Investing in Real Estate with a Purpose: The Mental Health Housing Mode

Uryah Babineau (00:00)
honestly,

dealing with all of the hardship and how long it takes and the bureaucratic stuff, dealing with all of that comes second to just how many lives we’re changing. It’s truly, truly meaningful.

Michelle Kesil (01:43)
Hey, everybody. Welcome to the Real Estate Pros podcast. I’m your host, Michelle Kesil. And today I’m joined by someone I’m looking forward to chatting with, Uryah Babineau, who is a real estate investor focusing on creating mental health housing operational solutions. So excited to have you here today, Uryah.

Uryah Babineau (02:03)
Hello. It’s…boutta be here.

Michelle Kesil (02:05)
Okay, awesome. Let’s dive in. First off, for those not familiar with you and your work, can you share what your main focus is?

Uryah Babineau (02:12)
Sure. So I have found a way to tie in my real estate investing into a more, in my opinion, like a more meaningful, a more gainful opportunity. have paired instead of renting rentals or buying rentals and renting them out to say just anyone off of Facebook marketplace or Crexie or loop net or whatever, just posting in random places. What I’ve done is I’ve found a program that allows me to backfill with a contract from the state. And I take care of people with severe mental health issues.

Michelle Kesil (02:38)
Awesome. And so can you expand on how that process works?

Uryah Babineau (02:44)
Um, sure.

So just like any other real estate investment, investment opportunity or acquisition, there’s lots of different vehicles to get to, you know, step one, which is have the property, whether that’s a buy, you know, acquire rehab blip, it’s very similar to the bar method, you know, B triple R, or it just buy and rehab what there’s so many different ways to get to ground zero, which is have a property worth renting from.

At that point, though, what makes this opportunity unique is it’s much like any other sober living home or assisted living facility. It’s I’m also the renter. Right. So what makes this interesting and a little bit unique from just a a raw and traditional real estate investing opportunity is with me as the investor, I’m also my own tenant. So I actually have both ends of that spectrum.

Michelle Kesil (03:28)
So you’re investing and operating correct.

Uryah Babineau (03:31)
Yeah, so I find properties that would be say a DSCR loan qualifier, meaning they’re going to be good rentals, they’re in a good market, the price point was good, I know that the rent would pay for the mortgage, etc, etc. Right. It’s it’s a very similar approach to anybody who’s trying to buy and hold and do the long term rental strategy, right. The difference in this case is I’m also my tenant. So I kind of wear two different hats in that regard.

Michelle Kesil (03:55)
Yeah, and so are you finding just empty vacancies and then creating these mental health facilities? Is that how that operates?

Uryah Babineau (04:10)
I mean, it can, right? That’s the thing about being like creative. Ideally, what I what is what’s perfect is I just find a turnkey house at a decent market rate. I just acquire it, know, furnish it, fill it, license it, get it set up for what I’m doing. And then I’m also the renter. And I can also charge myself, you know, above market value, sign five year contracts. So as far as like real estate is concerned, it’s

I can focus more on the real estate acquisition piece or if we’re more interested in the operating piece, I can can minimize the operating piece and basically just say my my acquisition strategy is unique because I’m guaranteed, you know, five year contracts above market rate. So I can actually grab properties that aren’t exactly as attractive to other people.

Because when you when you do say a comparative market analysis, right, when you have somebody look at properties and say, this is most likely going to rent for this much. So therefore it’s not worth investing in because blank reason. Well, I’m able to go in there and acquire those properties that other people over like look over because I’m my own renter and I can pay whatever makes sense for the property to work. So it’s kind of an interesting handoff in that regard. I can pick up properties that other people might look over.

Michelle Kesil (06:06)
Awesome. In which markets do you operate in?

Uryah Babineau (06:09)
Right now I’m in Montana. I’m specifically looking at Great Falls and Butte, Montana.

Michelle Kesil (06:14)
Is this something that’s scalable to have multiple of these operations in one area or are you looking to expand in other zones?

Uryah Babineau (06:22)
Yeah, great question. Now that I have kind of proven the model, right, because we’ve been doing this for nearly two years, and we have six of these going already in Great Falls. We’re easily at a point where we can just kind of copy and paste our operations into other cities. I won’t go too far into it, but we’re also ready to start picking up commercial real estate. Our staff has grown, my license has grown, the things I’m allowed, the services I’m allowed to provide have grown.

