How Sober Living Homes Work: Property, Staffing, Referrals, and Resident Support

Recorded 2024-07-09 for the Dynamis Podcast. This transcript has been lightly edited to correct obvious transcription errors and improve readability. Figures, program details, and regulations reflect the date of the recording. Use the linked guides above for current information.

00:00Hey guys, Andrew Lamb here as I'm sure you've seen I have been a guest on many podcasts now And I was recently on the Dynamis Podcast with Tim Gurule. Tim is a mortgage professional And he just asked a lot of different questions Then what you've heard me answer on other podcasts. I wanted to share this one with you. He's a mortgage broker So we asked a lot more questions about operations financials how to actually get lending on a property like this and

00:27And just really like dug a little bit deeper into certain items of how to run a sober living home So hopefully you enjoy this as usual if you like this content, please like This video and subscribe to the channel to see more as I'm going to be producing more content for you guys and going alive Pretty soon where you can answer get your live questions answered a live Q&A coming up soon So I will see you soon and enjoy Welcome in this week guys. We have a guest that I have been chasing down for months He's been super elusive, but I'm glad I finally got him in the studio today

01:03We have Andrew Lamb who is an expert in all things sober living He runs an awesome coaching course that teaches people how to execute on these how to find these things how to put the systems in place Really get you going get your momentum to not only get your first one But get scaling and how I even learned about Andrew was we both have a Mentor quasi mentor his name is Mattie or Matt. He's got this awesome podcast called the millionaire minecast podcast We're both go-bundant spros or go-bros as they call it and so I was listening to Mattie interview Andrew And he gets on the podcast and he blew my socks off by what he was talking about

01:46Obviously all of us are real estate investors were entrepreneurs were business owners We're trying to get to the next level and a consistent problem that we always run into especially in this market in the what I call the post bigger Pocket days is we're all competing for scraps And when we find a deal it is very hard to cash flow And when I mean very hard if you break even or are at a hundred dollar two hundred dollar a month deficit a lot of investors are calling that a win these days and what Andrew's doing is he's tying a business model that is working to buying real estate and 10xing cash flow returns and so I'm super stoked to have you here Andrew welcome to the studio

02:24I am over the moon that I finally got you in here Well, thank you for your your persistence and I'm excited to be here as well But yeah, just I've been slammed teaching people how to do this based off of what I was able to do over the last three years But on some time today, so I did this chat I think the best place to start here is and we're not gonna we're not gonna go too deep into like how did you get here? Tell us who you are But I do think I would love to know the race that you are running before you found sober living just some context of

02:57What were you doing before and then what led you down this path and why did you pivot? So give us some background of like why did you have authority in the space of real estate leading up to sober living? Yeah, I I started off in 2011 as a real estate agent and so I I Quickly did well in real estate soon after becoming married Six months later found out we were pregnant. I know as a teacher at a small private Christian school And I was like this isn't going to pay the bills. It's not going to pay for diapers a rent's going up

03:28Like I gotta do something else. So I jumped into real estate sales Spent the last decade or so really growing that starting a sales team and Eventually getting to a place where you know, I know all the top real estate agents in the country and on TV with you know commercial apartment Corcoran and that kind of stuff but COVID and like everything shutting down March 2020 changed my perspective on everything and instead of just collecting a fee For being a middleman helping people buy and sell homes. I really

04:02Realize I needed to to get some control and some passive income and not have all of my hard-earned money tied to my time I Had 14 deals in escrow when COVID hit and I didn't know if any of them would close That was me personally 14 transactions that I was like me and that's over six figures and commissions that could be gone and I just decided that year that month really March 2020 to start investing more and Started learning how to flip and wholesale and all that stuff

04:36by the end of that year we had completed several flips and and Then I also realized oh man flipping is just like going out and taking listings and doing real estate It's you're always looking for the next deal and if you don't show up to work although. It's a bigger payday If you don't show up to work, you just won't have a payday And so that's when I realized we made I need to hold on to these and it was 2021 January 2021 when I realized main rates are under 3% and I'm mid flip and I have another one under contract

05:10How can I transition this to something that pays me every single month in his real mailbox money? instead of you know Having to continue to keep searching for that next deal the mantra of every flipper is you know send me your deals Let's find the next one. Yeah, I didn't want that anyway. Yeah, it's a very active income source. It's it's active income It's it's what we call vertical income not horizontal income meaning, you know, if you stop doing the work You stop getting paid. This is a classic Funnel or trap that a lot of successful, you know sales individuals find themselves in is they they're working in a model

05:46The system works really well their income is really high. It looks like it's gonna go forever and a lot of Agents in particular, you know, if you're a real estate professional you get sucked into this false sense of security and forgetting that real estate is cyclical and If you are in the real estate industry if you're a lender if you are a realtor This is totally different than the rules of being a drug dealer Like you got to buy your own supply you got to buy your own supply You really do because you know in order to stay in the game having success in this game is all about longevity and

06:19For you to have longevity you need to get fed when there's famine. So, you know, just like Joseph had, you know, the he interpreted the Pharaoh's dream of like, okay We need to start harvesting grain to to put away because there's a seven-year famine coming that that Set aside is what carried them through that famine It's the same thing when you're in real estate except the set aside here is passive income And if you're finding opportunities that look really good You should take serious consideration into how can I?

