Making $30,000/Month (Per Property) with Assisted Living Rentals

Summary

BiggerPockets Real Estate Podcast: Episode Summary

Title: Making $30,000/Month (Per Property) with Assisted Living Rentals
Host: Dave Meyer
Guest: James Davis, Salt Lake City, Utah
Release Date: August 4, 2025

---

Introduction

In this compelling episode of the BiggerPockets Real Estate Podcast, host Dave Meyer sits down with James Davis, an innovative real estate investor from Salt Lake City, Utah. James shares his remarkable journey from his humble beginnings to building a multi-million dollar real estate business specializing in assisted living rentals. This episode delves deep into James's strategies, challenges, and the creative approaches he employed to achieve financial freedom through real estate investing.

---

James Davis’s Journey into Real Estate

James's Early Motivation and First Investment
James Davis embarked on his real estate investing journey in September 2019 with a modest savings of $15,000. Inspired by real estate influencers like Graham Stephan and Meet Kevin, James was eager to dive into the market. "I always wanted to invest in real estate. It was just a question of when," James explains (00:57). His initial opportunity came through his uncle, a real estate agent, who proposed a seller-financed house hack. Trusting his uncle implicitly, James invested his entire savings into a basement property, living without a toilet and utilizing a gym membership for essential facilities.

Overcoming Early Challenges
James recounts the hardships of renovating his first property while working a call center job earning $16 per hour. "I didn't have a toilet for three months," he shares (05:22). Determined to make the deal work, he spent eight months performing DIY renovations, teaching himself plumbing, electrical work, and construction skills through resources like YouTube and a recommended Home Depot book. This period of intense personal sacrifice was pivotal in setting the foundation for his future success.

---

The First House Hack and Renovation

Execution of the House Hack
James's first property was a house hack with a separate entrance for the basement unit, which he rented out. The initial rent was set at $1,100, allowing him to cover his mortgage payments of $1,300 after refinancing (08:43). This arrangement enabled him to live rent-free, creating a solid cash flow from the outset.

Refinancing and Financial Gains
After completing the renovations, James successfully refinanced the property in June 2020. The appraisal value soared to $285,000, allowing him to secure a conventional loan with an 80% loan-to-value (LTV) ratio and eliminate PMI. "The rent covered my mortgage payment," James proudly notes (09:26). This milestone not only stabilized his financial situation but also demonstrated the viability of his investment strategy.

---

Refinancing and Cash Flow

Leveraging Equity for Growth
With the property's value now at $285,000, James was in a strong position to refinance. "I locked in a 3.75% interest rate, and my payment ended up being $1,300 with the PITI," he explains (09:02). This refinancing allowed him to pull out additional equity to fund future investments, setting the stage for exponential growth in his portfolio.

Financial Freedom Through Creative Investing
James emphasizes the importance of creativity over conventional methods in a challenging market. By adopting unique strategies like seller financing and house hacking, he was able to generate substantial cash flow from each property, propelling him towards financial independence.

---

Taking a Break and Scaling Up

A Two-Year Hiatus and Market Appreciation
In January 2021, James took a two-year hiatus to serve on a mission in the Detroit area. During this period, his property appreciated significantly, doubling in value to approximately $400,000 (15:14). Upon returning in February 2023, James leveraged a Home Equity Line of Credit (HELOC) of $100,000 to expand his investment portfolio.

Entering the Subject-To Market
James acquired his second property through a "subject-to" deal, where he took over the seller’s existing mortgage while making timely payments. This strategic move allowed him to secure beneficial interest rates and avoid traditional financing constraints. "We back paid all those mortgage payments to ensure everything was current," James details (15:25).

---

Assisted Living Rentals and Subject-To Strategy

Understanding the Assisted Living Model
James transitioned into the assisted living real estate niche, providing housing and care for individuals with disabilities. This model not only fulfilled a community need but also generated significant revenue—up to $15,000 per month per property (02:56). By offering specialized care, James could command higher rents compared to traditional rentals.

Implementing the Subject-To Strategy
James's approach involves taking over existing mortgages (subject-to) and structuring deals that benefit both the seller and himself. "With subject-to, you offer a solution for a tough situation, providing sellers a way out while securing favorable financing for yourself," he explains (17:03). This mutually beneficial strategy mitigates risks and enhances cash flow potential.

---

Scaling the Assisted Living Business

Operational Challenges and Growth
James recounts the demanding nature of managing assisted living facilities, particularly in the early stages. Initially, he and his family handled all responsibilities, including 24/7 care shifts. As revenue increased, they began hiring staff to manage the expanding operations (25:01).