So I’m actually interested in a lot more than just single family homes. want multifamily homes. I want commercial. There’s a lot of opportunity around the corner. Really. It’s kind of exciting.

Michelle Kesil (06:54)
Yeah, and how do you see yourself scaling this model?

Uryah Babineau (06:58)
Well, it’ll depend, right? There’ll be enough cat flow coming in to where can acquire, you know, say, two, three properties a year realistically. But with the amount of opportunity that I have, meaning my referral base, more specifically people needing mental health housing, I could move a lot quicker. So I’m also interested in using other people’s money and explaining to them the model, how it works, et cetera. But I’m also planning to do two or three of these, hopefully a year, maybe more.

⁓ myself.

Michelle Kesil (07:25)
Awesome. And what do you feel have been some of the main keys that have allowed the business to be able to grow and run successfully?

Uryah Babineau (07:34)
Sure. So primarily the competitors in this space, I don’t even like to use the word competitor. That’s an investing term, but really we’re all just here to try to house people with mental health issues. speaking strictly from an investment standpoint, the competitors in this space are kind of, you know, three decades old nonprofits specifically, so they don’t move very quickly and they’ve been relatively dormant for a long time. So being a young company who is a for-profit,

I’m much more incentivized to move very quickly, do the right thing, get people in houses. And I have a real estate background. I have an investing background. And I also was an engineer for a while. So I have a very strong handle on numbers. So I’m able to create these models and just move really quickly. So that’s a huge advantage in this space. It’s kind of untouched in Montana for a long time. And then secondly, our jails are full, our hospitals are full and our psych wards are full.

And the reason they’re full here in Montana is because they’re literally just is not placement for people. So what’s unique about this model is I have a guaranteed stream of renters. So let’s, go back and talk about it from just strictly an investment standpoint. I’m, basically have an infinite guaranteed referral funnel is as quick as I could open houses, I could fill them. And that’s kind of a unique opportunity where I’m not worried at all about filling beds.

the true chokehold in my model is obtaining more property and I can buy them as quickly as I can buy them and I know I’ll fill them but I could also have other people involved in move much quicker.

Michelle Kesil (08:57)
Yeah, absolutely. And how does it work in filling it with the tenants?

Uryah Babineau (09:36)
So I have what’s called a license that allows me to be a mental health agency There’s a couple different, you know versions and tiers to that license, but the license itself is what allows me to bill Medicaid Medicaid is the primary funder for what I do. So Quite literally it takes it takes about two months to license any property But then after that it’s it’s full and billing has a really high NOI if that answers your question Medicaid is the billing body and there’s a wait list of over 950 people

waiting for these beds.

Michelle Kesil (10:06)
So it’s basically like Medicaid and the government paying as the tenants.

Uryah Babineau (10:11)
They would pay me and then I take so now we’re switching over to more of the operating part of it versus the investor. ⁓ So from strictly an operations perspective, I get paid from the government every day that someone’s in a bed. you know, switching back to the investment piece, let’s say I open an eight bed old Victorian home, say we rehab, it’s got a lot of space, it’s got eight to 10 bedrooms. Well, it’s the day I put people in those beds, I start getting paid a per diem, which is a daily rate for Medicaid.

Michelle Kesil (10:17)
Right? Ready?

Uryah Babineau (10:37)
So the way that an investor gets paid is I has nothing really to do with the money I make for Medicaid. It’s what is your house worth? What would it make on market? I’ll pay you above market. Let’s sign a five year contract. Right. Then back to the operations piece is I fill the beds with people who need mental health services. Then I get paid to take care of them at a much higher rate than whatever the rent was.

Michelle Kesil (10:59)
Yeah. And how does like the other aspect of operations look? Are you just managing it, hiring people? What does that day to day look like?

Uryah Babineau (11:10)
Yeah, sure. Great question. Depending on the specific type of model we’re referring to, let’s just stick to group homes as our as our example for this podcast. So with a group home, it’s rotating staff, right? So we got one person on day shift, one on swing one on grave 24 seven coverage. My job as the operator is I hire the right people, I have a manager in place who manages my staff. And really, I’m specific. So we’re talking about Uryah, I’m more of the oversight, I’m more of the

the direction, networking, the getting investors lined up. I’m doing more of the high level business things. I have a manager in place and I have staff who are managed by that person.

