Got underperforming single-family houses?
Excellent.
It’s time for a change…
Turn your underperforming “dud” into a profitable property “stud” by changing its use!
Why?
As a real estate investor and entrepreneur, it’s your job to keep looking for solutions till you find one… or several. That doesn’t just mean for other people, but also for your underperforming investment properties. (Or even your own home.)
If your rental properties are barely making it and you’re not earning the cashflow you desire, think of a change-of-use play that can also change the cashflow.
For example, say you want more cashflow in California or another high-cost area. How do you solve that dilemma? Change the property’s use to something that fits the economy. Maybe you’ll create sober living homes or, better yet, assisted living homes. These strategies work in high-cost-of-living areas where there are the right target residents.
But that’s just one or two ideas.
Off the top of my head, I can think of 10 cool change-of-use plays perfect for single family houses (SFHs), and that includes an Air B & B model. In fact, let’s start our list with…
1. Vacation housing – Also referred to as “vacation rental properties,” yours might be good as vacation rentals if it/they are in popular vacation-destination cities. Even if you get on a vacation housing swap directory or list your place with https://www.airbnb.com, there is an additional income potential possible to be discovered.
With vacation housing, you have to make sure to stay within hospitality guidelines. Things have to be clean and habitable. You have to be open to working with all types of personalities… even those that tend to be picky and difficult at times.
Offering properties up on a vacation rental basis is not for everyone, but it’s certainly an interesting path to greater profitability. And just think of the different relationships you can make!
While the crowd-sourcing house swaps may not require you to follow many rules, the further up the vacation housing food chain you go, the more of a rule-follower you will have to become. Certain regulations may apply.
I wondered about a few things regarding vacation rental properties myself, so I did a bit of research for us both. Read through the steps of how to create a vacation rental property now:
http://www.wikihow.com/Turn-Your-Home-or-Condo-Into-a-Vacation-Rental
Learn how to earn income in ANY economy anywhere! CLICK HERE.
2. Set locations – Did you know that production companies may be willing to pay you to use your properties in their films? Or maybe you think the houses you see in movies are located on movie lots. (Some are, but many are homes owned by people just like you.)
After reading this article you will watch movies with a different eye.
Some houses show up in lots of different movies because of the location, the view or some cool characteristic of the house. Think of all those Hollywood Hills party scenes where guests mill about a big pool overlooking the city. Or Cameron Frye’s cool house in Ferris Bueller’s Day Off… Remember the scene where Ferris takes off with Cameron’s controlling father’s super-fast car? That house can be yours for a price, because it’s real!
Wanna see a few houses used in famous movies? Go here:
http://weburbanist.com/2011/05/02/almost-famous-13-houses-from-major-hollywood-films/
Ask yourself if you could handle having a movie crew (lots of people) and gear, along with a number of actors wandering around your property. You have to be willing to let them change whatever the set dressers and designers want to fit the scenes and theme required to make things true to the script, but they will put it all back to normal when they’re done. (Or not… if you like the new look.)
You can contact production studios to offer up your property. This can be a tough sell, but it can also be lucrative and a great story to tell the grandkids.
As with anything you are going to do with your property to earn extra cashflow, you will have steps to follow.
I found this article on the subject of renting your property to movie studios pretty interesting. Take a look at Step 5 in this article. This is an important part in the process!
http://everydaylife.globalpost.com/rent-house-movie-set-9233.html
Learn real estate investing strategies that work even in Hollywood! Get your copy of Cash Flow Diary now.
3. Executive housing – So… what exactly is executive housing? It is typically temporary housing for executives who are relocating to a new area. Their companies will put them up in quality, furnished houses while they get settled in and have a chance to find permanent housing.
Executive housing is also for those higher-level employees most typically in executive positions who require temporary living situations while working on contract for a large company. Somewhat like student exchange programs, these executives may even come from foreign countries. They don’t require permanent housing, so nice temporary housing will do.
It is a unique change-of-use play, but think about how many large corporations are located near your property. Do you have a few underperforming SFHs that might be served up to these companies for a decent monthly lease rate?
Do you live in a city where a new big booming business is moving, for example Reno… where Tesla will have a major presence?
Do your homework. Research marketplaces that show signs of expansion and business growth. Where are all the big corporations located right now?
This is a topic I cover in my book, because as a real estate investor you need to know how to spot trends and get there faster than other investors. Learn more. Go here to get my book:
4. “Crash” pad for pilots and flight attendants – While “crash” pad might not be the best choice of words to describe housing used by pilots and flight attendants, these airline professionals might like the option of staying in a house vs. staying in hotels during layovers, especially if the layover is a couple of days or more.
This type of housing isn’t just for airline professionals.
Put your thinking cap on.
What types of travel professionals pass through your neck of the woods? If you have properties in hub cities where there is an airport, a train station, bus station, waterway, Fed Ex or other shipping hub or anything similar, the professionals who work for these businesses sometimes need a place to lay over. Could your property work for them?
