Are you tired of searching for rental houses or flips that have a decent ROI? Traditional real estate investing is still a great option in many places. In some cities and neighborhoods those methods are getting harder and harder to find. What can a beginning investor do? Here are some ideas for nontraditional real estate investments that might be a solution.

Student Housing

Renting student housing can be profitable because you rent by the room, rather than the whole house. In other situations, small apartments are rented. Students can be excellent tenants if they are well screened. In many cases, a parent will co-sign if the student doesn’t have enough income. This provides you with more security in the case of a broken lease or damage to the property.

When renting by the room, it may work better if the students themselves are the ones to choose roommates. Whether this is done by a primary tenant managing a sublease, or a group of friends wanting to live in the same house, it works better if everyone agrees to the arrangement ahead of time. Screening is essential with student housing, but young people in college can be just as responsible as any other adult.

Residential Treatment Center

Commonly called a “group home”, residential treatment centers usually house adults who can’t live independently. They may be permanently disabled or elderly. They often have live-in caretakers but don’t usually require fulltime medical care like those in a nursing home. Operating a group home is simpler and cheaper than other medical facilities and can be set up an a normal residential home, as long as it has a lot of bedrooms.

There is an increasing need for adult care as the population of the US gets older, so the need for group homes is growing. This is a great niche area for anyone looking for a way to help their communities. In addition, investing in a residential treatment center can make houses profitable in neighborhoods that don’t usually cash-flow. The income from residential homes can be very good. 

Section 8 Housing

For the most part, renting to section 8 tenants is similar to any other rental investment. The difference is where the money comes from. When you have a section 8 tenant, part or all of the rent is paid by the government. While many landlords are hesitant to rent to section 8 clients, others prefer it and have created a niche in that category. Advantages to section 8 clients include stability, guaranteed payment, and potentially higher cashflow.

Because section 8 houses can be hard to find, many tenants will stay in a home for a long time. This decreases vacancy expenses. In addition, some landlords say that section 8 tenants are more careful with the property because an eviction will mean they loose their benefits. Properties are inspected after they are vacated, and tenants who destroy properties also risk losing their voucher.

Rehab Centers

In the United States, the need for rehabilitation services keeps growing. Under the Affordable Care Act, insurance companies are required to provide addiction rehab services. This has increased demand. These centers continue to be mainly privately owned and operated, and most are relatively small operations. For these reasons, more private funders are investing in clinics that provide rehab services in local communities.

Storage Units

Unlike the rest of the investments on this list, this option doesn’t involve housing. Instead, storage units are rented to clients who need more room for belongings. Usually built as rows of metal or concrete sheds, the greatest expense in storage units is initial construction. Ongoing expenses include security, maintenance of roads and buildings, and possibly an employee or two. Income is in the form of monthly rental payments from clients.

While storage units are expensive to build, they have several advantages over housing units. Because they don’t have anyone living in them they have minimal maintenance. And you won’t lack for customers. The storage needs of the country are great- 1 in 10 families rent a storage unit. And once a client rents a unit, they tend to hold onto it for a long time. Plus, with so many different clients, individual vacancies don’t cut into the bottom line much.

Owner-Financed Units

This method involves buying, repairing, and reselling properties to people who for whatever reason can’t purchase traditionally. Maybe the buyer is self employed, or is on a fixed income. In other cases, it’s the property that doesn’t qualify for traditional lending, such as mobile homes or low cost properties. A good lawyer but be involved in order to ensure all parties are protected. These owner-finances properties allow a less qualified buyer a chance to own a home, while providing a monthly income stream to the seller. With a down payment, the seller gets a portion of his investment back and the maintenance transfers to the buyer.

While there are potential dangers with any investment, non-traditional approaches to real estate can provide a new avenue of income in difficult areas.