Affordable Housing Sector Heats Up With New Investors
Digested from New Investors Enter Affordable Housing Sector National Real Estate Investor (5/17/16) Anderson, Bendix
Investors looking for guaranteed rent are buying up apartment communities built under the auspices of an affordable housing program. Many of these private equity funds have little or no experience running these types of communities.
In markets where affordable housing rates are set below market rates, these communities are often at full occupancy, which can result in significant income, providing a yield on investment.
Until recently, these communities were sold to other developers of affordable housing. But now real estate brokers are major players in these deals. From 2010 to 2014, commercial real estate firm CBRE helped sell $4.8 billion of these communities.
Affordable housing has become a commodity that is traded through brokers. And there are a lot of bidders, says Scott Kline, Vice President of the National Housing Trust.
Why are so many communities looking for buyers? Nearly 1.1 million units built under the backing of the federal Low Income Housing Tax Credit program have exited the 15-year compliance period. The original investors may want to sell because the tax benefits provided by the program have ended.