In this case, you will need housing close to the transportation centers. However, you can’t expect the professionals to want to stay in a lower-end part of town with a lot of crime. That won’t work. If you understand the identity of the tenant you are trying to serve, you will know if your property fits the bill or not.
I talk about Investor Identity in my live Q & A’s and in my book.
If you are interested in this type of arrangement you should start by calling the corporate offices of the airlines and other transportation businesses where your property is located.
If you understand the identity of the tenant you are trying to serve, you will know if your…
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5. Traveling nurse housing – Did you know that nurses who are willing to travel to different locations are paid well? Don’t take my word for it. Google it. Do your research.
As such, these nurses also need a place to live while they work far from home. The agencies responsible for putting these nurses in place at hospitals and other medical environments globally are also responsible for finding them clean, safe, quality housing.
The nurses have the option to have the agencies take care of everything (which means the agency contracts with you, the property owner, and pays you directly for renting the property for the term of the nurse’s contract) or the nurse receives a stipend. In that case, the nurse is responsible for finding and paying for his/her own rental property.
Either way, if you are approved to provide housing to traveling nurses, you can earn good rents and you’ll have pretty darned good tenants.
If you think about it, nurses are ideal tenants because of their longer work hours. The more time away from the home, the less stress on the entire eco-system. Plus, you’d be doing a good turn for professionals who help save lives.
I talk about knowing your Investor Identity so you can choose whom you wish to serve in my book. Go here and get a copy.
6. Student housing – Are your SFHs located near a university or smaller college? Why not rent rooms out to college students? Just understand that they aren’t likely going to take care of your properties the way a family might. You have to understand your tenant. Be prepared.
You may want to take carpeting out of properties where students will be living. You could replace with stylized concrete flooring (if the foundation is in fact slab) or tile that can take abuse.
Be prepared to have turnover and vacancies. Cover yourself in your lease. Include an upfront cleaning deposit as well as first and last month’s rent. That way, if a youthful tenant gets a wild hair to move out and maybe have a killer party or two, you’re covered legally and in your reserves.
There are lots of ways to earn income as a real estate investor. Learn more. Get THE one book you need to read now.
7. Veterans housing – This is not for every landlord (property owner), but if you have housing that might be good for veterans, this may be an option.
Start by contacting the referring agency, which means your first call might be to the Veterans Administration and/or HUD. You may be directed to contact the social worker who handles the region in which your property resides.
Learn what you have to do to earn referrals. As with anything else in life, there are rules. But here’s the deal. If other people offer veterans housing, guess what? You probably can, too.
Receiving rent checks from the government can be a good way to earn steady income. That’s why some people work with Section 8 tenants. Working with veterans falls under the Section 8 housing umbrella.
You have to decide whom you want to serve… what type of tenant. If you don’t want to work with Section 8 types, this may not be your cup of tea. However, veterans put their lives on the line for our freedoms, and it might feel pretty good to provide them with housing so they can stay off the streets.
Veterans put their lives on the line for our freedoms…
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Visit this site to read a very interesting press release and see how many clues you can find that might indicate that serving veterans is a good idea right now:
http://www.va.gov/opa/issues/Homelessness.asp
Plus, you can read this article I found that lays out the exact steps you need to take to become a landlord to vets:
http://www.ehow.com/how_7502198_hud-transitional-housing-landlord-vets.html
In 2014 I interviewed an investor who provides veteran housing. Give it a listen:
8. Sober living homes – There are different types of sober living homes. They can be licensed or unlicensed. It’s somewhat like the Wild West, according to heads of the Sober Living Network in southern California and the people who run these homes.
You can earn some pretty good cashflow, but you have to be aware of any rules (that are put in place by the city in which the residence is located and sometimes the Homeowners Association governing the CC&Rs of different neighborhoods) and necessary certifications.
At this point, the landscape in sober living homes is changing. Some cities are trying to force those running the homes to up their game and offer better, cleaner, safer, more livable conditions.
That said, it’s always better to earn certification to run a sober living home, because your home is then held to a higher standard. You don’t want to be known as the slum lord of sober living, but that happens. There are nasty homes that stack residents just to earn a buck.
A good place to start on this path is to contact NARR (National Association of Recovery Residences). Each state’s rules may vary. If having sober living homes interests you, do your homework. Ask lots of questions. Get to know the referral process.
9. Assisted living homes – This is by far one of the biggest trends in recent history that you should be following. With 77 million Baby Boomers at varying stages of aging, there is massive opportunity to create homes that serve this group of individuals in every way.
Since the first stage is independent living, where seniors want to live in a home together somewhat like you’d see on the old TV show, Golden Girls, according to where your homes are located you could charge more for providing a niche rental experience.
The next stage in the aging process occurs when an individual loses his/her ability to live independently without assistance. They no longer drive, they have trouble showering, preparing meals, dressing and such… they need some assistance. You can provide that in the form of a licensed assisted living home. As such, there are rules that you MUST follow and certain additions/changes you will need to make to your properties to be on target for this type of renter.
In assisted living homes, you are not offering medical care. That is a different realm. You can, however, offer Hospice Care, which is provided by an off-site Hospice worker. These people come to the home to assist during the final end-of-life phase, which can be days to even a couple of years, depending on the condition of the individual for whom they are caring.