06:49Partner or get this deal done to provide passive income through the highs and lows to carry us through those times So I just want to clarify up to that point in 2021 Had you ever or had you owned any rentals yourself up to that point? It just won so my family my wife and I bought our first house 2017 and a year later due to some other stuff with with my family I had to move my mom out to Northern California from North Carolina and then my grandmother within a year of each other To move into assisted living so we thought they might need to move in with us first. We got a bigger house

07:26In 2018 and we turned that first one into a rental and it was doing okay But it was up until we refied it was maybe 250 300 a month in cash flow But then we refinanced in 2020 or 2021 Under 3% and that changed everything is like 600 a month. It's pretty awesome. Yeah. Yeah, and so you read you did rate in term refi I'm assuming to lower your monthly principal and interest payment and squeeze a little more cash flow while rates were low excellent excellent move So here we are it's 2021 you have these 14 s grows COVID's happening you have no idea if anything's gonna close this is guys if you remember

08:03I mean it got super weird countries were closing if you were buying real estate you had to be completely masked up You had to go through like a de-con process It was one person allowed to walk through the house at a time the agent had to stand at the front door It was just weird. It was like weird times So you're seeing the writing on the wall of oh the comfort that I had become accustomed to is uncertain I need to make some serious shifts here. How do you go from that flipping? You know having a successful brokerage sales model flipping wholesaling to

08:37sober living is the answer like what was that bridge? Yeah, that was a Transition for sure, but and here's a funny thing Going back to you know using your own supply that very first sober living home was my own listing that I purchased That's amazing. They decided they wanted to get their money out of California There were some tax laws that were on the horizon that would change things and They wanted to just drop the price 50 grand and I was like if you're gonna do that I will not charge you a commission. I will just buy it myself

09:07It's gonna save you money in the long run because now you're not paying two commissions and I'll just take it and so I got a great deal on that house And it became the first sober living home, but the plan was initially to flip it when I decided I wanted to To turn it into something that was a long-term hold I was like man $600 a month that I'm getting with my first rental my first and only rental is awesome and I Had two insurance claims on that property as well once was a plumbing backup the second time was an appliance failure and

09:40if we didn't have insurance honestly after the deductible like many months of cash flow. We're just gone right, so Even though you have a good Property that's cash flowing. Well It doesn't really help that much Especially in Northern California expensive area to live, you know, $600 was was nice I could take my wife out to dinner a couple of times

10:04But it wasn't doing it for us in terms of creating wealth and freedom So I figured you know the thing I learned in business is if you provide more value You can probably get paid in proportion to the value you're providing So if I could help a lot more people if I could house more than one family Whether that's renting by the room or Airbnb or whatever Residential assisted living is something I looked into Then I'm probably gonna make a lot more money

10:34And so I looked into a lot of different models I went section eight first and talked to the housing authority and they were actually gonna pay below market rent So I was like well, that's not gonna make sense This is a house that market rents 2800 a month once I've done with the flip and they were gonna pay like 22 or 2300 And so then I looked at other things and what I stumbled upon was I Called my local shelter

10:58And just like hey, do you have any use for a single family help? I'm working on this property I don't want to sell it. I'd rather hold on to it interest rates are great, but I want to help people Do you have any need for this and I got lucky the director? I ended up talking with the director of the of the the shelter and she's like I am the head of This organization called housing first, which is a HUD organization they're basically all about getting people off the street into housing because it's hard to access services and support if you don't even have an address and She was like you they're called sober living homes

11:34This is what it looks like in California These are the people you should talk to and she introduced me to everyone I needed to know So I believe that was like a God ordained thing and like there was just favor on it because as soon as I decided I want impact more than I want profit Everything just seemed to line up like the universe just said here you go Here's everything you need and it ended up being far better than I ever imagined I had never heard of sober living before I had never heard of being able to house people to get paid by the government

12:04besides section eight before and this ended up being I mean literally ten times better than Then the traditional cash flow I was used to so you just hit the nail on the head for me And it's a consistent theme that just is just regularly showing up Impact over profit and I want to reiterate that impact over profit, right? God knows the contents of your heart just he does right and When you steward the resources he gives you well when you have good intent when you have a heart to grow the kingdom He absolutely has the ability to multiply your abundance to just literally reach down and hand you those keys inside

