No Capital For Your Group Home? Learn to Negotiate

20 Feb 2017 by admin">Admin

“When it comes time to negotiate, he who cares less wins.” – Unknown

We feel your pain. You want to start a group home, help others and make a lot of money but you just need the capital to start right? It is such a crappy feeling when you know you can succeed at something, but you just have one thing in the way. The good news is that we can overcome that one thing. The bad news is that the one thing that is in the way is you and your ability to negotiate.

Get Out of Your Way

If you have told yourself over and over that you need money to make money, then it is time to give yourself a good shake. Here is why this thinking is flawed! If you know you need money to make money, then it is your fault for not getting more to succeed or by finding another way.

Secondly, as soon as you tell yourself that you need money more money, you shut down your brain. Thinking in this way shuts down your creativity because you have already bought into an idea that there is no other way. There is always another way to succeed, but you just have to be willing to dig deep.

Negotiate Everything

The group home business is not just for people who make oodles of money that they have no idea what to do with it. Group homes can be started by practically anyone who has the will to succeed and is willing to save up a couple of thousand dollars. The only way to make this come alive with limited capital is to approach everything ready to negotiate for what you want.

When you begin your hunt for your first place to lease or own you have to open your eyes and seek out opportunity. I will give you an example. Let’s say you are a first-time homeowner. Many states have programs that allow you to buy a home with no money down.

Let’s crunch some simple numbers

Rent For Where You Live = $1000 per month (medium sized city)

Group Home Cost = $200,000 for 3 bedroom home

Monthly Mortgage Payment = $850

Cost of Starting Business = $2000

Amount Earned on Rent = $3600 ($600 x 6 beds)

Upkeep = $1000 (on the expensive side to be safe)

Profit Per Month

$3600

– 1000 for Upkeep

– $850 for Mortgage payment

= $1750

The Upkeep should not be $1000 per month so the profits would be higher. That is enough money to pay the mortgage on the house as well as pay the rent for where you live while still having $750 left. All of this would be passive income. You would be able to do this buying a house with no money down on the house, and you would be building your assets since you own the house and can sell it at anytime. It would only take a few months for you to recover your expenses.

Another example that would require more grit would be negotiation with someone who is renting. If you don’t want to buy a house or won’t be able to for various reasons, you just need to find a landlord who will let you do this. Doing this is a bit trickier but again if you have the will to succeed you can do it.

You need to find houses that have been up for rent for a long time. The reason is that any house in this situation costs the land lord money and they will be desperate to rent it out to anyone. You have to find someone that cares about changing their situation more than you. If you seem desperate to do this, and the landlord does not mind paying the mortgage, it will not work!

They key in this situation is that you have nothing to lose at all. If you get the house through a landlord it is 100% risk-free for you, if they say no, you are in no worse of a position. You need to come into the negotiation understanding this. The house is burning a whole in their pockets and splitting these profits with you will make you both money.

The simple math for example 2:

Rent Where You Live = $1000 per month (medium sized city)

Mortgage of Unoccupied Home – $600/month

Rent Price of Unoccupied Home – $1300/month

Cost of Starting Business = $2000

Amount Earned on Rent = $3600 ($600 x 6 beds)

Upkeep = $1000 (on the expensive side to be safe)

Profit Per Month for Both Partners

Total Profit – $3600/2 = $1800 for each party

Landlord

$1800

– $600 for mortgage

= $1200

If rented to the single family same house would generate $700 profit, so the landlord earns an extra $500 a month. Focus on talking with the owner about what he could do with an extra $500 a month for this house and others if they own more homes. Also remember he is currently losing money on the house.

Profit For You

$1800

– $1000 for Upkeep

= $800 month

You would almost be able to pay off your rent with this money, and it would take three months to recover your start-up expenses. Doing this comes at no risk or cost to you. You just need to work at finding the landlord that is hungry enough to do this.

Some people may look at this and say well $800 is not a lot of money. You have to remember that this is a business, and any successful business is a grind to start. When you can survive that grind, though, later on, there will be a huge reward for surviving. You have to get the first home going, and if you can do it with one house, you can do it with 10 and eventually start owning the homes.

Be Persistent

Spend time learning to negotiate with confidence and then work on being persistent. Once you have these two things, you will have five group homes running before you even know it. Once you take the time to dive into the numbers you can see how easy it can be to explain to a landlord. This business is yours to get started.