When you get started in real estate, you need to make a decision on what type of real estate you want to focus on. If you are considering choosing affordable housing as your focus then continue reading to see if this is the best fit for you.
The median income for Americans has not increased much over the years making the gap between the wealthy and middle class that much bigger. Making a lot of the middle class closer to the poverty line. Most of the middle class are struggling just to get by so they are looking for affordable housing to live in. Demand for these types of properties are predicted to increase under these conditions as the gap will only continue to grow.
Is Affordable Housing in High Demand?
Affordable housing is in high demand right now with no sign of it increasing. This supply and demand leads to increased rent for families that rent their home. Affordable homes become more valuable under these conditions. Keep in mind if you have to raise the cost of rent you should only do so to offset the inflation of the cost of living. Under no circumstance should the raising of rent become excessive by the landlord trying
to exploit money from the renter for their own personal money gain.
One way to invest in this market area is to renovate unused buildings into apartments where the rental demand is high for affordable housing. With upgrading a property like this, it is easy to keep tenants in the building. By offering an affordable product with updated living spaces it keeps tenants happy and they tend to stay in a place longer. Another type of property to consider buying is apartment buildings that were originally built for subsidized housing through the government. Many investors tend to keep the rent of these properties affordable because that produces a constant, steady flow of income for them. Most of these properties stay fully occupied at all times due to the affordable rent.
Other Affordable Housing Investment Options
Some other investment options to consider would be properties that house seniors or people with disabilities. A significant percentage of the U.S. population is people 65 or older and have disabilities. Studies show that within the next 20 to 30 years these numbers will reach a record high from the baby boomer age. People in need of this type of housing need to close to public transit to be able to get around and have a living space that is accommodated to their needs including ramps, wheelchair accessible bathrooms, handrails, and cabinets and closets that are wheelchair accessible also.
If you live in a city that has a university, student off-campus housing may be something for you to look into. College is expensive enough to attend and the students that go there are always looking for ways to save a dollar, affordable off-campus housing is one of the ways for them to save money. There is also a growing number of adults with families that are going to
college that are in need of affordable housing off-campus. International students are in need of housing all year round because the dorms on campus close for the summer and holidays leaving international students homeless for that time period.
Something else to look into would be transitional housing for rehabilitation and re-entry programs. This would be housing for homeless people and their families, recently released people from correctional facilities, housing for recovering addicts, group homes for state protected adults and children, and neighborhood-based housing for the mental health system. These types of apartments need to be big enough to provide the right care needed but also give residents the privacy they need. These types of property will require you to have the right security 5 levels needed for each group.
Affordable housing tends to be recession resistant due to the rent already being affordable. So if the market starts to decrease again, the major class that will take the hit will be the higher class and they will experience the price fluctuation. Keeping your income at a steady flow. The demand for affordable housing will not drop due to income growth being slow in the
economy making multifamily investors more interested in this market.
This is a lot of information all at once but we like to help prepare you as best we can for what is to come. We always like to remind everyone to ask as many questions as you need to. In this market, dealing with your finances no question should go unanswered.
Want more great investment advice? If so, please check out our article on the pros and cons of bridge loans.