12:42Sometimes it's as easy as that is making that impact over what am I gonna get out of this? How can I serve? You know and sometimes when you ask that question You cannot quantify the abundance that is bestowed upon you in the aftermath of that and that when you said that just now Andrew it gave me it literally gave me goosebumps that is an incredible incredible story so you reached out you you Called this you know this this shelter which by the way excellent outside of the box thinking because

13:12You know I don't know if I would have had That four thought to do that I mean obviously watching you on social media watching your journey and in the interim I've met a couple other you know sober living operators locally because I was so curious you sparked this curiosity in me but upfront I mean you saw a problem and Looked for a need that other people weren't solving and in that delta found abundance And that is just that speaks to your ability to problem solve your tenacity

13:43That's that entrepreneurial mindset that we all need to have that outside of the box thinking to solve a problem a problem that people may not have even known Existed and you were there to provide the opportunity in that problem so you call her and You have no idea what you're doing you call her. Hey do you have a need for this? She's like yeah people need these addresses I mean what were the first early phases of that? I'm sure it was somewhat Marky gray like what's the next step? Yeah, none of it came with with a handbook or manual

14:14So and I'd never dealt with people who were in recovery before and so it was a lot of just How do we provide as many beds as possible? right I had that first home that was almost done with the flip I had a second one in contract and What's crazy is throughout the rest of that year we bought and fixed up five homes using the birth strategy So used hard money and private money to buy those fix them up and then refinancing the to long-term debt and Fill them up and so five homes in one year Which meant most were four bed two baths so eight or nine people because we were doing shared rooms

14:51two people to a room maybe three in the master because they get to share that private bathroom and it's a little bit bigger and We filled up so there was a lot of people moving in Me not knowing what questions to ask me realizing a week later Oh, this person's been drinking or they've been using traffic or they have a mental health issue I didn't know about and they weren't taking their medication and so it was a school of hard knocks for sure just

15:17Figuring it out cleaning up bodily fluids all the crazy things you could think about When when you have people who are in recovery and it's messy and you're not actually used to working with it But after six or seven months of that we had three homes opened by then We were filling up and I realized man. I'm really good at business. I created a real estate team I started a brokerage. That's a franchise the Keller Williams office So like I know systems and models really well like Keller Williams is really good at systems and models It's Gary Keller's thing. What if I just apply that?

15:50to this business and What if I have a set of questions that I ask every single time just like when I'm meeting with the buyer or seller What if I have a checklist On this is what every home should look like this is what every home should have on a monthly basis This is what we should be checking for what if I set up simple systems cameras So I know who's coming and going and when all of that stuff and after I implemented that

16:15six or seven months in 90% of the headaches went away and it just started to run extremely smooth To the point where now we have eight of those homes and I spend very little time managing it I have a manager now who's a substance use counselor But it became something that really just took off and became that that passive income for me All right, let's let's dive in a little bit more tactical here And then we'll kind of touch back on the trajectory of the story. How did we get where you are?

16:46You know implementing these systems and processes So you're saying okay, we're typically we're looking for a four bedroom house two to three Baths I heard you mentioned in the master or the primary we call it these days that it's a little bit bigger square footage So potentially you can put three beds in there you just you you gave a little cookie crumb there You said they have the the primary usually has its ensuite bathroom meaning. It's a it's a bathroom That's only access through that primary bedroom I'm assuming the way you you made it sound is is that only the occupants of that bedroom that share the

17:20ensuite are allowed to use that bathroom is that correct? Yes, so how many people when you say all right typically two people to room to a room is there like a square footage? I Guess a minimum square footage amount that each person needs in the room I mean you're probably not doing bunk beds, right? Correct. Well, so some people do and I think sober living If you look it up, you end up finding you know Clips and articles of people doing it very poorly and I think that actually is what allowed us to grow quickly in this stand out

17:52Because we're doing it at a very high level But there are homes that historically aren't well maintained who do put people in bunk beds in fact there was a home in my area next city over that would shove 12 people into a three bedroom house, you know two bunk beds each room for guys and It's just not a great situation. Well again though for me. I decided I love people I can't imagine living in a situation like that. Let's just do two to a room going back to impact They're sharing that yeah that bathroom. It's it's three in the in the primary Well, just like you said like we're going back to impact right we want we want to know what is the impact well

18:32The purpose of this is to serve and so we're trying to give these individuals a second chance on life here the ability to thrive and grow and prosper and if you're if you're putting them in positions where they're more susceptible to fail It's stressful the living conditions are less than standard. I mean is your intent really impact at that point You know when you're prioritizing profit over impact, you know I think that makes a big difference right and how you're stewarding these resources So I really like that model and and and something just to highlight here is it's like what you're doing is Optional like you said that there's there's houses with 12 people in there. I'm assuming there's no