Current Business Metrics
Today, James oversees 13 residents across four properties, generating approximately $1 million in annual revenue with a 20% profit margin (28:07). This impressive growth is attributed to his strategic property acquisitions and efficient management of assisted living services.

---

Economics and Revenue

Revenue Streams and Expenses
James breaks down the financials, highlighting that four active properties yield around $70,000 monthly from rental income. Additionally, non-real estate revenue from staffing services contributes to the overall income (28:43). Despite high insurance costs of approximately $1,000 per month, the streamlined expenses allow for substantial cash flow. "For a $15,000 client, the expenses are about $10,000 to $11,000, leaving a net cash flow of $3,000 to $4,000 per person," James details (26:40).

Scalability and Profitability
The scalability of James's model hinges on maintaining high occupancy rates and managing operational costs efficiently. As he continues to acquire more properties and expand his service offerings, the business is poised for sustained growth and increased profitability.

---

Advice for Listeners and Ideal Investors

Who Can Succeed with Assisted Living Rentals?
James emphasizes that this strategy is ideal for investors who are passionate about helping others and willing to engage in hands-on management. "If you care about people and have the ability to meet their needs, this can be incredibly satisfying," he advises (30:06). The role demands a balance of empathy and business acumen, making it suitable for those who thrive in entrepreneurial environments rather than traditional employment roles.

Key Considerations and Best Practices

• Due Diligence: "Always work with experienced title companies and escrow officers who understand subject-to deals," James recommends (16:47).
• Risk Management: Understand the risks involved for both buyers and sellers. For instance, sellers remain liable for the mortgage, which can impact their credit if payments aren't maintained.
• Mutual Benefit: Strive to create win-win scenarios where both parties gain value from the transaction.

---

Future Goals

Balancing Growth and Stability
Looking ahead, James plans to continue expanding his real estate portfolio while maintaining a balance between high-revenue assisted living properties and stable long-term rentals. "We aim to use our revenue to make higher down payments and acquire properties that offer strong cash flow," he shares (32:51).

Diversification and Long-Term Vision
James envisions a diversified portfolio that mitigates risk and ensures steady income streams. By incorporating both assisted living rentals and traditional long-term properties, he aims to achieve a resilient and profitable real estate business.

---

Conclusion

James Davis's journey exemplifies the power of creativity and perseverance in real estate investing. From a challenging start with a single house hack to managing a lucrative assisted living rental business, James's story offers valuable insights for aspiring investors. His emphasis on mutual benefit, risk management, and community service underscores the potential of innovative real estate strategies to generate substantial income while making a positive impact.

Notable Quotes:

• "I didn't have a toilet for three months." — James Davis (05:22)
• "With subject-to, you offer a solution for a tough situation, providing sellers a way out while securing favorable financing for yourself." — James Davis (17:03)
• "If you care about people and have the ability to meet their needs, this can be incredibly satisfying." — James Davis (30:06)

---

Timestamp References:

• 00:57 - James's motivation
• 05:22 - Early living conditions
• 08:43 - Refinancing details
• 09:02 - Mortgage and rent coverage
• 15:14 - Market appreciation after hiatus
• 15:25 - Subject-to deal explanation
• 16:47 - Advice on working with title companies
• 17:03 - Risks and benefits of subject-to
• 25:01 - Early operational challenges
• 26:40 - Financials of assisted living
• 28:07 - Current business metrics
• 30:06 - Ideal investor profile
• 32:51 - Future growth plans

Note: The actual timestamps have been hyperlinked for reference.

Transcript

[Dave Meyer]

This investor makes $30,000 per property per month with assisted living rentals. Is there really no cash flow available for real estate investors these days or do you just need to get more creative instead of making excuses during a challenging market? Today's guest found a formula that tripled his monthly revenue and now he's repeating it over and over to grow his portfolio and advance towards financial freedom. He hey everyone, it's Dave, head of real estate investing at BiggerPockets. And I've been buying rental properties for more than 15 years. Today I am joined on the show by an investor, James Davis from Salt Lake City, Utah. And James started his investing career with just $15,000 in savings and was willing to do anything including living without a toilet for three months just to make.

[James Davis]

His first deal work.

[Dave Meyer]

Now, just six years later, he owns six properties and is on pace to gross more than $1 million in revenue this year. James has done this by adopting the increasingly popular assisted living real estate strategy. Basically what he does is provide a needed service to people in his community. And by doing that, he can generate up to $15,000 in revenue from just a single bedroom in a house that would normally rent for just 2000 bucks. This approach is definitely an active strategy and so it's not going to be for everyone. But if you're willing to hustle as much as James has, you can radically transform your financial situation in just a couple of years. Keep listening and hear how he's doing it. James, welcome to the BiggerPockets podcast.

