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.