19:11Regulation. I mean, what's the regulation on these these types of homes like there's not a government agency out there saying like hey You can only have X amount of people in these facilities, right? Yeah, it's so this is the crazy thing about sober living It is the Wild West in most areas No license no certification required. Nobody's really checking on it You're protected by fair housing laws because most of the people in the homes are protected class So no one can really tell you that you can't do this We're not offering services or anything that would be licensed. We're just providing housing like they're getting their services

19:43Anything that will would require a license through an outpatient program their case management through like a local government program We're just providing beds and a clean and drug-free environment with house rules and I mean technically They're not even tenants. They have a license to a bed We're not giving them a lease because that allows us to if they do relapse or if there's violence or weapons or anything like that We can just kick them out. We can revoke that license. So it's really easy to fill up homes like this and the city and HOA They can't tell you to stop so the management company is handling and we're gonna get a little more tactical here and how we're fighting people

20:22How we're putting people heads and beds essentially the systems that we have in place But you just said right there there's a license for them to occupy a space So the management company is having them sign an agreement that essentially I'm assuming is like a binding contract that says they're agreeing to certain behavior Terms and expectations and if there's a violation of that then they're forfeiting their right to occupy Is that essentially the license that you're talking about? Yeah for us and we we own and operate so We were the management company technically

20:53But yeah, they get a license. So the license says very clearly there's rules. There's expectations. There's a curfew If you don't abide by these things your license will be revoked But if you want to stay here like you have to sign this degree here initial here So there's a lot of waivers and you know, yeah Things like that but there's also a lot of protections for them because my goal is for them to be able to move into permanent housing So if we had at least they have a timeframe where they're actually stuck in our house And I want them to be able to if they can get an apartment next month they can just go

21:25They don't have to wait So it's actually a dual benefit of allowing them the freedom to be able to move on but also allowing us the The freedom necessary to protect the house and make sure it stays clean. It's over. Yeah, so as far as I really love that model I love what you're talking about there is that they're not like in a long-term You know binding lease that if an opportunity for them presents they can they can capitalize on it All right, what are some of the expectations inside the house you mentioned that there's like curfews timeline expectations Behavior expectations no drinking no drugs things like that

21:59But also is there like a seniority is there like, you know rules? Is there chores? I mean what how? What is the the operation the day-to-day look like who's in charge like essentially of the home? Yeah when it first started it was me So I actually bought my first two within a walking distance of my personal home So I was able to every single day just stop by which was fine for me because I was doing a 75 hard I had to do an outside workout anyway So I would just use that as an excuse to go and stop by each house I

22:30Learned that that wasn't necessary Because the guys that we were housing really should have jobs They should be working and saving especially while the government like a local program was paying for them to be there And so these guys could just work and save so that they could afford their own apartment And a deposit and stuff in the future And so I learned I could just put in cameras and then have one of the residents be my eyes and ears and

22:57Kind of make them what we call the house leader or house captain you'll hear that pretty frequently throughout sober living homes What we later did was we implemented a second person who was like a chore monitor because all these guys contribute back to the house by doing chores fosters your responsibility and community and just life skills in general and So they're they're helping keep the home clean working together all that stuff So we would have a second person in charge just so that there wasn't a power trip from the house leader thinking They could just tell everyone what to do now right you guys kind of a balance of power and they act like big brothers Almost like an RA in a dorm. That's really their job. No confrontation. No dealing with with stuff like that

23:37They just observe and report and let me know what's going on later I hired somebody to do that because I was still a busy realtor right and an investor doing flips And I just you know I couldn't be in two places at once so I brought in somebody who Full-time could handle intakes handle taking phone calls from different programs when we get referrals things like that What was the breakover point for you to make that position a full-time hire you mentioned that they have like a background and like Subsense or like a counselor substance counselor, but not only are they doing like the in-house, you know

24:11Conflict de-escalations. They're also making sure people are adhering to the rules They're in taking people making sure check in, you know rules are signed Etc, which is brilliant It's brilliant to like you know kind of make them the taskmaster of all of those things What was the breakover for you like how many properties until that full-time position Comes into play and it makes financial sense. It was so for me it was three So I didn't have anyone paid until my third home, which I started very quickly

24:41But it was also in another city so my first ones I could walk to that third one was a 25-minute drive and It's because the way I open homes. I do a lot of market research I ask all these different housing liaisons case managers What's the population that needs housing and where should it be and my first two homes were in my city for single men? Because that's what I told the need was that's what I was told but then the third one was like hey, we really need to place for women and children over here and So I found a property. It made sense had multiple units

25:14So it was like a triplex and we turned that into a woman in children's home and it filled up immediately but it was further away and I actually Just like to build a relationship and have this almost a partnership with the case managers and the people sending folks to our homes and One of them was really on it. So I was just like you really need some help and I took that to heart and it was like great. Do you have anybody?