[James Davis]

Thanks for being here.

Thanks for having me.

So how long have you been investing or involved in real estate? James?

I got my first property. It was September of 2019, so it'd be almost six years ago.

Nice.

[Dave Meyer]

Okay.

[James Davis]

And can I ask why? What brought you into the world of real estate?

So I've always loved watching you guys. I've always. I really liked Graham Stephan and meet Kevin online.

Sure, yeah.

Growing up in high school, I watched those channels. So I think I always wanted to be invested in real estate. It was just a question of when. And when I was 18, I actually moved out of my parents place and I was a live in aide at a nursing home. So what it looked like is I didn't have to pay any rent. Rent. I got to live there. I take care of this, this guy, he was a Vietnam war veteran and I took care of him. He paid for my food and housing and I didn't have to pay anything, which was really nice. So it was a really good setup and my uncle reached out to me, he was a real estate agent, and he was like, hey, I have this property that I think you should invest in. And in my mind, I was like, oh, I don't pay any rent. I could live here for a while. I'll just save more money. I don't need to buy a property right now. And that was like, July of 20. So he was suggesting, like, hey, you just use your savings. You'll have a down payment. It was like a house hack situation where I'd live in the basement and I had a separate entrance, and then I'd rent out the upstairs, but it would be like $15,000, which was like, everything I had. So I decided, okay, yeah, I want to take this on. That was July, August of 2019, and it was actually a seller finance.

Oh, cool.

And this is my uncle setting it all up. I had no idea any of real estate contracts or anything how that worked. And I had just graduated high school.

It sounds like you walked into an interesting opportunity with your uncle. So he came up with this house hack. I'm curious which a great way to get started, especially in 2019. I'm sure it worked out well, but did you look at other deals, or were you kind of just trusting your uncle? Like this one that he's proposing to me, it's seller financing. This is a good deal.

Yeah, I didn't look at anything else. I had complete trusted him. And looking back, I'm like, wow, I was lucky. And I'm fortunate that I had someone in my life that cared about me and didn't take advantage of me, because totally could have.

Sure. Yeah.

[Dave Meyer]

But so was it like, in a neighborhood you liked, did you know where it was?

[James Davis]

Or you're just kind of like, moving into a house blindly based on your uncle's recommendation?

When I went to the neighborhood, of course, it wasn't the most expensive side of town, but it wasn't terrible either. We call it West Valley over here.

Okay, cool. And so you find this house hack. You got to put 15 grand in. That's all of your life savings at this point. But you're moving from what was your job. Right. Because living with this veteran you were living with was kind of how you're getting income. So did you have a new plan for how you were going to make your mortgage payments, or were you living.

For free at the time? I was making 16 bucks an hour at a call center.

Oh, wow. And then you were doing DIY renovations to it at the same time.

Oh, yeah. And this is at the time where I had no idea what I was doing either. And what I had done is I. I lived in the basement. It had that separate entrance. There was no kitchen, not even a bathroom down there. And then I just. I rented the upstairs right away.

Okay, but how did you go to the bathroom?

Uh, it was funny. I. I had a gym membership, and I had to strategically do that. And I worked downtown at the call center. So I would go to the gym. Not to work out or anything. I would just go there to take.

A shower, just to use the shower.

And then do everything and then go to work that way. And.

Oh, wow.

I didn't have a toilet for three months.

Oh, my God. I was.

Yeah, I just. I didn't have a toilet. I didn't have a shower. And it was. That was my first goal, was to try to get that.

I imagine that's pretty motivating for when you're doing your diy. It's like, I got to build myself a toilet at least.

And then on top of that, so I had the down payment for 15, and I knew I needed about 15 or so in work. And I ended up spending about $12,000 on the renovations because I did all of it on my own.

And how did you pay for that? Was that just more savings or your income from your job?

It was my income from my job. So every paycheck, I just threw it at Home Depot, basically going and getting materials and doing everything. Of course I knew how to do something, but then I had to wait until I could buy what I needed to buy, which was really tough, especially with, like, the mental load of the balloon payment coming due for sure. Because my uncle was like, hey, if you don't finish it in a year, it's due. And, like, if it doesn't appraise, then you can't keep the house, basically. So.

So just so everyone understands, sometimes when you do a seller finance deal, the seller will say, hey, yeah, I'll float you for a year, but I'm not going to amortize this loan over 30 years. Like a bank, they're basically like, I'll give you a year to figure this.

[Dave Meyer]

Out, but in a year, you owe.

[James Davis]

Me all your money. And that's sort of in the form of a balloon payment. And so what James was facing is that in a year, he had to figure out a way to refinance, or I guess the seller could technically foreclose on you, right? Or try to take the property back. But you're also dealing with this thing like you want to go Quickly to renovate so you can refinance, but you're using money from your call center job to pay for that. So how long did it actually wound up taking you before you could complete the renovation and get that refi?

