Commercial Investment Real Estate March/April 2018 | Page 40

by Heather Olson, CCIM, and Frank Baldasare
Affordable
Housing
Six steps help to navigate
this tricky terrain.
Nationwide, the affordable housing sector continues to grow — in importance and need. Demand
for units consistently outpaces supply in key market areas, driven by factors such as rising rents,
stagnating wages, and shifting demographics of baby boomers and millennials.
By definition, affordable housing projects require occupants to pay no more than 30 percent of
their income for gross housing costs, including utilities. These affordable properties do not always
have the lowest rents. Area median income percentages play a large role in determining the rental
rate pricing and the impact it exerts on absorption rates and lowering cost-burdened percentages.
While it is a significant market opportunity, new investors must learn to navigate a complicated
process. Commercial real estate professionals can invest wisely by following these steps.
Essential Knowledge
The six steps to success and creating growth in the affordable housing market space encompass
the following:
Who: This could be either a developer of new affordable
properties or an investor looking for existing properties to
buy and operate.
What: Define the types of affordable properties
the developer or investor wants to operate, such
as income-restricted, low-income housing tax
credit properties, Section 8 properties, or
workforce housing.
When: Does the developer or inves-
tor want to hold these properties for the
short- or long-term?
Where: Identify main markets in which the
developer or investor wants to operate, such as
urban, suburban, or tertiary.
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March | April 2018
2. Weigh the
options with an expert.
Seek out a full-service provider with the experience,
contacts, and creative approach to help the developer or
investor build a team of experienced affordable housing
experts, with both U.S. Housing and Urban Development
and a government-sponsored enterprise (Fannie Mae or
Freddie Mac).
COMMERCIAL INVESTMENT REAL ESTATE
1. Identify the four Ws — who,
what, when, and where.