25:43Like my best hires have always been by referral and so I asked her like can you think of anyone because I could really I could use the help and She referred somebody who's a little bit older had volunteered at another sober living home for like eight years Just really loved people and Honestly, she just wanted to volunteer and I decided to pay her I was like this is more like a part-time job like can I just pay you?

26:06Like five hundred thousand dollars a month. Yeah, and that's what it turned into so this was like past her second career She was pretty much retired and just out of the goodness of her heart wanted to help people in her recovery and Pick them up drop them off buy them clothes Take them to get some groceries. Yeah, I'm gonna ship with the food bank pick them to the food bank that kind of stuff That's amazing. My my immediate thought is what's the secession plan for that? Right like when that person I mean it's past her second career. What's it? What's next? What's this a secession plan? But obviously, you know, that's that's one of those things like, you know fix it after it's broken

26:42Probably like it's working right now. So it worked great for a year. Oh, okay. So that that so that person has already moved on then Yeah, her husband honestly was like because we kept growing so we went from three homes to five homes to seven homes and She was spending a lot of time and there is, you know, the occasional conflict mostly just words, but Her husband was like you don't have to do this and I like to see you more often and so she decided to back away from it and then we ended up hiring somebody full-time who Went kind of the opposite direction. So the thing you learn is what personalities work well You know what what makes sense and so she was great because she was a volunteer

27:26But she was really more like a grandmother Would bend over backwards for people sometimes we get taken advantage of got it And so we ended up bringing somebody on who was a registered substance use counselor meaning had hundreds of hours of supervised group therapy time all that stuff But also was in recovery herself. So understood what people were going through had lived in homes like this for four years and before they became a house leader in one and For another maybe year and a half

27:55That went really well Until it didn't and she had some personal stuff in her life And so this is a real business you're gonna deal with managing personalities and the same thing I dealt with with running a real estate team People are with you for seasons and then things change and so we ended up maybe six months ago hiring someone new who was even further along in like the The certification process so instead of being a registered person. This is a certified level 2 substance use Counselor who does group therapy sessions at a local rehab and

28:27Honestly already knew half the people in our homes and she's just done an amazing job of Continuing to have everything run very smoothly and reputation is everything in this business. It's a really small community and So just the feedback has been like she's been a great addition and our houses are running really smoothly Yeah, that is awesome. I want to jump into a little bit more tactical I want to talk very specifically about a Couple things you had mentioned, you know four bedroom house were putting eight people in there nine people in there Are you in the space of doing you know?

29:03formal dining room conversions or garage conversions into living space like is that what's the general rule of thumb of like living space? How many bathrooms per people and then you know, what are you? What do you bring it in on these properties every single month? So to answer the first question? I don't like doing major renovations. I don't like moving walls. I don't like converting garages Because I still think about I want resale value to be high on these properties So there's a lot of people out there doing what's called Pat split now or co-living or there's every little bit of Common area space they're putting up a wall and creating a tiny room and sticking people in there

29:42And I think for a lot of different reasons fire hazards Lots of other things unpermitted additions that that can cause it to not sell in the future. That's not a great idea I Want the ability to if every program in my area shut down and I can no longer house people like this to just sell off the properties at top value and So that's always been my thought process

30:06So there is one home the second one where we converted a formal dining room into a bedroom because I already had an egress window and we just needed to basically put in two solid double doors We didn't wall it off. We didn't add a wall, but we did french doors And just made it its own space and so that turned that into a four-bed two bath But a four-bed two bath for us we average over a thousand dollars per person And so if you think about that eight or nine people eight grand a month bring it in

30:37Eight nine grand a month. There are some programs where we charge more So it's more like 11 12 grand a month when the houses are full. So what what programs all in are about three thousand? What would differentiate between you know a thousand or more than a thousand? It really just depends on On the program. There's a lot of different kinds and they're different everywhere So I tell people like what I teach is a framework on how to find them because what happens in my county is going to be Called something completely different in the next county over versus the next state over in california We have you know mental health behavioral health probation parole got it

31:12But those same departments don't exist in like oh, hi. Oh, they're gonna have mental health boards and something completely different uh, and so That's where you just really have to ask a ton of questions And so part of my process is connect with all these organizations who are face-to-face with the population I want to house ask a ton of questions analyze that data And then determine what's going to make my homes different and help them stand out like I just found out There's over 150 homes in my area that could be used for sober living

31:43Uh, the county actually told us there's there's that many in their database I house 20 of their people in my homes. Wow And so when you develop that type of rapport you ask those questions and then you give them exactly what they said they're looking for Like why wouldn't you be their first call? Why wouldn't they fill you up? Yeah, so that's how we quickly became like the go-to place. So okay, so we have a thousand dollars a person Let's just say you have eight residents in a four-bedroom house, you know, you're typically on a four-bedroom You're depending on the area anywhere from 2,500 to 3,500 a month