It took me eight months, and I think it probably would have gotten done in two maybe if I had the money right away. But I had to do it just paycheck by paycheck. I added a kitchen down there. I added a bathroom. I did all the plumbing, the electrical, everything.

And you taught yourself all that?

Yeah. There's a really good book, I think it's called, like, Home Improvement. One, two, three. It's something from Home Depot, actually. My uncle recommended it and I read it, and it does, like, it shows, like, all the basic stuff if you didn't want to go through YouTube. But I used YouTube a ton, and even though it was really hard, I remember being very happy at the time and just being like, I know that this will, like, help me in the future. I just got to get it done, put my head down and work on it. I didn't. I didn't even have a bed. I had a sleeping bag that I was sleeping on. There was no flooring. It was a concrete floor. And it was just. I was the definition of house poor at the time.

Good for you, man. I mean, that is an unbelievable amount of hustle to. To get it done. Like, you just found an incredibly creative way to get into your first deal and worked your butt off and personal sacrifice for eight full months, basically, to. To be able to do that.

[Dave Meyer]

Not everyone's going to do it that.

[James Davis]

Way, but kudos to you, man. I mean, you took responsibility and you worked your butt off to be able to do that, and hopefully it worked out for you financially. When you were done with the renovation, like, what did you have? Because you had the unit upstairs now. So, like, what did the final product look like when you went to apply for the refi?

I had an appraiser come in for the refinance, and they appraised it the 285, which means the loan to value was 80%, I think.

Nice.

So my mortgage was 220, which means I didn't have PMI, and I got a 375 interest rate.

Wow, that must have felt good.

Yeah, it did. And it was June of 2020 when I closed on the refinance. So I was able to lock in that rate for the 30 years on a conventional loan instead of an FHA. And my payment ended up being 1300 with the PITI.

And how much rent were you getting upstairs?

So during the renovations I charged 1100, but afterwards I was able to do 1300.

Amazing.

The rent covered my mortgage payment.

So after obviously eight months of incredibly hard work and sacrifice, you were able to essentially live for free. Now your upstairs tenant is paying your principal, your interest, your taxes and your insurance. So pretty much your biggest costs. I'm sure there were still repairs and other costs, but given that you just did a big renovation, like at least the basement unit was probably in pretty good shape and so that's just a home run deal. That's incredible. I hope you still have that 3.85% interest rate on that deal.

Yeah, I do and it's still doing really well and just recently appraised for 440.

Okay, congratulations. Just want to say like this just seems like an absolute home run deal. Congratulations on putting in the effort, the time, getting creative and figuring this out.

[Dave Meyer]

I want to hear where this first.

[James Davis]

Deal has taken you and how you went from living without a toilet for.

[Dave Meyer]

Three months to now running a multi million dollar real estate business in just.

[James Davis]

The span of a couple of years.

[Dave Meyer]

But first we got to take a quick break.

[James Davis]

We'll be right back.

[Dave Meyer]

Managing rentals shouldn't be stressful. That's why landlords love rent ready. You can get rent in your account in just two days, which means faster cash flow and less waiting. Do you need to message a tenant? You can chat instantly in app so you have no more lost emails or texts. Plus you can schedule maintenance repairs in just a few taps so you're not stuck playing phone tag. Are you ready to simplify Your Rentals? Get 6 months of rent ready for just $1 using promo code BP2025. Sign up in the link in our bio because the best landlords are using RentReady.

[Unknown]

Landlords. Here's a quick tip. A standardized checklist for property inspections can save you time, money and headaches. Preventative maintenance means fewer expensive surprises later. Want to save even more? Rentready helps you stay on top of rent collection, lease management and maintenance requests all in one easy to use platform. And right now you can get six months of rent ready for just $1 with promo code BP2025. Visit rentready.com that's R E N T R E D I.com and use code BP2025 to get started. Landlords, Here's a quick tip. A standardized checklist for property inspections can save you time, money and headaches. Preventative maintenance means fewer expensive surprises later. Want to save even more? Rent Ready helps you stay on top of rent collection, lease management and maintenance requests all in one easy to use platform. And right now you can get six months of rent ready for just $1. With promo code BP2025, visit rentready.com that's R E N T R E D I.com and use code BP2025. To get started, let's talk about a.

