Affordable Housing: A Multi-Billion-Dollar Industry Where Investment Property Serves A Community Purpose

The shortage of affordable apartments and homes is a challenge for people of all income levels in the U.S. With so many people spending 50% or more of their income on housing, it is no wonder that people from all walks of life are looking for relief. This unwavering demand for housing and affordability is the driving force behind a large and important segment of the real estate investing industry.

According to America's Rental Housing: Expanding Options for Diverse and Growing Demand, a report by the Joint Center for Housing Studies at Harvard University, about 2.2 million affordable rental units were built or rehabilitated in the U.S. between 1986 and 2014, with the help of the Low-Income-Housing Tax Credit (LIHTC) program. This figure represents more than just sticks and bricks, it represents millions of people that have the opportunity to live in safe, decent-quality housing. LIHTC is only one of many essential affordable housing initiatives currently underway.

Graphic: Federal and State Low-Income Housing Tax Credit Allocations in Selected States:

Chart:Federal and State Low-Income Housing Tax Credit Allocations in Selected States

Caption: The Low-Income-Housing Tax Credit (LIHTC) is one of several programs that provide incentives to developers and those involved in real estate investing. By giving investors the opportunity to contribute to housing developments in return for tax write-offs, real estate developers are able to access capital that enables them to build more affordable housing or enhance the efficiency and physical features of their existing investment property.

The term "affordable" encompasses many types of housing programs and it is difficult to get a clear definition in your typical real estate books. Working people that have modest salaries and those with sizable incomes can all benefit from affordable housing programs. For example, veterans and first responders including fire and medical personnel can take advantage of affordable housing programs that provide rental discounts and mortgages specifically for them. Other programs provide incentives to landlords that set aside some of their apartments for military personnel. Yet other programs help people living in or planning to live in areas hit by devastating disasters.

Affordable housing also means transitional housing for formerly homeless families, shelters helping men, women and victims of domestic violence, seniors apartments, and housing for people living with mental and physical disabilities. By allowing people to live independently, affordable housing plays a major role in helping them improve their productivity and quality of life.

Below is a listing of just a few of the many programs and organizations that help people access decent, affordable housing. These resources provide useful information on how to access rental subsidies and mortgages, how to find affordable apartments, and how to build, acquire and rehabilitate investment property that can make a difference in communities large and small.

USDA Rural Development – The U.S. Department of Agriculture provides housing support for Americans living in rural communities across the Nation. Home loans, rental assistance and real estate investing assistance are available to help ensure that the vitality of our agricultural heritage is kept strong.

U.S. Department of Health and Human Services (HHS) – One HHS program, the Low Income Housing Energy Assistance Program (LIHEAP),helps families to cover the cost of energy bills and home weatherization costs. The subsidies are relatively small, but they make a real difference when people need a little help staying warm in the winter or keeping the lights on this month.

Community Development Organizations – Nonprofit agencies like Mercy Housing step in where government leaves off. Driven by a desire to change the way people live regardless of income, community development organizations provide capital to developers of affordable investment property as well as providing direct services to renters, home buyers, and people that just need a little helping hand.

U.S Department of Housing and Urban Development (HUD) – With the most exhaustive set of resources, programs and information, HUD is not your only source, but you should make it your first stop. Renters, home buyers and those involved in affordable real estate investing are able to access federal, state and local programs through the HUD website.

John Florio, MBA

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