SUBSIDIZED HOUSING
WHAT IS IT ? Subsidized housing is a local and federal government program providing economic housing assistance for Americans who live in poverty — as well as the elderly and disabled . Affordable and subsidized units can be located anywhere — not just in subsidized housing projects . In fact , every major market in the country deals with local public housing bureaus who identify and approve tenants and residences for the program .
WHAT ’ S THE LOCAL NEED ? With an ever-increasing population and a higher-thanaverage cost of living , New York City housing requires diligent regulation in order to ensure that city residents who fall below the median income level can afford a place to live . Currently , NYC Housing Preservation and Development ( HPD ) serves approximately 38,000 households across all five boroughs , with over 9,000 landlords participating in HOD programs .
For the city that never sleeps , New York still has a large need for housing where people can rest their weary heads at night — and affordable housing , at that . In 2014 , the city had 3,400,093 total housing units , with 64.2 % of its tenants renters — making NYC a land of promise in the realestate world . For Todd Menowitz of Menowitz Management Corp ., the real opportunity now lies in the subsidized housing market , where local competition is low .
Founded 70 years ago by Menowitz ’ s grandfather , Harold , to develop multifamily units , the firm was eventually taken over by his father , Fred , boasting a portfolio of 4,700 properties in Brooklyn and Queens . Today , Menowitz and his brother , Marc , stand at the helm — with properties spanning the country .
Owning and managing 17,500 multifamily units , and more than 4,350,000 square feet of commercial space across 22 states , Menowitz ’ s company recently addressed the need for affordable housing in the city of 8.4 million — acquiring subsidized multifamily units with contracts on the property or an attached affordability component .
“ What makes affordable housing more lucrative for us is we know how to navigate through the many difficulties involved in obtaining approval and getting through sticky issues that you currently incur as you acquire these properties ,” Menowitz explains . “ There ’ s usually less competition and more left on the table if you can navigate through those issues . So the upside is it ’ s much larger than a typical , conventional multifamily deal .”
Typically in such situations , the subsidies from the federal government or local housing authorities are paid directly to the property owner for the management and offering of the affordable unit — also known as contractbased subsidies . Some properties with the affordability component will have subsidies paid to the tenants .
While Menowitz Management Corp . faces some local competition ( it is NYC , after all ), they ’ ve proven successful by jumping on great deals .
“ The deals can be tough to find , and it ’ s a lot of work to get through the process of getting approved by local housing authorities . But that makes our competition a little more limited than just acquiring conventional multifamily deals . There ’ s definitely competition , but certainly less than in the conventional arena ,” he says .
As the firm grows , Menowitz sees its concentration shifting outside of the metropolitan area , where they expect to experience less competition . By self-managing all their properties and building the middle-management tier while developing the multifamily market , he sees the firm acquiring more property in additional locations throughout the country .
The firm has been a Sterling National Bank client since his grandfather , Harold , set up an account in the ’ 60s , and Menowitz has continued to look to Sterling with help with acquisitions . “ We ’ ve built a nice relationship with Sterling , using their help to acquire properties , and they provide either permanent or bridgeloan financing to get the deals done in a timely manner ,” he says .
Menowitz is even hoping his son — who just graduated from college and is headed for NYU ’ s master ’ s program in real estate — will explore real-estate finance to learn about the property industry from the lender perspective . With this well-rounded view of the business , Menowitz believes his son will be better equipped to begin working for the family firm .
12 | SNB . COM // CONNECT INNOVATION SUMMER 2016