Low Income Housing- Would you Invest?

[Christine Lee Middleton]

It is apparent that the motivator in real estate investing is gaining financial freedom. Great ROIs are goal….hot up and coming areas are ideal….BUT….how does creating NICE, low income housing (sfr or multi) fit into this dream of investing for big profit? 

I rarely see anyone talking about this strategy or showing any interest in it. I know it’s possible because I’ve seen it done in my city, but overall I feel like the popularity in this is  L O W. 

Does anyone have any experience in this? This is a goal of mine…to create more nice homes/apts for low income families.

[Nathan Gesner]

I don't have the answer, but I can tell you that it's generally larger investors with the ability to navigate government funding to supplement rents, and they have so many units that they can take reduced rents and still turn a profit. Large companies are building these new facilities across the country. In my area, a nice 2bed/1bath apartment will cost $800+. These new income-based facilities are renting the same units for as low as $550. They get away with it because government is using tax-payer dollars to supplement the rent.

My problem with this?

1. The properties are built with money from outside the state using outside contractors and outside materials. 

2. The property is managed by a company outside the state. They hire one local employee (at a really low salary) to handle basics like showings, inspections, and collecting applications. Everything else is handled by a team in another state.

3. Rent money is collected and sent to another state. Nothing stays here except the low salary of one employee.

4. Our local tax dollars supplement the rent, and then goes outside the state.

You get the idea. Everything goes out of state. It would make so much more sense for states to supplement existing Landlords, allowing them to improve their rentals, then teaching them how to apply for state dollars to supplment rent and become an income-based provider. This would keep local money local.

Long story short, you can't do it as a small investor unless you're willing to run a charity. It's very difficult to provide low-income housing and build a profit at the same time.