Which Specialized Housing Should You Invest In?

You manage your own property and have added a few single family homes along the way.

You understand the ins and outs of being a landlord, and you like the income you're making from property management.

Now you're ready to invest in something bigger. Specialized housing for the elderly or students has caught your attention.

Where should you invest your money, and which type is right for you?

There are several types of specialized housing.

Some are designed for low income tenants, while others are available for all income levels.

All cater to different needs of the tenants who occupy the units.

Take a look at the following list of investment properties to help you determine your ideal match.

1. Single Room Occupancy
Think boarding room houses. In these units, living and sleeping space is used exclusively for one tenant.

The bathroom and kitchen space is shared between tenants.

Federal regulation allows only one person per unit, but there are no limits on how many units a facility may hold.

Single room occupancy facilities may be used for any group, but they can be beneficial in college towns with a high number of students.

2. Congregate Housing
This type of housing is most often used for senior citizens and the disabled.

Each tenant has a private living area with a bathroom, bedroom, and living room.

While there must be a central kitchen and dining room, food service is provided by the facility - not the occupants.

Live-in aides may occupy the unit with the tenant - this is considered reasonable accommodation for disabled tenants.

3. Group Housing
Like congregate housing, group homes are most often formed for senior citizens and the disabled.

Each unit may have two occupants and contain a living room, dining room, kitchen, and bathroom for the tenants' personal use.

A social, recreational, or community space is shared by everyone and maintained by management.

The federal maximum is 12 occupants per home.

4. Cooperative Housing
A cooperative home is owned by a non-profit company or association.

A member of the non-profit lives in one of the units and participates in the management of the facility.

There are no federal restrictions on occupants for cooperative housing.

Things to Consider Before Investing in Specialized Housing
Before you jump in and invest in the senior-assisted living facility being built down the street, keep a few things in mind.

The benefits of investing in specialized housing are twofold. Investors diversify their property management holdings to allow for a more steady income.

Each type of housing should have some form of management team in place for the day-to-day running of the home.

This allows investors to stay out of the daily running of the residence.

The downside for an investor is that many of these homes cater to lower income tenants.

If a more immediate and higher return is important, investors will want to consider group homes and other housing facilities that work with higher income tenants.

Assisted living facilities, for example, come in all price ranges for all income levels.

Don't Forget Fair Housing Laws
While federal law does allow for specialized housing for the disabled and the elderly, investors and owners should never forget federal and state Fair Housing laws.

The basic tenant of the Fair Housing Act is simple: discrimination is not allowed for any protected class, which includes race or color, religion, national origin, familial status or age (example: pregnant women, anyone under a certain age, etc.), disability or handicap, and gender.

Senior housing is specifically exempt from the law's familial status requirement.

Public Housing Authorities
Many types of specialized housing are overseen by public housing authorities (PHA) - especially those that cater to seniors and the disabled.

Investing in an established housing property should mean that all requirements have been met. For new housing, you will want to connect with your local PHA to make sure you meet all federal rules and regulations.

Investing in specialized housing is a different world from managing one single family home.

The housing options each come with their own considerations, benefits, and challenges.

Understand what you're investing in, and make sure to stay on the right side of the law. In the long run, you may see a return on your investment and help your community find affordable housing at the same time.

Posted on Dec 23, 2014


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