[Dave Meyer]

Real estate backed investment with major tax advantages. Car washes PBR's Opportunity Fund offers accredited investors access to a high margin, recession resistant industry with passive income, tax efficiency and significant upside potential with operations in prime locations using best in class technology. Managed via a vertically integrated team, this fund is designed to deliver strong, stable returns. Backed by over $1 billion in assets under management, PPR has provided passive returns to thousands of investors since 2007. Don't miss out. Learn more [e-mail] PPRCAR that's biggerpockets.com PPRCAR Want to invest in real estate but don't have the time or know the best local markets? Rent to Retirement has got you covered. Here's the deal. They've helped thousands of investors just like you find turnkey homes across the best US Markets. And best of all, they do all the heavy lifting for you. With over 255 star ratings on bigger Pocke, Rent to Retirement experts help you build strategies to retire early through real estate. And right now, Rent to Retirement offers some amazing incentives on turnkey new construction properties. Just for example, you can get up to 30% off new build prices or you can get 0% down loan options or interest rates available as low as 3.99%. So don't miss out. These deals will not last. Text REI to 33777 or visit biggerpockets.com retirement to start investing in top cash flow markets today. Welcome Back to the BiggerPockets podcast.

[James Davis]

I'm here with investor James Davis.

[Dave Meyer]

We heard about this amazing house hack.

[James Davis]

He did in Salt Lake city back in 2019.

[Dave Meyer]

James, after you pulled off this incredible.

[James Davis]

Effort of hustle and creativity, what did you do from there?

Yeah, so actually January of 2021 I left and I and I served. It was a mission for my church, so I left and I was living in the Detroit area for two years. Okay, so I had family that actually lived in the property and they took care of it while I was gone while I was there in Detroit. And if anyone knows what a mission is like, you don't really have access to like technology or what's going on in the world. But when I came back two years later, I saw that real estate values had doubled in my area. So my mortgage was around 220, but yeah, it was around the $400,000 range that it was worth. So I came back February of 2023 and taking the advice from what I've heard from Biggerpockets and the other real estate investors, I went and I applied for a HELOC. So I got my HELOC approved for $100,000 June of 2023. And then this wholesaler sent me this deal September of 2023 for the single family property that was in that needed a lot of work, but it was a sub two deal. Okay. So the interesting, the seller didn't have any equity. They bought it back in 2021, but they had two loans on it. So it was the original mortgage. Plus they got a loan on their down payment. It wasn't a pre foreclosure, but it was getting close to that.

And how do you approach that when you see a situation like this? Like how do you structure a deal that makes sense for you and hopefully for the family that you're taking the mortgage over for as well?

For this one, what we did, we back paid all those mortgage payments, so I made sure everything was current. And then they got $5,000 too on top of that. Okay. So instead of having to come out of pocket, they got $5,000 and I paid for all the closing costs too, and the wholesale fee too. So. And it's good for them because they're in this situation. If they tried to sell with an agent, they would have to fix up the property, they'd have to deal with all that and it would be like a several month ordeal, probably.

And probably 6% commission.

Absolutely. So with a sub 2, they don't have to do that.

Right.

And that's kind of the selling point because a lot of people don't know about it, especially the sellers. So when you're trying to talk to sellers about sub 2, you have to say, hey, this, you get equity like you get paid to get out of this and you don't have to deal with the payment anymore. And then if I don't make the payment, you can have the place back. And all the payments I've made, you can have that too. So that's how I've structured it. And I think also key is having a really good title company that's dealt with it before and you can reach out to title companies and say, hey, have you ever done sub two deals? Like, have you ever done seller financing? This is what I'm wanting to do. Have you guys had experience with that? And there's definitely escrow officers that have more experience than others. So having those people with experience is, I think, really key.

For sure. Yeah. I mean, that's really good advice. Because with Subject to.

[Dave Meyer]

Right.

[James Davis]

There are risks to both the seller and the buyer. Right. Like, for a buyer, there is a risk that the bank could call the note due. What are the risks to the seller? I guess maybe I should ask you.

Yeah, the risk to the seller is it's still on their credit. So, like, the loan is still there. So if I don't make the payment, it could affect them still. So if someone pulls their credit, they still have to explain, hey, this is a mortgage that, yes, is under my name, but it's a sub to. And they have to prove that if they were trying to get loans in the future. So there are downsides in that way. But I think the pros outweigh the cons where they can get out of a situation that they really don't want to be in anymore, and they can get paid to be able to get out of it. Which is nice because sometimes with properties that need a lot of work, you almost feel like you're taking advantage of people when you buy them. And I hate feeling that way. I hate feeling like I'm taking advantage of someone's suffering. But with sub 2, I feel like you're offering a solution for a really tough situation that they're in and you're giving them a way out that's creative. That, yes, there are risks, but I got their interest rate, which was three and a half percent in 2023.

