This is a guide for analyzing a potential sober living home business. This step is done as a part of a site search.
The Process of Opening a New Sober Living Home
The steps below detail the overall process of opening a new home. Much of this information is written for our Chartered Operators, but most of the content is broadly applicable to all Operators regardless of their affiliation with Vanderburgh Sober Living (VSL).
Background
Site Selection
- 🔎 Area Survey *
- 🏠 Site Search
- 🔎 Initial Site Inspection
- 📊 Potential Site Analysis - 📍 you are here
Planting a New Home *
*These specific articles are not available to the public at this time. While we try to offer as many resources as possible to the public, this content contains privileged information and is only available to Operators who are members of our community. Want to join our community? Apply today at www.vanderburghcommunities.com.
Gather the Data
Background Data
Make sure you have completed a thorough 🔎 Area Survey and an 🔎 Initial Site Inspection of the home. This data will be used when running the figures below. Make sure you have the following information available for the site you are analyzing:
- Building size (in square feet)
- Estimated utility costs
- Heating
- Electricity
- Water / sewer
- Other property operating costs
- Maintenance estimate
- House supplies
VSL should be able to provide most of this data. Please reach out to a member of our team to discuss your specific situation.
If you are leasing a property from a VSL-affiliated property owner, they should provide you with a Lease Prospectus. This prospectus will provide much of the information needed to perform a thorough financial analysis. Reach out to a member of our team for more information.
Pricing Data
What should you charge? That's a great question! Explore our guide: How to Set Rent Pricing.
We have a ton of data on pricing in the markets we serve, as well as analysis tools which can assist in helping set pricing.
Building Layout
You will need several data points before you can do a thorough analysis of a potential opportunity. From a property perspective, you should consider each factor below.
We prepared a sample floor plan which is accessible in 🏡 Recovery Residence Model. Take a look! Reach out to our team if you need help with laying out a particular home.
Floor plan review
This work is typically completed by VSL if you are intending to engage in a lease from one of our affiliates or if you have retained our agency to provide direct support.
Highlights
- Beds: 70 sq. ft. for the first bed; 50 sq. ft. for each bed after (in each room)
- Bathrooms: One full bathroom equivalent per 6 beds
- Kitchens: One fridge per 4 beds, appropriate storage required
- General: Does the layout make sense? Is there enough common space?
Bed count: With the floor plan in hand, review the floor plan to determine the maximum possible number of beds in the bedrooms. We recommend starting from the uppermost floor and working your way down, analyzing each bedroom to determine capacity. Use the chart in Facility Standards for the size requirements. In a nutshell: 70 sq. ft. for the first bed, 50 sq. ft. for each bed after. e.g. a 120 sq. ft. room would allow for 2 beds (70 + 50).
Additional space: Now, go to the floor plan and see if we can add additional space. If you have a ton of beds and limited common space, maybe this should be common space. If you have a strange layout and limited beds compared with total building size, consider adding additional bedrooms.
Required bathrooms and features: Now that you have an idea of Total Space and number of beds, figure out if we need to add any bathrooms or other amenities based on the Facility Standards.
Scope of work
Start to think about a scope of work that would be required based on your analysis above. Do we have to finish additional space? Do we have to renovate areas of the home? Feel free to consult experts at this point, sharing the video in the floor plan to get an idea of what is going on.
- How can we maximize space in the home?
- Do we need to add bathrooms based on the total beds?
- Can we finish additional space to increase occupancy or common area?
- What work is needed to meet safety and reasonable comfort standards?
- What furnishings would be needed?
- Should we improve storage or other features?
Final results
The final results of an initial inspection should give us answers to several questions as detailed below:
Final analysis results:
- Total number of beds: How many beds will be able to comfortably and responsibly be offered by this home?
- Scope of work: A moderately detailed scope of work should be prepared to give an idea of what level of renovation and furnishing will be required. Feel free to separate out work needed immediately, and potential future improvement projects (e.g. finishing a garage).
- Cost of work: A rough cost estimate should be calculated.
- Timeline: How long will the work take under reasonable circumstances?
Run the Numbers
Sober House Financial Calculator
VSL has developed a Sober House Financial Calculator. This valuable tool allows Operators to evaluate potential sober living business opportunities. This tool will help you work through revenue and expense estimates, as well as providing for a pro forma income statement, breakeven analysis, and a 12-month projection from startup to stable.
- 📥 Download the Sober House Financial Calculator (Free Download)
Disclaimer: We offer this tool at no cost. However, we retain and reserve all rights to this material. We must also note that this tool is not a guarantee of performance, and rather, it is simply an analysis tool. The projected financials are only as good as the assumptions given. Like everything else in life: use common sense and carefully consider any business opportunity before proceeding.
Using the Sober House Financial Calculator
- Please note, this walkthrough is using an older version of this calculator