Michelle Kesil (11:46)
Awesome. And so what has been the biggest challenge of this business?

Uryah Babineau (11:51)
getting real estate. Like truly, I know that sounds silly, right? But like, I have got my my model, like working with the state getting people billable, my referral pipelines, the business end of things I’ve been working on for two years, and it’s been a slog, right? But we are at a point where it’s very optimized, I can move quicker. So at this point in the business, if you’re asking me as a snapshot of today, it’s simply getting bets. Truly, that’s that’s my biggest hang up here.

If you’re asking, you know, with respect to the whole battle, right? Your two year fight, getting the state to do anything is a nightmare, right? It’s getting getting the right people in the right place, convincing the government to do their job is no easy feat. But we have, right? I’ve met the right people. We have the right contracts in place. I know who to call to get things done. So we are kind of over that hurdle of getting the government to do what they’re supposed to do. You know, knock on wood. But.

Yeah. So currently today, my biggest hang up is just, I can only purchase a certain amount of these myself at a certain speed. That’s my biggest hang up.

Michelle Kesil (12:44)
Yeah, and is this something that is viable in all states or are there certain like regulations that make this not possible everywhere?

Uryah Babineau (12:54)
Sure, great question. I actually started in Idaho, right? I’m in Montana now. I started in Idaho and due to how they structure things, how they’re allocating their funds, how the program itself, by the program I mean mental health housing, how the program is handled, it all fell apart. I to liquidate my assets, we had to sell a few homes and I had to completely go to a different state. It was just nearly impossible. I’m sure it’s possible to do it in Idaho because there are people doing it.

But I’ll tell you, it took me so long. It was so difficult. I couldn’t actually get the right pieces in the right places. I had to shut down, but I was able to move to Montana and do the exact same thing in a much shorter amount of time. And it’s going very well. So no, it’s not viable in every single state. I would have to do some market research, right? I’d have to spend some time in that state, meet the right people, talk to people already doing it, et cetera. But once you find a state it’s viable in, for example, right now, Montana, it’s incredibly viable.

so no, not necessarily every state, but to answer your question from a high level, technically speaking, yes, every state has Medicaid and every state pays for group homes. Right? So technically speaking, this is available across the union, the nation, but from a business standpoint and investment standpoint, honestly, not really. some states are just completely dead in the water and I wouldn’t recommend certain states.

Michelle Kesil (14:50)
Yeah, and what would those be?

Uryah Babineau (14:52)
Well, I don’t know all of them, but I’ll definitely tell you don’t do Idaho. Not right now. Right. But Montana is wide open. Truly. A lot of people are moving here from the coast. So you see, you see commercial real estate appreciation, residential real estate appreciation. You’re seeing a lot of value increase in the asset itself. So Montana is kind of just a good state to be investing in, general. Again, prices are steadily going up. People are moving here and the mental health.

Michelle Kesil (14:54)
Right? Okay.

Yeah.

Uryah Babineau (15:16)
structure that I’m referring to, right, paying through Medicaid and such. It works. I do a thing and they pay me for it. It’s not that easy in all states, but it is here.

Michelle Kesil (15:25)
Is this something that any investor can get in or how do they need something specific for like the mental health side?

Uryah Babineau (15:31)
⁓ technically anybody could do it. But what I will tell you is it took me 14 months of fighting to get my first license, right? they make it very difficult. It’s a bureaucratic process. takes a tremendous amount of time, energy and effort to get to that first step. But I didn’t have to have a degree. I didn’t have to prove myself in any way. I didn’t have to, there’s no prior qualifications. So if you’re willing to put up a year and a half fight to get a license, yeah, anybody can do it.

Michelle Kesil (15:57)
Yeah, what has been like the most rewarding aspect of this?

Uryah Babineau (16:03)
easily taking care of people, right? In this case, with this business model, the renters aren’t just necessarily people looking for a home. We’re transforming lives. We’re literally saving lives. A lot of the folks that we take care of would have otherwise been on the street or taking drugs or getting back into crime. There’s a strong relationship between mental health and crime and taking drug use, et cetera, et cetera. So

honestly,

dealing with all of the hardship and how long it takes and the bureaucratic stuff, dealing with all of that comes second to just how many lives we’re changing. It’s truly, truly meaningful.

