Behavioral Health Real Estate
Attached below is a great article highlighting the need for real estate in the Behavioral Health Sector. Most large behavioral health companies opt to lease their properties instead of own. Why might you ask? Two reasons really. 1. They believe their capital is better spent in providing better care to patients 2. Zoning Behavioral health (substance abuse treatment in particular) is a difficult problem to for many to understand. Patients are legally considered to have a disability. This makes them protected by the federal fair housing act of 1988. Cities are not allowed to craft land use code to specifically make rules that ONLY apply to people in recovery. However, this doesn't stop many cities from flexing their discriminatory muscles. I have faced this in the past. I was forced to sue the city and they did in fact settle prior to facing the judge. That being said, it was a pain. What does this mean for potential real estate investors or operators? OPPORTUNITY. Our operators know we are there to help them in more ways than just fixing a leaking roof. Part of the reason this is so lucrative is that it's not always easy. Sober living in particular doesn't fit into a box in the code. Legally, you can do it. Period. However, some cities make it easy, some cities don't. Often times, the city just doesn't understand what a recovery home is. There are 3 main reasons we've become so successful with this model. 1. We understand real estate (property management, construction, raising money etc.) 2. We understand what operators want (close to public transportation, enough sq footage to serve maximum clients, low start up costs to help them get the property open and stabilized). 3. We understand the laws Operators want to run their programs. Period. They are the experts in treating clients. They do the most important work. Our job is to be MORE than a "landlord". Buying a property, rehabbing it, and leasing to someone is honestly the easy part. Helping the operator navigate unruly cities. Keep in mind, most times the cities are cool. I'm not writing this to scare you. However, when the time comes where it's time to fight, you have to be prepared. Also, there are certain properties you can buy (licensed boarding houses for example) that already have the correct zoning.