While it is great thing to have a designated Hospice room in your assisted living home, it is not by any means the standard. You need to decide if that is something you would be open to, and you have to follow lots of rules.
The final stage is where an individual requires medical care, and that must be provided by a licensed medical professional. That level of assisted living brings us into the commercial realm, and it’s not ideal for SFHs. However, if you want to provide that level of care, you can always invest in convalescent and geriatric are facilities. That is commercial investing, and that’s not what this article is about.
Not too long ago, one of my Cash Flow Diary podcast guests, Gene Guarino, talked about why investing in assisted living homes makes a whole lot of sense! Listen to it if you haven’t already:
10. Battered women’s homes – While many of these are set up as charitable organizations, there may be a way for you to involve your properties and get paid by those organizations if you agree to rent to women who need transitional housing.
Transitional housing covers a lot of ground. You can set your own non-profit up and still earn an income from the use of your properties. Or you can just offer transitional housing for displaced women and children who are seeking a new life that doesn’t include physical, emotional or any other form of abuse.
Since I am not an attorney nor am I a CPA, I wouldn’t dare advise you on setting up this type of structure, but it is possible. All things are possible if you take action steps.
How do I know? Because lots of people have done it. That means you can, too.
If you want a little motivation to help you realize that your dreams as a real estate investor and entrepreneur really can come true, I invite you to read my book. Go here to get a copy.
Then come back and read this page I found on the topic of battered women’s homes. It gives a lot of great paths to finding the information if this is a change-of-use play you’d like to try:
http://amptoons.com/blog/2007/02/28/question-about-starting-a-battered-womens-shelter/
Change of Use Offers Additional Income Streams Beyond Rent…
The cool thing about changing the use of your SFHs is that you have the option to create more streams of income. And that’s beyond being able to charge higher rents or rent out otherwise rent-challenged properties on a steady basis.
For example, you can charge extra for pets.
Think about it. People love to travel with pets. Say you change the use of a SFH to a vacation rental. You could make your vacation rentals pet-friendly.
That strategy won’t go over well for every traveler, but there are a fair share of pet owners who like to travel with their beloved pets. You have to be sure you want to cater to the pet-loving travelers, because that may preclude you from serving those people who don’t travel with pets and don’t like it when other people do.
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Some people are allergic to pet hair, so if you are going to market to all travelers and want to also allow pets, you need to add that to your messaging. The last thing you want is for someone who is allergic to pets to have an allergic reaction in your pet-friendly room/house because you weren’t forthcoming.
Similarly, you can opt to allow pets at a little higher fee in any of your transitional housing.
Again, you must be aware that means you likely won’t be serving those with allergies to pets. You have to choose your niche wisely. But allowing pets for an extra fee creates an extra stream of income. (And possibly more mess.)
It is not uncommon for senior housing and assisted living homes to allow cats and small dogs. After all, studies show that pets can add to our lives and have positive effects on our health.
Coin-op laundry machines are good to add to some change-of-use housing plays.
That’s actually something I talk about in my book. However, in the book I’m talking about what types of things I do to add income streams to my apartment buildings, but the same can apply on a smaller scale in your SFHs.
Unless you are creating a very high end, luxury experience, you can have coin-operated washers and dryers on your properties.
However, if you create a luxury-based, we-do-it-for-you experience in your housing, you can charge higher rents and fees. Luxury living comes at a price, but be aware that it would be a challenge to offer luxury services in a “C” or “Wal-Mart” property.
The value-added services and income-stream strategies have to match the Investor Identity and property type. I talk about this in my book, too.
If you have properties where higher-end services are a greater possibility, you can take it as far as you want.
For instance, maybe you want to add concierge services, transportation to and from the airport or other places, storage fees (great for transitional housing where the garage may be underutilized and the residents have a few boxes to store), and whatever else brings a higher quality of experience to your residents, tenants and guests.
In assisted living, you will be responsible for supplying food or full meals, and daily or weekly cleaning service, as well as the actual assisting staff. But you can add other services that the residents would enjoy. You can package those extras at different fee levels.
You can even provide more personalized services and “classes” to create additional streams of income. This works well in transitional housing situations.
Nothing stops you from partnering with meditation specialists, yoga instructors, massage therapists, hair stylists or any other professionals who are willing to provide services that they will deliver to the door of your properties and your residents/guests.
You can have operating agreements with businesses and business owners/contractors. You should have an attorney look over your agreements. You want to ensure these professionals’ safety. (You might consider installing an in-house camera system… and make sure residents are aware that cameras are in place for security reasons. They would have to sign a waiver.)
You can even contract with writers, artists and other professionals who might be interested in leading classes at your property locations, especially in transitional housing situations. Assisted living homes want to keep their residents actively involved in different activities.
The point to this article is that you can change the use of your SFHs to earn more income in new ways. Do your research and ask lots of questions. Then take the steps necessary to get you to your new goals!
The post 10 Ways to Turn Duds into Studs! appeared first on Cashflow Diary.