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How Much Do Halfway House Owners Make in Profit Yearly?

Open a Halfway House for Inmates

Do you want to know how much halfway house owners make in profit? If YES, here are factors that will influence the amount halfway house owners make in profit.

Halfway houses are a major feature of the criminal justice system, but very little data is ever published about them. Broadly speaking, there are two reasons for this obscurity.

First, halfway houses are mostly privately operated and don’t report data the way public facilities are required to; second, the term “halfway house” is widely used to refer to vastly different types of facilities.

It can be used to refer to a residential facility where people leaving prison or jail (or, sometimes, completing a condition of probation) are mandated to live before being fully released into their communities.

In these facilities, individuals live in a group environment under a set of rules and requirements, including attendance of programming, curfews, and maintenance of employment.

State corrections departments, probation/parole offices, and the Federal Bureau of Prisons (BOP) tend to contract with nonprofits and private companies to run these facilities.

These contracts are the primary means through which halfway houses receive funding. Federally contracted halfway houses are called Residential Re-entry Centers (RRCs).

State-licensed halfway houses can be referred to by a variety of terms, like Transitional Centers, Re-entry Centers, Community Recovery Centers, etc.

These facilities work with corrections departments to house individuals leaving incarceration, often as a condition of parole or other post-release supervision or housing plan.

“Halfway house” can also refer to a few other types of facilities: Sober living homes, Restitution centers, and community based/residential correctional facilities that act as alternatives to traditional incarceration.

The majority of halfway houses in the United States are run by private entities, both non-profit and for-profit. For instance, the for-profit GEO Group recently acquired CEC (Community Education Centers), which operates 30% of all halfway houses nationwide.

Even with their large share of the industry, they release no publicly available data on their halfway house populations. The case is similar for other organizations that operate halfway houses.

A halfway house is more or less a transitional group living facility for individuals working their way back into society after incarceration or drug and alcohol dependence recovery. Some houses provide instructional living skills to individuals with disabilities for independent living.

A halfway house is operated as a business and will have to meet its financial needs and provide promised services. Owning and operating your own halfway house can be a rewarding experience, with many homes filling up before they even open.

Whether you’re in it for profit or community service, below are crucial factors that tend to influence the profit potential of any halfway house owner.

Factors That Influence The Profit Potential Of A Halfway House Owner

  1. Business Status

Have it in mind that much of the profit potential for a halfway house is related to recognition as a for-profit or non-profit business entity.

As a non-profit organization, filings are expected to be made with the state and the Internal Revenue Service. Non-profit status protects income from being taxed but does not allow for profits to benefit the owner.

  1. Facility Size

The size of the facility will greatly influence the number of residents and the possible expenses and overhead. A halfway house that operates from a small facility is expected to make far less than a halfway house that operates from a standard and well–equipped facility. If your facility is large enough, it can accommodate more people and that will mean increased revenue.

  1. Location

The cost of a living in a halfway house varies a lot. States that regulate these facilities require a maximum number of residents, often fewer than 10. These facilities are houses located in quiet neighborhoods, although they may sometimes be in apartment buildings.

Cost more or less depends on the mortgage for the home and the average rent in the area. Renting a room in a halfway house is just like renting an apartment, but with more community involvement. It simply entails that some halfway houses have low rents, like $450 a month, while some halfway houses in popular areas have notoriously high rents.

A halfway house in West Los Angeles – a very affluent neighborhood – was found to have rent listed at $10,000 per month. However, the people who are attracted to this form of living expect a lot of space, and amenities including pools, personal chefs, massage therapists, and more.

  1. Licensing

State and local licensing requirements also greatly affect a halfway house’s profit potential. The National Institute on Chemical Dependency notes that licensing standards often require in-house professionals and programs that greatly limit profitability.

Furthermore, NICD notes that unlicensed homes may still be protected under the Americans with Disabilities and Fair Housing Acts.

  1. Halfway House Management

One critical factor that will influence the profit a halfway house owner is expected to make yearly is the management style of the halfway house.

Have it in mind that the progress and results you will get when you are a good manager will definitely be different from a facility with a poor management style. Howbeit, the idea is that a good halfway house manager will not just boost the image of the facility and attract more contracts, but also keep overhead low.

  1. Complimentary Services

The average halfway house is not likely to have many amenities, and the person renting a room there is expected to provide their own groceries, medications, and income.

If the person is using money from friends or family, they may be encouraged, through the rules of the halfway house, to find part-time employment to offset costs, go to classes, or find other ways to better themselves. However, some halfway houses offer amenities like pools, personal chefs, massage therapists, and all these means that the residents pay more.

Operating a halfway house as a non-profit organization requires that no profits be pocketed by the owners or board of directors.

Any profits are expected to be re-invested into the facility or programs to benefit residents. The actual profit potential for a for-profit will have to be considered on an individual basis owing to the factors above and how much residents are willing to pay.