32:17You're taking that to 8,000 a month. So I want to I want to talk strategically here 8,000 minus your liabilities Which is your mortgage for let's just say your debt service And then what are you taking and setting aside for the business for like what kind of business expenses? Comes out of that as well. Yeah, here's what's crazy So that same home and I use this as an example because the numbers are just perfect That same first rental where I was making $600 a month after doing an fh a streamline refinance Which people don't even know you can do on an investment property like I lived in it then I moved out and I still could do an fh

32:52A streamline um $600 a month. We convert it once those guys move out We convert it to a sober living within 90 days. It's netting $6,000 a month Because all in my mortgage was a little over 2,000 we paid you for utilities And internet like 60 bucks a month for internet So that was it roughly $3,000 and if I spread out my manager over all of my homes, it's very minimal So yeah, 3,000 3500 tends to be like our actual cost per home And then are you paying utilities?

33:29We do pay utilities. Okay, so you pay utilities, but no food nothing like that No food. They usually are low income and have food stamps and they're on Medicaid Okay And so they they get an ebt card they could do all that and then we like to work with food banks that can just our guys can go and get whatever they need Uh on a limited basis because they can afford food I don't want to take food from people and pay out to what really need it and don't have food stamps A lot of military don't get paid well, but they don't

33:54They're not under the threshold of being able to get food stamps. Right. So there's a lot of military folks who I grew up on an air force base I know There's a lot of folks who end up going to food banks who are employed. Yeah, I'm a I'm a army veteran myself and I can cooperate that story. I know people that We're getting food stamps while active duty in the military. So kind of That's a whole other topic of conversation that we could have another time but So I guess the biggest that now the next major question here is

34:28There's really two puzzle pieces is how are you putting how are you finding these people and placing them? And then I like are there hard and fast rules where like no you're not taking certain individuals Um, you know, so first is how are we finding these people? Who's calling you and then are there hard-nose for you? It's a good question. So yes, the number one thing is connecting with those organizations So I'm gonna my number one way of marketing is to go to the source So I'm finding everybody who is a paid employee

35:01whose job it is to get face-to-face with folks who don't have housing and who are in recovery and you can make the decision to Pay for them to stay in a place whether that's a hotel or a motel or a house like ours Yeah, those people like charitable charitable organizations are those like government officials It's a combination of local government. The problem with local government is You have all these different departments, but they're like silos. They don't talk to each other They don't even know what the other one does And so I had to just kind of figure out over time

35:34Who did what and now I actually know okay if somebody's in this program Once they're off of this program or they age out or graduate. I cannot put them in this other program I can make a referral here and over there and there's just ways to Not necessarily self-refour, but it's like, okay You need to actually get in this outpatient program and then this program will pay for you for nine months to be in a home like ours And so we've we've figured it out for our local area. It's different everywhere, but that's usually how it goes That's a big puzzle piece right there is the industry knowledge of the programs like that's massive massive. Yeah, it takes time

36:09Um, but once you figure it out You have the keys to everything you need and so That's what I do. I teach people how to do the market research how to connect We have an email template all this stuff. It's got exact questions to ask I've recorded phone calls and our coaching programs that people can hear me doing this in multiple areas, but we go We ask we figured out and then I don't have to market anymore Because now my best friend

36:36Who's face to face with them literally this person comes in saying they need housing. I'm the phone call Right and we business systems. We have a trackable phone number. I know who's calling that number my manager gets it If it doesn't if she doesn't pick up and then it rings me so that we never miss a phone call So again, if if it's 4 30 on Friday and this person needs to place somebody Before the weekend before they can go home. They know they can call us and we'll have a vet available and we'll answer And so if we're just providing that value to them like why wouldn't they just call us for a city time? And that's what it ended up being. So that's that's what we do. I do not put stuff on Craigslist on Facebook marketplace on Zillow

37:15It's just those relationships. Yeah What do you do with the? Hesitation and the opposition from neighbors. There isn't any oddly enough so or it's very limited um For the most part they can't do anything I've seen this over and over and over. I have like court cases and stuff just from last year where Even a city can't stop you from opening and so

37:39There's really nothing they can do but for the most part we have rules that are like our People have to be good neighbors. They can't just loiter and hang out outside If they want to smoke if they want to hang out it's got to be in the backyard in private space Um, they can't just park in in open spaces in front of someone else's house. They need to be by our house We choose our locations for that as well. Although most of the people in our houses don't drive because they lost their license The ui or dwi Um, but yeah, it's it's more just controlling the rules and doing a good job of screening and making sure they're right people who actually

