Are you looking for help transitioning out of sober living?
Sober living homes are opened by those with a passion for helping men and women in recovery. Understandably, many operators reach a point in their lives where it is time to transition. Most operators have not created a succession plan, and figuring out what to do when it's time to move on can be difficult. We've worked with many sober house operators in their transition by helping find a suitable buyer, helping to provide financing to facilitate the sale of a sober house, or even by purchasing the home ourselves. We work with Operators on a national level, and have had a great deal of success in helping facilitate the complex process of selling a sober house.
Why work with Vanderburgh Communities to sell your sober house?
Selling a Sober House: The Warwick Story
In the midst of a cold New England winter in 2020, we received a call from a real estate broker in Rhode Island. He was working on behalf of a couple interested in selling their two sober living homes in Warwick, Rhode Island. Initially, the broker explained that he had experienced difficulty selling these unique businesses and properties. He had discussed with his clients the prospect of relocating the residents and selling the homes as residential properties, but his clients insisted that their residents needed the homes and the recovery community in the City of Warwick would suffer if these homes were decommissioned and sold as residences.
The broker went on to explain how difficult it was to find an investor interested in taking on these unique properties, noting that a buyer needs experience in operating sober living homes as well as the financial capital to undertake a purchase. Most real estate investors are enticed by the prospects of a profitable sober living business, but lack the experience required to operate them successfully. Most investors will eventually realize the intensive management responsibilities of operating a sober living home and back out of the transaction. Some investors follow through with a purchase and realize shortly thereafter that they are tasked with far more than real estate management. This is one of the greatest challenges in selling an existing sober living home.
The broker noted that local banks were not eager to fund these properties, and he was at a loss for how to proceed with their clients wishes in mind. Understandably, a local bank has no interest in foreclosing on a sober living home and assuming the responsibility of operating it. These homes have a much lower perceived collateral value, and banks often refuse to finance them. This, coupled with a small number of potential investors who could handle the operational responsibilities, creates a very difficult situation for a seller.
If the seller decided to decommission the homes and convert them to a traditional residence, they would be responsible for the significant costs and risks of doing so. These responsibilities would be relocating at-risk residents and making any modifications in the home needed for it to appeal to a traditional family looking to buy a home. Not only could this include costly code upgrades required to pass a traditional home inspection, but also petitioning the city to change zoning and building use back to that of a single-family home, and to produce a satisfactory appraisal and to meet a buyer's financing terms and conditions.
Facing pressure to arrange a sale as well as the client's desire to continue the legacy of these important homes, he asked for help.
Within a few days, we were able to visit with the sellers in Warwick. We enjoyed the tour of the homes and were appreciative of the work being done for their residents. We reviewed their home policies, met with their House Manager, and spoke with residents. We brought a finance partner through the homes later that week, and arranged for our affiliated real estate fund to purchase the homes. Our finance partners were quick to approve the funding of the transaction, and our real estate fund closed on the purchase within 30 days. The sellers were happy to see the homes continue offering essential services without interruption, and we were happy to be the catalyst for a successful transition.
The homes, which you can view here, continue to serve the community of Warwick, operated by a Chartered Vanderburgh House Operator, Kayaly Recovery.