What to Look for When Buying a Property for Recovery Housing: A Due Diligence Checklist

A Step-by-step Guide to Finding the Right Property for Sober Living – and Making Sure the Numbers Work

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Investing in a recovery residence is about more than just buying a house – it’s about the right house at the right price, with the right plan. Whether you’re a mission-driven developer or an investor looking to make an impact, this due diligence checklist will guide you through the essential steps before you make a purchase.

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✅ 1. Physical Property Inspection

Your first step is to inspect the physical condition of the property and determine how much work – if any – will be required to bring it up to recovery housing standards.

• Walk through the entire home, noting current layout, bedrooms, bathrooms, and shared spaces.
• Check for unfinished spaces (like attics, basements, or garages) that could be legally and safely converted into living areas.
• Look for serious capital repair needs: roof, plumbing, HVAC, foundation, siding, electrical or egress issues.
• Hire a professional home inspector – this is a non-negotiable. Their report is your insurance policy against costly surprises.

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Need help developing the physical property?

💡At Vanderburgh Sober Living, we offer guidance on how to maximize space for occupancy and revenue while maintaining community and flow. From room layout to code compliance and fire safety, our tools and team are here to support you. Reach out today to get started.

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✅ 2. Area Survey:  Referrals & Resources

Next, evaluate whether the location supports the home’s success. This is more than just looking for a good neighborhood – it’s about access to the community services your guest will need.

• Map out referral sources nearby (hospitals, detox centers, reentry programs, drug courts, sober couches).
• Identify supportive services within walking or bus distance (AA/NA meetings, food banks, employment centers, bus stops).
• Look for community risk indicators (e.g., areas with high crime, poor transit, or known stigma against sober living

🧭  A strong area survey helps you avoid launching in a community that won’t support recovery housing.

 

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✅ 3. Market Rent Study

Before estimating what you’ll earn, research what the market can support. Recovery housing doesn’t always follow traditional rental comps, so use both conventional and recovery-specific sources.

Start with the census media rent and income data for the ZIP code.

Call other recovery housing providers or referral partners in the area and ask what they think is fair market rent for sober living.

Adjust your expectations based on level of service, amenities, and certification status.

 

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✅ 4. Run the Numbers

This is the point where vision meets math. Based on your rent study, calculate your estimated gross monthly rent (total occupancy rent per bed). Then subtract expense to estimate Net Operating Income (NOI)

• Common costs include:
• Utilities, internet, landscaping
• Insurance and taxes
• Repairs and maintenance
• Staff (if any), property management

Now calculate your debt service (monthly loan payment). The difference between NOI and debt service is your cash flow.

💡 This is where you start playing with levers: If you do more work (like finishing the attic), your renovation cost – and mortgage – go up. But so does occupancy, which increases gross revenue. Use this as a Scenario-building exercise: what happens if you add two beds? What if you bump rent slightly? What if occupancy drops to 85%?

 

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✅ 5. Decision Time: Move Forward or Walk Away

Once you’ve walked the house, studied the market, and run the numbers, it’s time to decide whether the deal is worth pursuing. A great recovery investment should be:

• Physically feasible
• Financially sustainable
• Mission-aligned
• Community-supported

If it doesn’t check those boxes, walk away – or revise plan. If it does, you’re ready to move forward.

📚 Want support with your development journey? Vanderburgh Sober Living offers a robust library of tools and training, including:

• The Recovery Housing Developer Toolkit
• Our full Developer Academy Curriculum
• Personal coaching support.

Were here to help you do this right – from your first walkthrough to your first move-in. Reach out to Vanderburgh Sober Living today to get started.

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