This article discusses the factors that we consider when evaluating the purchase or long-term lease of a new site. This applies to both VSL, as well as developers affiliated with VSL.
Article Table of Contents
Additional Resources and Related Articles
- Check population: https://www.census.gov/quickfacts/
- Check a walk or transit score: https://www.walkscore.com/
- 🏡 Recovery Residence Model - learn about how sober living works from an economic, architectural, and operational perspective
- 🔎 Initial Site Inspection Guide - follow this helpful guide when looking at a property in person for the first time
- 📊 Potential Site Analysis - learn how to evaluate the profitability of a particular opportunity
Background
Learn about what VSL and our affiliates look for when purchasing or long-term leasing
About this article
When evaluating potential site purchases, we follow a comprehensive set of criteria to ensure each acquisition aligns with our strategic goals and investment standards. This process helps us identify sites with strong potential for growth, profitability, and long-term success. In this article, we outline the key factors we consider, from location and market trends to financial performance and legal considerations, to ensure each site meets our quality and investment requirements.
A suitable site meets criteria for operational suitability and investment stability. Sites must both be suitable for operations, but also must be profitable investment opportunities.
How to present a site for consideration
- Send details to site@vanderburghhouse.com for an initial review
- If we are interested in learning more, you can submit a full packet for consideration: knowledge.vanderburghcommunities.com/initial-site-inspection
We protect brokers in all circumstances and we will pay "finders fees" to those who for properties we buy or lease. Please reach out to our Site Team for more information.
About Vanderburgh Sober Living
Who we are
VSL operates structured group homes where men and women in recovery from addiction live together in a guided group-living environment. Our so-called “sober houses” are typically large homes located in safe and walkable settings, typically single-family homes with large bedrooms. Homes work best in moderate- to high-density residential areas, close to essential services and/or public transportation, employment opportunities, and services.
Who we serve
The guests in VSL homes are men and women in recovery from abuse of drugs and/or alcohol. Most guests have completed treatment programs and would otherwise be ready to live independently. Guests choose to live in a group setting with VSL for the social support, positive recovery environment, and cost savings compared with renting independently. Most guests do not drive which requires us to locate homes in walkable settings.
What we don’t do
We do not offer treatment or recovery services; this is not a rehab facility, halfway house, or program. We don’t offer transportation, food, counselling, career training, or other services. We offer affordable group housing for like-minded individuals looking for a comfortable transition to independent living.
Location Requirements
Our affiliates acquire sites throughout the US, with current focus in New England
All locations must meet the remaining requirements below. Do not limit search only to certain zones or areas. Focus on residential areas with large, typically older homes, where work can be done to add value, and where the size is suitable for our use.
Regions where we are most active
- New England: Massachusetts, Maine, Rhode Island, New Hampshire, Vermont, Connecticut
- North and South Carolina: Focus on Greater Charlotte area
- Illinois: Focus on Springfield, IL area
We often have certain areas of focus: speak with someone in the office for an updated list.
Location Requirements
Most guests conduct their life on foot for the first few months (often longer). Homes must be located in walkable areas or areas with good public transportation (bus routes, etc.). A “walk score” of 40+ out of 100 is usually our minimum, but we would consider extenuating circumstances. Requirements:
- 10,000+ population: Homes should be in a relatively populated area with population of at least 10,000. Check population on www.census.gov/quickfacts/
- Walkable: Homes should be in proximity to essential services (or bus routes to them) and be generally a decent walkable setting. Check the Walk Score, Transit Score and Bike Scores on www.walkscore.com
- Decent neighborhood: We are looking for sites in a “safe” and a “good” area. This is understandably subjective; however we cannot open homes in areas which have known drug or crime problems in the immediate area. Think about it this way: if you wouldn't live close by, we probably don’t want to open up a home there.
Zoning is not a factor which we consider, provided that the building is (or was recently) used residentially. Do not limit search only to certain zones or areas. Focus on residential areas with large, typically older homes, where work can be done to add value, and where the size is suitable for our use.
Property Types
Residential look and feel -- Low price per square foot -- Look for unconventional
In a nutshell:
- Look for properties that have somewhat of a residential look and feel
- Focus on properties that no one else might want:
- Specialty or commercial properties that are currently something similar: other sober living homes, dormitories, group homes, shelters, etc.
- Obsolete or poorly designed / laid out for more traditional uses (e.g. homes that were converted to offices, funeral homes, mixed-use, etc.)
- Large single families that are difficult to convert to a multi-family
- Properties that are lacking parking or other standard desirable features
- Focus on acquisition price per sq. ft. - this almost always drives deal desirability
Specialty/Commercial
The property should have a current residential use or a past residential use (i.e. a large home converted to an office, which can be simply converted back to a home). These sites often offer excellent cost per square foot, and are very attractive. Avoid buildings that do not have any residential component or previous residential use (i.e. purpose-built office building), as converting the use to residential is difficult when there is full/partial, or previous residential use of the building.
