Landlord only on a 5 bed, 14 months in and every rent check has cleared
I said in my intro I was planning the first purchase carefully and this is what carefully turned into. Posting it because most of what I read about this category is people running the care business, and I don't run anything.
Bought a 5 bed 3 bath ranch on a corner lot in an older suburb, 385k, 25 percent down. What made me look at it was an operator I'd been talking to for about eight months who already ran two licensed homes about 20 minutes away and wanted a third. She held the licenses. She had an administrator. She had staff already on payroll who wanted more hours. I was never going to be the person providing personal care and I was never going to hold a license.
The deal is a long lease to her operating entity, she carries the operating insurance, she handles maintenance under 500 a repair, I keep roof, structure, and the mechanicals. Rent is 4,950. Straight residential rent on that house in that neighborhood is around 2,400, and I ran the whole thing assuming I might have to fall back to it someday.
The part that nearly broke it was the conversion. Budgeted 40k, spent 62k. A residential sprinkler system was the single biggest line and it came in over because the water service to the house needed upsizing before the system would pass. Also a second egress in a bedroom that had been finished off years ago without one, a ramp, hard wired alarms, and widening two doorways.
We split it. I paid the 40k, she paid the overage, and in exchange her first 12 months of rent stepped down by 250. That negotiation happened over one long phone call in month three of the work and it's the reason we're still speaking.
What I'd keep: I did not spend a dollar until her application for that address had cleared plan review. And the fallback rent covers my note, taxes, and insurance with a little left, so a vacancy is a bad year and not the end of me. Licensing requirements for the building differ by state, so my sprinkler line may be nothing like yours.