Sober Living Facility

I work for a multifamily development/investment firm in Los Angeles, and after studying up on Sober Living Facilities as well as Drug Rehab Centers, I've come to the conclusion that I should be in the business of successfully charging $20,000 for a shared bedroom. That being said, I want to know other peoples experiences with owning/operating these facilities.

Is it common to be an owner/operator?
What are the average NOI/IRR/Cap rates for such product?
Any information or thoughts on this would help my research.

Thank you

 

I'm not intimately familiar with the structural or economic nuances of sober living facilities, but I would guess they would get valuations and treatment similar to other medically oriented, operationally intensive products like skilled nursing facilities or continuing care retirement communities.

 
Best Response

There is sober living and then there is inpatient rehab. The two are very different. Most investors picture inpatient rehab quality tenants but are only capable of obtaining sober living tenants.

I have a buddy that owns 5 houses here in San Diego and has been running them as sober living for 8 years. On the 5 houses he grossed $600k last year. He spends a ton of his time getting food donated and driving over town all day everyday to meet the food consumption requirements of the 80 people that live in these homes. Can you staff that? Yes, but they aren't going to do the job right, or at least that's what he tells me.

The operation is not profitable unless you get your food cost way way down.

Inpatient rehab is heavily regulated as insurance is the one footing the entire bill. Typically you'll see a doctors office anchoring a large rehab facility. His/her patients are right upstairs a lot. The fee is closer to $40,000mo.

A significant portion of sober living tenants are fresh out of incarceration whereas a significant portion of inpatient rehab are middle to upper middle class folks trying to clean up.

 

Voluptatum laborum illum explicabo voluptatibus et dolores aliquid. Sed sed odio ut architecto consequatur. Iste nostrum ratione aut tempora earum.

Career Advancement Opportunities

March 2024 Investment Banking

  • Jefferies & Company 02 99.4%
  • Goldman Sachs 19 98.8%
  • Harris Williams & Co. (++) 98.3%
  • Lazard Freres 02 97.7%
  • JPMorgan Chase 03 97.1%

Overall Employee Satisfaction

March 2024 Investment Banking

  • Harris Williams & Co. 18 99.4%
  • JPMorgan Chase 10 98.8%
  • Lazard Freres 05 98.3%
  • Morgan Stanley 07 97.7%
  • William Blair 03 97.1%

Professional Growth Opportunities

March 2024 Investment Banking

  • Lazard Freres 01 99.4%
  • Jefferies & Company 02 98.8%
  • Goldman Sachs 17 98.3%
  • Moelis & Company 07 97.7%
  • JPMorgan Chase 05 97.1%

Total Avg Compensation

March 2024 Investment Banking

  • Director/MD (5) $648
  • Vice President (19) $385
  • Associates (86) $261
  • 3rd+ Year Analyst (13) $181
  • Intern/Summer Associate (33) $170
  • 2nd Year Analyst (66) $168
  • 1st Year Analyst (202) $159
  • Intern/Summer Analyst (144) $101
notes
16 IB Interviews Notes

“... there’s no excuse to not take advantage of the resources out there available to you. Best value for your $ are the...”

Leaderboard

1
redever's picture
redever
99.2
2
Secyh62's picture
Secyh62
99.0
3
Betsy Massar's picture
Betsy Massar
99.0
4
BankonBanking's picture
BankonBanking
99.0
5
dosk17's picture
dosk17
98.9
6
DrApeman's picture
DrApeman
98.9
7
kanon's picture
kanon
98.9
8
CompBanker's picture
CompBanker
98.9
9
GameTheory's picture
GameTheory
98.9
10
Jamoldo's picture
Jamoldo
98.8
success
From 10 rejections to 1 dream investment banking internship

“... I believe it was the single biggest reason why I ended up with an offer...”