- Existing sober living homes, group living facilities, nursing homes, etc.
- Dormitories and boarding houses
- Funeral homes (with an existing residential component)
- Mixed-use (e.g. offices with attached apartments or homes)
- Other specialty use properties with residential components
Single-Family Homes
SFR properties are our most common acquisition. These homes tend to be large homes in walkable urban or semi-urban areas. These types of properties are perfect for our use. Our perfect home: picture a large Victorian home in a safe residential neighborhood, difficult to develop into multi-family due to zoning restrictions, perhaps limited parking or a small yard and not conducive to a traditional family. Perhaps it had a past use with some commercial component to it and would be difficult to finance traditionally.
Multi-Family Homes
Multi-family homes are less attractive than single-family homes, because much of the square footage in a multi-family is taken up with additional kitchens and common hallways, which we will not need. Bedroom size, on average, tends to be smaller as well, which is less attractive. However, we will still entertain multi-family homes.
🚩 Undesirable Properties:
- Properties which have an office or retail “feel” to them, not able to be converted to a comfortable home.
- Multi-family properties which are too “cut up”, for example, a 6,000 sq. ft. 6-unit building multiple 2-bedroom apartments, instead of fewer and larger apartments.
- Too large / too many units: more is not necessarily better.
Site Characteristics
Minimum 3,000 sq. ft. -- Look for finishable space -- Must be currently used as residential
Size & Space
- Size Preference: 3,500 to 7,500 square feet of enclosed living space
- Minimum 3,000 square feet | Maximum of 12,000 the maximum size can be flexible+/- (but flexible maximum depending on situation).
- This square footage can and should include finished attics and basements, or spaces which can be finished into living space. Bottom line: the bigger the building, the better. Count all enclosed spaces that are finished or can be easily finished.
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Layout Preference: Any sensible residential layout is fine. Our goal is to comfortably fit multiple residents in a group living setting in the home. We most often have shared bedrooms. A few points worth noting:
- Multi-family homes may not use space as well as large single-family homes—they include multiple kitchens and other common spaces and often have smaller bedrooms.
- Spacious common areas help the sense of community and is highly desired
- Large bedrooms allow for multiple occupancy in each bedroom (two, three, or four beds in the rooms).
Unfinished Space?
Cost per square foot is the primary way we analyze properties. If we can finish additional space, it may significantly reduce our cost per square foot of usable space. Of particular interest is the ability to add additional bedrooms. Examples:
- Is there a walk-up attic with appropriate head room for additional finished space?
- Is there a basement with appropriately high ceilings which can be finished?
- Is there a garage or other additional attached space which can be finished into living space?
Condition?
Our preference is properties which do not need work or need minimal work if we can get a deal on them. By acquiring properties in need of work, we can build value through renovations. Our use requires certain modifications, and if work is needed to the home anyway, we can complete these modifications and build value at the same time.
Building Use
All properties must be currently or formerly used as a residential property, or partially used for residential purposes. Typically these are:
- Single-family homes (detached; typically we cannot do attached homes or condominiums)
- Multi-family homes (be cautious of multiple smaller units, these often don’t work well)
- Mixed-use property
- Dormitories / assisted living / nursing homes / etc.
Other Features
- No parking requirements. We have no parking requirements; homes without parking can be acquired for far lower cost and are very attractive to us.
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No zoning requirements. Remember - zoning is not a factor which we consider, provided that the building is currently or was previously used as a residential building of some sort.
Deal Structures
VSL Affiliate Purchase
We acquire most deals through a simple purchase through one of our affiliated real estate investment companies. Our typical purchase terms are as follows:
- Cash offer, not subject to financing
- 5 days to perform a comprehensive property inspection for informational purposes only
- Closing within 45 days, sooner in some cases
VSL Lease with Purchase
We always ask if a seller would prefer a long-term lease with option to purchase, but most often we purchase properties outright. We have a preference for owner financing if that is available.
Some of our properties are acquired through a long-term lease. In almost all cases we ask for an option to purchase the home. In some cases, we are willing to obligate ourselves to purchase within the first 12 months with a nonrefundable deposit. Typically, our lease structure is as follows:
- Term of 15 years with three 5-year options (very negotiable on the term)
- Option to purchase, typically one of the following:
- Option to purchase during the lease term at fair market value, often with increases over time
- Obligation to purchase within 12 months with nonrefundable deposit to guarantee performance
- Lease rate typically 110-130% higher than market rate in the area
Creative Structures
We are willing to be as creative as needed. We are comfortable with the following:
- Buying a property subject to an existing mortgage: In this case, we will either make mortgage payments or catch up on any delinquent balance
- Buying a property with a title defect which we will clear in the future
- Buying a pre-foreclosure property and working out a solution with the current lender