Michelle Kesil (16:34)
Yeah, definitely. And what kind of opportunities do you see this heading in for you?

Uryah Babineau (16:41)
Sure. So the kind of cool part about where we’re at is I just got an expanded license, which basically means I can do a lot more things and build Medicaid for them. So once now that I’m at that position, the sky’s the limit, right? There’s, there’s therapeutic rec, there’s life coaching, there’s vocational rehab, there’s there. The list goes on and on. There’s actually 56,000 individual uniquely billable items under this license. It’s kind of, it’s kind of nuts. Um,

But the point is, instead of going off and talking too much about the operating part, right? Cause this is a real estate investing podcast. To switch it back into the investing part is to say, I’m going to need a ton of commercial real estate, a ton of residential, single family, multifamily. I want to copy my model that I have going here in great falls. Cause my license and what I’ve established are relationships that are statewide. So I can move to Billings. I can move to Helena. I can move to Butte and just copy and paste what I’ve done.

So we have six single family homes. I want two or three group homes. That’s multifamily, right? And then a commercial space. I want to copy and paste that model that I have going to group home, sorry, in Great Falls, copy and paste that model I have in Great Falls. And I want to put it in Butte. So immediately I’m going to need roughly four to five million dollars of real estate. And that’s just one city. Right. So I want to go to the next and the next. The opportunity is so huge.

Like I said, real estate at this point is my bottleneck. I have the employees in place. I have the infrastructure. I have all the stuff that I need to keep moving. I just need to buy more real estate, which is the exciting part, right?

Michelle Kesil (18:06)
Yeah, absolutely. And is this something that, you know, every area needs a lot of or is it kind of limited on place to place?

Uryah Babineau (18:16)
no, absolutely not. There’s not limited, sorry, maybe more specific. There is a nationwide mental health crisis going on in every single state, right? The numbers are there, the need is there, and there’s just not enough people doing what I do. So really in any state at any time, if people were interested in doing this, I could share with them. I am very interested in helping and minimize homelessness, especially mental health driven homelessness.

⁓ and it’s everywhere. It’s early. ⁓ in Montana alone, the problem is huge, but here’s the thing is it’s not unique to Montana. It’s, it’s everywhere and there are funds in place for it. There are programs in place for it. I should say oversight. If people got into this, they would need to build the program, but there is oversight for it. yeah, the need is, the need is intense. Like for example, in Montana, there’s over 950 people right now today waiting for this opportunity. It’s just not there. It’s not there for them, but there wouldn’t be a wait list.

right? And I know 950 might not sound like a huge number for a state, but that’s just people who have tried. You know, there’s probably more people who don’t even know it’s an option. They don’t even know to be on that wait list, right? But as far as a business standpoint is concerned, I would guarantee you there’s a list like that of at least 1000 in every state.

Michelle Kesil (19:24)
Yeah, amazing. Thank you for sharing.

Well, before we begin to wrap up here, if someone wants to reach out, connect, learn more, where can people find you?

Uryah Babineau (19:32)
So an easy way would be to go to my website, all of my personal info is on there, all my business info is on there. And it gives you kind of a simple understanding of what we do and the people we serve. It doesn’t really go into the investing piece of it, though. I don’t I try not to make that the forefront of the mission and the message. Right. It’s not when I walk into a room, I’m not immediately asking people, hey, you want to invest in real estate with me? Like, that’s not the big piece. So if people are really interested in investing in real estate that has a purpose and a mission.

Yeah, please reach out. Like you can contact me. My information is public. It’s an awesome opportunity to not just invest in real estate, but also to be contributing to a larger ecosystem that really does drive impact and meaning.

Michelle Kesil (20:12)
Perfect. We’ll appreciate your time and your story. Thank you for being here.

Uryah Babineau (20:16)
Yeah, absolutely. Thanks.

Michelle Kesil (20:17)
And for those tuning in, if you got value, make sure you’ve subscribed. We’ve got more conversations with operators like Uryah who are building real businesses and we’ll see you all on our next episode.