly basis. The income benefit for creating this type of rental dwelling is extraordinary. A large master bedroom could generate $750 per month rented as a semi-private (two beds) room; smaller private rooms could rent for $450 a month. Take any rental unit you own and add it up. I think you will quickly discover that you have effectively doubled the gross rent you could be collecting for the unit.
The model is for our real estate investments to provide us with passive income, right? But how passive is it really? If you are a veteran rental property owner, you either do the property management yourself, to maximize your net rental income, or you hire it out to a property management company. You pay them to advertise, screen tenant applicants, collect rents, do credit and background checks, perform property maintenance/repairs, and handle evictions. The cost for those services will reduce your net cash flow significantly.
Property owners doing transitional housing concern themselves with all the same issues, but in a different way. Once the house is set up and fully occupied, the cream will come to the top. By that, I mean a particular tenant could become your property manager. For a small discount in their rent, they would carry out many of the same functions of a property manager. Check in tenants, perform minor maintenance, carry out property inspections, and even handle evictions, which are a cinch with this type of housing. (See resource box for ways to learn more).
A virtual assistant can even deal with advertising of your property to established referral sources when you have vacancies. All that is left is tenant screening, which does not include traditional background or credit checks. Just a chat with one or two individuals that are informed about the candidate’s background.
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