While real estate development investment opportunities abound these days, most of them seem to be based in high-rent luxury developments geared only for the top earners. However, there are surprising advantages to be gained by investing in affordable housingIn general, housing for which the occupant(s) is/are paying no more than 30 percent of his or her income for gross housing costs, including utilities. Please note that some jurisdictions may define af... More developments, as well. While this type of investment may not seem as flashy or exciting as other parts of one’s portfolio, the fact is affordable housingIn general, housing for which the occupant(s) is/are paying no more than 30 percent of his or her income for gross housing costs, including utilities. Please note that some jurisdictions may define af... More provides reliable revenue streams for investors while also serving to build community. Let’s take a look at some of the benefits of investing in affordable housingIn general, housing for which the occupant(s) is/are paying no more than 30 percent of his or her income for gross housing costs, including utilities. Please note that some jurisdictions may define af... More that you might not have realized.
Tax Credits
According to Bisnow, the Low-Income Housing Tax Credit (LIHTC)A tax incentive intended to increase the availability of low-income housing. The program provides an income tax credit to owners of newly constructed or substantially rehabilitated low-income rental h... More now helps to fund approximately 90 percent of all affordable housingIn general, housing for which the occupant(s) is/are paying no more than 30 percent of his or her income for gross housing costs, including utilities. Please note that some jurisdictions may define af... More developments across the United States. Depending on the particular credit, investors can get between 30 and 70 percent in subsidies through the LIHTCA tax incentive intended to increase the availability of low-income housing. The program provides an income tax credit to owners of newly constructed or substantially rehabilitated low-income rental h... More. This benefit creates a lot more value for investment dollars spent.
Reliable Revenue
Despite the restrictions on rent increases that accompany affordable housingIn general, housing for which the occupant(s) is/are paying no more than 30 percent of his or her income for gross housing costs, including utilities. Please note that some jurisdictions may define af... More, investors can expect consistent, reliable revenue streams from these developments. This can be attributed to a couple of key factors:
- Government subsidies. Rent subsidies like Section 8The housing assistance payments program that implements Section 8 of the United States Housing Act of 1937. More provide reliable income streams for investors while keeping tenants’ rents affordable for them.
- Steady/increasing demand. Given today’s high rent market rates, there are considerably more people who qualify for affordable housingIn general, housing for which the occupant(s) is/are paying no more than 30 percent of his or her income for gross housing costs, including utilities. Please note that some jurisdictions may define af... More than there are properties to accommodate them, and most properties retain wait lists for prospective tenants. This results in high, consistent occupancy rates and easy-to-fill vacancies.
Recession-Proof
During times when the economy is shrinking, vacancies in conventional or upscale rental properties become harder to fill as consumer incomes are affected. However, in a recession, the demand for affordable housingIn general, housing for which the occupant(s) is/are paying no more than 30 percent of his or her income for gross housing costs, including utilities. Please note that some jurisdictions may define af... More goes up, not down. With demand consistently high in a good economy and even higher in a bad economy, affordable housingIn general, housing for which the occupant(s) is/are paying no more than 30 percent of his or her income for gross housing costs, including utilities. Please note that some jurisdictions may define af... More can be one of the most consistent and stable investments whether the market is up or down.
Building Community and Local Economies
When the people of a community can afford their rent, they are also better able to afford other things like groceries, clothing, healthcare and entertainment. These dollars get injected back into the local economy, helping to fund additional community services and creating more prosperity in general. By investing in affordable housingIn general, housing for which the occupant(s) is/are paying no more than 30 percent of his or her income for gross housing costs, including utilities. Please note that some jurisdictions may define af... More, you aren’t performing a social service or “doing good;” you are also investing in the greater community and economy in general, which can eventually have a positive impact on other investments in your portfolio.
Between high demand, predictable ROI, immunity to market fluctuations and the general benefits to the economy, investing in affordable housingIn general, housing for which the occupant(s) is/are paying no more than 30 percent of his or her income for gross housing costs, including utilities. Please note that some jurisdictions may define af... More developments can be a smart addition to any investment portfolio. To learn more about opportunities to invest in affordable housingIn general, housing for which the occupant(s) is/are paying no more than 30 percent of his or her income for gross housing costs, including utilities. Please note that some jurisdictions may define af... More developments throughout the Southeast, call Olympia ManagementOlympia Management, Inc. exists to meet the needs of the affordable housing community by providing top-quality living conditions, excellent management, compassionate interaction with tenants, and cons... More at 256-894-2382.