The short answer is that it is depends on your goals. Sober living owners are either landlords or tenants. Below are the pros and cons of both options so you can decide what works best for you.
Buy
Many times someone who wants to open their own sober living will buy a house and finance it. They figure out how many people they need to house in order to pay all expenses and also turn a profit.
Pros
-You or your company (depending on whether you buy it personally or under the company) will own an asset, which could appreciate and bring you a lot of cash in the future
-You won’t have to deal with a landlord or his/her demands
-You won’t have to worry about the landlord deciding to sell his/her house, requiring you to move locations
-You won’t have to worry about the landlord raising the rent on you every time your lease is up
Cons
-If you buy it personally, as a residence, you will need to live in the house which can be intense
-If you buy it under the company, your interest rates will be more, and you will have a harder time getting financing since most banks will not loan to an LLC with no assets
-Your down payment will be anywhere from 5%-25%. This is money that could be used to operate your new sober living. Sober livings cost a lot to set up so the more money you have to put towards salaries, marketing and operations, the better.
-You will have to deal with paying all expenses on time – property taxes, insurance, mortgage – it is a lot to keep track of while also running your business
-You will be charged with maintenance – if there is a plumbing issue, you will be responsible for calling a plumber and taking care of the issue
-When buying a house, you have to know what you are doing. The one thing you don’t want to do is overpay for a house and then later not be able to sell it for more than you paid. You have to know how to analyze a property and the surrounding area.
-Closing on a house is a long process – it may take 3-6 months for you to even get one of your offers accepted. These days many houses are going on the market one day, and the very next day they receive multiple offers above the listing price. It will then take 45 days to close with financing.
Rent
Many sober livings rent because it is easier to get started. All they have to do is find a house in a location they have referral sources, pay the deposit, first month’s and last month’s rent, furnish the house and voila, they are open for business. The process is much faster than if you were to buy a house.
Pros
-You can open the sober living rather quickly
-All you need is first month’s, last month’s, security deposit,enough money to furnish the house and pay a few months of the house manager’s wages. Roughly $50,000-$70,000 in Los Angeles
-Sometimes you can find a house that is furnished to rent which is even easier on you (but of course more expensive)
Cons
-You won’t have to deal with any maintenance issues
-If you don’t the area or if neighbors give you a hard time, you can move locations after your lease is up
Of course both options are available to you, and the answer will be based on what kind of sober living you are, what amenities you are providing and what you are charging your residents.
Do you rent or buy? Do you think you made the right decision? Why? Comment below or email us at info@onestepsoftware.com to share your story.