38:14Want more than just a roof over their head. They want to rebuild their lives. They have recovery related goals They have a savings goal. You just want to make sure they're really in it To be able to rebuild and move forward instead of Just have a warm bed and a roof over their head. That's reassuring You know as a neighbor, I would be concerned But if I saw that you actually were caring about these people the tenants were good The houses were clean, you know, I was a firefighter for seven years and I can tell you I've ran on a number of these, you know

38:44transitional houses sober living and oftentimes They're tough. They're rough and tough and this the quality of living is substandard and you know if Neighbors are seeing that actually they're nice places and there's pride of ownership There's there's definitely gonna be less hesitation You know, what's the biggest difference between someone like you and an organization? Like let's just say the ospherd house for for example, you know, like these These non-profit organizations that really do the management because I know some other sober living operators where they'll go find the asset

39:20They'll partner with a management company like ospherd for example to like fill up The space, you know, what what would you can you speak into that at all about, you know, pros and cons? Yeah, 100 percent so There's a national alliance of recovery residences And so although I said before that it's mostly non-regulated, that's changing in some states So if you're gonna get state funds they some states like texas, florida, washington, ohio They want you to be certified through this

39:50Body it's almost like being a realtor the national association of realtors and then the state association of realtors underneath that and so There's um the ability to do that and get certified but uh Oh, it's a question again The difference between like an ospherd house versus like your you know

40:09Like what you're doing like instead of just buying the asset and bringing in like the ospherd house to do the management Versus your model, you know, which is really running the management, you know taking that on and owning the asset Yeah, so n. A. R. R. This national alliance of recovery residences has what they call four Like old levels of housing an oxford house would be level one which means not monitored very peer led uh, the way oxford house usually works is People come in who are in recovery, but they just equally share in the cost so they'll equally split the rent and Utilities but there's really no oversight. No one's monitoring it. No one's really drug testing them

40:48And usually what you hear from my experiences Is that if someone brings drugs into the house like the whole house could just start using again And the problem with that is now you have Nobody overseeing it. No one's paying the rent. So i've actually talked with many landlords who have evicted oxford house for non-payment and it's because they They were non-profit they do things through charter and nationally They have a good intent

41:14It just doesn't always play out regionally where there's There's actually like a representative of oxford house who's checking in on these homes Yeah, that makes a ton of sense and actually brought up an additional question I have two last questions for you and then we'll give you the floor and uh, you know, tell people how they can find you But my my next question is is you know, you mentioned that you they sign like a license A map in the instance that there's a relapse on one of your you know, one of your your tenants I guess well, I don't know what you like to call them

41:46Occupants of these houses residences. Yeah Um, if one of your residences rehabs and is consistently causing problems and there's damage What is the is do you have to go through a standard eviction process or is it? Different no, not at all. So here's what's crazy most of the people who live in our homes have lived in similar homes before and they understand how they work The unwritten rule and many of them is that if they use they're kicked out We're a little bit different if somebody relapses we want them to go to detox We want them to get through seven to ten days of going through withdrawals with

42:20Either medically assisted treatment or somebody watching them because if you just binge drink over the weekend and you stop cold turkey Like you could die with draws or that that so we want them to be monitored and get that help Away from the house, but then we'll hold on to their space and their stuff and they can come back in Honestly, that's happened so many times where somebody has moved in we're testing their dirty They go, but they're so thankful that we let them move back in That they're they're not messing up again and they stay a year to 14 months. Yeah, and they move into permanent housing uh, but for us it's it's really

42:52The license agreement is very clear on the rules and the expectation is set forth In a way that if they mess up and they aren't willing to go to detox Or there's a fight or weapons or something's found. They just leave. I've never had to evict in three years Interesting. Yeah, and they're rent. I guess that the the cost of being there That's being paid for by the organizations that are matching you with the tent with the residents. Is that correct? Yeah, in most cases some have graduated their programs and they're paying out of pocket now Interesting. He's been with us for two and a half years

43:27Clean for three years and she she went from because of her medications sleeping all day long to now She's a manager. Wow local fast food place. She's doing great And so there's like male houses and then you know women and children. I'm assuming Do you have homes for like dads like single dads with kids? We've always made a space for single dads. So usually that primary bedroom When I first started I would it would be the last room I filled up Because just in case we had a single parent

43:55I wanted them to be able to move into that space and we've helped a lot of single parents be able to To move on to permanent housing that way. Yeah, we even created like a second phase of housing Where home I moved out of a year ago Six bed four bath that ended up being for the people who like did so well in our sober living homes And we're no longer on their programs anymore and had been cleaned for over a year That they just basically rented a room from us in a normal type of Rent by the room situation instead of a sober living house and then moved into permanent housing