I think subject to is sort of a controversial thing. I think as long as you understand the risks and sort of go into it with the mentality that James has where you are trying to genuinely help someone and create mutual benefit. As long as you understand the risk. Work with professionals, as James said. Like, work with people who really understand this and go in it with an approach of trying to find mutual benefit. It is a worthwhile strategy for a lot of people to consider. Make sure that you're not breaking any laws doing anything right. But, you know, if assuming that you can do it right, like you said, you can help someone out and you can get an interest rate that's a fraction of what you would get today if you were just to go get a new mortgage.

Absolutely. And with this one specifically, we had reached out to the mortgage company and said, hey, this is what we want to do and oh, that's great. Hey, it's either you have a foreclosure or we make the payments. And they said, okay, yeah, we do need to call the loan due, but we'll, we'll delay it. So they agreed, hey, we're going to delay 18 months if the payments are current. After a year, you guys can assume the loan.

Okay, that's a great way to do it.

Yeah, but of course that was with the mortgage company agreeing to it and being kind enough to delay it. But it was in their best interest too.

That's a great way to do it and definitely appreciate you, you know, really dotting all the I's, crossing all your T's and doing this the right way. When you were talking to some of these wholesalers, were you intentionally looking for sub 2 or did you just kind of like come into this deal and then figured out sub 2 after?

I was looking for seller finances, but with the interest rates being higher, it was tough to find a deal that I could cash flow with the numbers because I was wanting to buy and hold and doing the long term and that was my idea back then, was to, to buy the long term rental real estate. But the numbers just couldn't make sense. So I came across sub 2 and it kind of came to me, I guess with that first deal as an option.

Well, you've proven yourself, James, to be a very creative and hard working guy just from the first two deals that you've told us about.

[Dave Meyer]

I want to hear more about how.

[James Davis]

You'Ve scaled because I understand that you've really grown a massive real estate business in the last couple of years. But we do have to take one more break.

[Unknown]

We'll be right back inspecting your rentals again. Here's a pro tip. A simple checklist makes sure nothing gets overlooked. It saves you time and costly repairs down the road. And when it comes to managing your rentals, Rent Ready makes everything easier. Rent gets paid on time, leases get signed online, and maintenance requests don't get lost in your inbox. And if you're a BiggerPockets Pro member, I've got great news for you. Rent Ready is already included in your membership for free. Don't leave it sitting on the table. Log in to your BiggerPockets Pro account and start using RentReady today. Inspecting your rentals again, here's a pro. A simple checklist makes sure nothing gets overlooked. It saves you time and costly repairs down the road. And when it comes to managing your rentals, RentReady makes everything easier. Rent gets paid on time, leases get signed online, and maintenance requests don't get lost in your inbox. And if you're a BiggerPockets Pro member, I've got great news for you. Rent Ready is already included in your membership for free. Don't leave it sitting on the table. Log into your BiggerPockets Pro account and start using Rent Ready today.

[Dave Meyer]

Want to earn passive income every month without the hassle of property management? If you're an accredited or high net worth investor, PBR Capital Management offers a proven solution. Since 2007, PBR has helped nearly 2,000 investors earn over $100 million in consistent, predictable passive returns. Headquartered just outside Philadelphia, PPR manages a $1.1 billion diversified portfolio designed to provide steady income and long term growth. With decades of in house expertise, their team strategically mitigates risk to help investors achieve their financial goals. See how a PPR fund could fit into your portfolio. Visit biggerpockets.com ppr today that's biggerpockets.com ppr do you want to invest in cash flowing rentals but don't have the time to manage the properties? Is your local market too competitive or expensive to invest in? Rent to Retirement offers new construction turnkey investment properties that you can buy with as little as 5% down and rates.

[James Davis]

As low as 3.99%.

[Dave Meyer]

Their team handles everything from financing, management, insurance and more so you can live where you want and invest in the markets that offer the best returns. Rent to Retirement has the best reputation in the industry with more five star reviews than any other company on the BiggerPockets website. To learn more, visit biggerpockets.com/retirement or just text RE I 233777 to start investing in the best markets today. Welcome Back to the BiggerPockets podcast.

[James Davis]

I'm here with investor James Davis.

[Dave Meyer]

James, it sounds like you know you.

[James Davis]

Did your first house hack, you did this sub2 deal, but since then in the last two years or so you.

[Dave Meyer]

Really scaled your business.

[James Davis]

What have you been up to more recently?

So my brother reached out to me. He was working for a company that did residential and disability services. There's assisted living for older people, but then there's assisted living for different categories of people too. We went into the realm of assisted living for people with disabilities that are any age. So my brother reached out saying hey, I work for this company and one he didn't really like how it was Being run. He was really passionate about the mission where it's like, hey, there's. We need housing for people with disabilities. Of course there's a business side of it.

Sure.

But you should look at this. So he sent me what it could look like in the whole licensing process, and I reviewed it with him. And it would be really expensive because one, you have to have a long period of time without a tenant at all, where they do tons of inspections and licensing process, and then we have to do so much paperwork.

And you already have to own the property at that point.

Right, Exactly.

So you're just sitting on a mortgage and insurance and taxes while you're working with, I assume, the government, state, local government, to figure this out.

Oh, yeah. So we're sitting on it and. Or it's more like I'm sitting on it and we're doing the licensing process. And we started that around, like, July, August of 2023. So it was actually before I bought the second property when we started. And it took eight months for the whole licensing process where we had to do all the paperwork. And then we finally got approved. Okay. You're allowed to provide services for these types of people.

Okay.

But in this industry, at least in the state of Utah, the way it's set up, it's. It's. It's similar to like being a real estate agent, where you have to fight for clients and like, really show that you can take care of them. Me and my brother, actually, after we got the license and we were finally legal to have clients, we got the list of all the caseworkers in the state of Utah and called every single one of them, and it was like 400. Called everyone. We're like, hey, we're a newly licensed provider. If you have a resident, we're ready to take them right away. And of that entire list, we got one person.

Oh, my God.

So we found a client that toured the place and was like, okay, yeah, I want to live here. And that was our very first one. And at that point, my HELOC was at like $50,000. And me, my wife, and my brother, we were all working full time and we all took shifts. I'm taking care of this person.

Oh, my gosh. So it's really like one to one care.

Oh, yeah. So it was 24 7. Someone had to be there 24 7. So we just took care of them. It's similar to having kind of like an infant where they just need that level of supervision. The good thing is the revenue was closer to like $15,000 a month just from this one person.

15,000Amonth. And they're living in one bedroom in your facility?

Yep, just one bedroom. And we were approved for up to three.

Okay.

So that was the first one. And we took shifts and we didn't hire anyone because we really wanted to pay down our debt that we had accrued.

Yeah.

Just from the vacancy and then from the renovations too. So we did that for about five or six months, just literally taking 10, 12 hour shifts back and forth while we were all working. And we just had to work it around our schedules. But after that, we started hiring people and it made it a little bit easier.

[Dave Meyer]

I mean, I'm sure there's a lot.

[James Davis]

Of people listening to this thinking 15 grand a month, maybe you can get three tenants at once. It's 45 grand a month. That's an incredible amount of money. Tell us just a little bit about the economics about this. Because first, are there other expenses? Like, you know, I assume there's a lot of insurance and stuff that on top of just labor costs, that's a lot more expensive as well?

Oh, yeah. You have to have the highest level of insurance for this industry, like you're taking care of people. So if something goes wrong, the state requires us to be covered. So the insurance requirements are really high. So we Pay. It's about $1,000 a month just in insurance. The good thing is, is that as you get more clients, that number kind of stays the same.

Okay.

For insurance costs, but when you only have one, it does feel like it's a lot too. For a $15,000 client, you are looking after all of the expenses. Probably like 10 or $11,000 a month in expenses. So. But you're probably cash flowing, three or $4,000 per person that's living there.

Wow. And just as you scale up, I assume you got more residents over time.

Oh, yeah, yeah, we have a lot more now. So we only had that one for like five months. But then as we were doing well, the caseworkers, I guess, noticed and they sent us a little bit more. So right now we're at 13.

13 residents across how many properties?

So we have four properties right now that are active where we have residents there.

Wow.

So there's residential care, which is that type of assisted living. But then there's something called supported living, where they live in a home and then there's a staff that comes and takes care of them. So we have six clients that are residential, then we have the rest that are supported living. So they're not involved in our real estate portfolio. They're, they're like their business.

So how big is this business grow? Like, what is your revenue now?

Yeah, so this year we're set to do $1 million in revenue, maybe even 1.1 million, depending on how things go. Wow. And then net out of that, we should be getting at least $200,000 this year.

[Dave Meyer]

So.

[James Davis]

Right. About a 20% margin.

That's amazing. Obviously, you know, created a business that you can, I would assume, comfortably live on. I don't know your, your living expenses, but based on the stories you've told me, I assume that you can comfortably live off of that. Can you break that down?

[Dave Meyer]

Just like how many units is that?

[James Davis]

Like how many properties across?

I guess it comes out, it's about $83,000 a month that we're getting a total. For the real estate side of things, it's about $70,000 of our revenue is coming just from the properties that we have. So we have four functioning properties. Two of them, it's about like 25 to $30,000 a month because there's about two residents in each one and their funding is a little bit different. Like it's not always 15. 15 is kind of on the higher end if they need a lot of staffing.