44:26What's the typical time frame that a resident stays with you guys? What's the average stay? For us it's 12 to 14 months and I think it's because we put an emphasis on this should be the last place you ever live Before you get an apartment or move into like your own rental situation Yeah, I know too many sober living homes that are like a weekly situation you could pay 150 175 a week And the problem with that I think is that they're only in it for a week at a time Yeah, and I want people to realize like we support you when we believe in you and we think you can be here 12 months and stay clean and then move on

45:02That should be plenty of time to save and be able to do that And what's your what's your vacancy like like if somebody moves out, you know, how soon is that space filled? The beauty of our model is we have these relationships where they're reaching out to us every day to see if we have openings Wow, so in many cases we have a waiting list. Wow Wow, okay last question. I know I said I was gonna only ask two more and I asked like ask six more Sorry my brain. I just like had all these extra questions Okay, my last question and then the floor is yours Andrew and I I cannot tell you how grateful I am of you and how much I appreciate your time

45:34You say when you talk about cashflow, this is an interesting question. I like to ask all investors Not just you specifically as a sober living. It could be a single family buy and hold person. It could be a multi family apartment syndicator I love to know what cash flow is to investors because A funny little pattern I have seen arrive over the year and a half and 87 plus episodes that we've done here every week Nobody gives the same exact answer cash flow is different to every single investor. So what Andrew? What do you consider as actual pure cashflow? Are we talking just from a basics of like your income?

46:15I'm not talking. I'm not talking asset minus liability. I'm talking like you specifically like what do you consider as cashflow? And I'll I'll give you an example of what I consider cashflow if it's helpful. So I Let's say I have my my portfolio. I bring in my gross rents. I deduct out my mortgage Okay, but then I have a little piggy bank on the side and I put in you know vacancy capex reserves maintenance property management boom the caveat to that for me personally is once I reach a Total number of the in this general fund based on either a couple things if it's a single property six months of of total expenses or

46:57A portfolio. I figure how many how many doors do I have? Okay? I need to have at least x amount in reserves anything above that at that point Is cashflow? So my cash flows zero essentially now psychologically I could say okay. I'm making 200 bucks a year A month here after I pay all my expenses, but um Essentially like you know for me I factor cashflow as capex maintenance reserves mortgage You know property management. What's remaining that little portion of pie that's remaining. That's what I consider cashflow. How do you consider cashflow? Interesting. So I I consider cashflow the total amount leftover after my debt servicing utilities for my model However, I also have that divvied up because we follow profit first for real estate investors

47:39Yeah, and it's divvied up into a tax bucket and You know a reserves bucket and owner compensation operating expenses Uh, honestly, it's a very high profit type of business. Yeah, so the owner compensation can be higher Plus we make use of a lot of tax strategies bonus depreciation cost aggregations all that stuff So my taxes aren't huge. So I can take the excess taxes and move it into owner compensation later So it's just I guess semantics. Yeah, it's when you decide to put it into those different buckets And it's completely irrelevant. It really doesn't matter at this point

48:13This has just become a social experiment for the podcast for me of like define Cashflow because I think it's we all we all talk about cashflow and what's interesting is none of us are speaking the same language I've come to realize that we're all talking about the same thing. We all define it differently But it I think it's really what what's more important is just like consistently defining it in the same way So andrew this has been freaking excellent. I love your heart You're obviously out there trying to do the lor's work and it is paying off Um, it sounds like your program is incredible. I'm hyper

48:45Curious about it. I'd love to learn more and follow up with you. Where can people find you reach you? What's the next step if you have sparked some curiosity and people want to reach out to you and take the next step? Yeah, they could find me on instagram, of course the andrew lamb Is my handle there or Sober Living Riches.com Is our site that can kind of give you an overview of sober living and then Potentially you can schedule a call with myself or my team and talk through what that would look like because our coaching program is is truly that It's a full-on coaching program

49:18Of six months of here's step by step like a business in a box Here's how to do the market research even give you a list of 40 or 50 organizations in your area to get started Uh with the scripts with the email templates everything you need plus policies and procedures how to Handle the day-to-day all that stuff and we've had a lot of students to be able to one student started five homes last year in six months That the last three months of the year off Completely financially free time and and you know freedom to do whatever he wants with his family stuff like that We have another student who started at homes in ohio, but lives in austin texas

49:53They've been with us for two months and they started three homes already Another student who has two homes in california but did it all from brazil. Wow. This doesn't have to be Right down the street from you like my first tour Um, so we have students who are seeing a lot of success if you want to learn more about that There'd be Sober Living Riches.com if you just want to connect with me follow my journey Uh the andrew lamb at instagram

50:16Awesome. Andrew. Thank you so much. I hope I know that people out there listening in Dynamis audience took something away from this Thank you for your time. Thank you guys for tuning in and listening and we will catch you all on the flip side See you next week.