Okay.

So for the first two properties, there's 25 to $30,000 a month. And then on the other two, they're like just one or two bedroom condos and those pull in, okay, $6,000 a month each.

And then the remaining revenue is from sort of the staffing that you do in other people's properties.

Yeah, exactly. So that would be non real estate related revenue.

Very cool.

Yeah.

I'm curious if you have any advice for our audience here, because I assume a lot of people are hearing your growth trajectory, your revenue, your profit margin.

[Dave Meyer]

All super impressive, but you're also running.

[James Davis]

A more sophisticated business that's more complicated than buying just a regular rental property.

[Dave Meyer]

And you're taking care of people.

[James Davis]

Like this is super important role that you are playing.

[Dave Meyer]

So what kind of investor, what kind.

[James Davis]

Of person do you think could succeed with a strategy like yours?

I think if someone wants to have a choice of how they make their money and they still care about people because it is caregiving in a way where you still have to care about the people. It's not all about the money. Even though we wouldn't be able to do it if there wasn't any money. But you do need to care about the people. And if you do care about people, you Have a way to take care of people and meet your needs and it's incredibly satisfying. Like, I remember working at my job and I hated getting up in the morning. I hated like going to work. I hated like having a boss telling me what to do. I hated having to beg someone for time off.

Yeah.

And saying like, hey, I want to go do this. Or like feeling sick and still feeling the need to go to work because you have to just suck up to somebody. So like someone that doesn't like being an employee. And I. And I hate being an employee. Like, I hate. And I think I'm a bad employee because of that. Like, I just, I don't think I'm good at listening to other people.

Well, that's kind of what I was saying at the beginning. Like, you clearly have this entrepreneurial spirit. Even in high school, if you're selling stuff on ebay, there's something about you that wants to take your financial future into your own hands.

Oh yeah. And I feel like a lot of people feel that way. It's just they don't have a vehicle to realize that dream. And this is a way to do that. Where you can use real estate and I love real estate and a way to fund my lifestyle too and be able to meet my needs and my family's needs while meeting other people's needs too.

Yeah, I love that mutually beneficial approach. Thinking about, you know, creating a business that obviously works for you and your family, but provides value to the people that you are serving. At the same time.

[Dave Meyer]

You've obviously, James, accomplished a lot in.

[James Davis]

Just a couple of years. It's amazing. What are your goals from here?

Yeah, I think we're kind of on the upper end of where we want to be. At least on, on the business side we might get another property or two because right now we have six. And it was really easy to scale and buy more properties when you, when you just have a lot of money coming in. And we didn't get paid for a really long time because we would just put that money towards down payments and doing more subject to's and doing that. But I think what we would want to do is buy a couple more properties. But we'd still love to have the long term rental real estate too, because I do like the idea of having a tenant that only bothers you every once in a while instead of every day. And you have someone that is really high maintenance. Like even though there's more revenue on this side of things, it is nice to have something really stable for sure. Which is what long term rentals are. So we want to use the revenue that we're getting and the profit to have higher down payments and just buy really good cash flowing real estate.

Makes sense. Yeah, just balance out the portfolio a little bit higher revenue. Higher work some is a little bit lower revenue, but lower work. Building like a sort of a portfolio of different properties that have different values, different purposes in your portfolio is I think where most real estate investors want to get. So thank you James for sharing that with us and thank you so much for being here and for sharing your story with us. It was really interesting to hear and I'm sure our audience got a lot out of it.

Yeah, absolutely. Thanks for having me on.

[Dave Meyer]

And thank you all so much for listening to this episode of the Bigger Pockets podcast.

[James Davis]

We appreciate you being here and we'll.

[Dave Meyer]

See you for another episode in just another couple of days.

[James Davis]

We'll see you then.

[Dave Meyer]

Thank you all for listening to the BiggerPockets Real Estate Podcast. Make sure you get all our new episodes by subscribing on YouTube, Apple, Spotify or any other podcast platform. Our new episodes come out Monday, Wednesday and Friday. I'm the host and executive producer of the show, Dave Meyer. The show is produced by Ian K. Copywriting is by Calico, content and editing is by Exodus Media. If you'd like to learn more about real estate investing or to sign up for our free newsletter, please visit www.biggerpockets.com. the content of this podcast is for informational purposes only. All host and participant opinions are their own. Investment in any asset, real estate included, involves risk, so use your best judgment and consult with qualified advisors before investing. You should only risk capital you can afford to lose, and remember, past performance is not indicative of future results. Biggerpockets, LLC disclaims all liability for direct, indirect, consequential or other damages arising from a reliance on information presented in this podcast.