In the build-up to the COVID-19 pandemic, nearly a third of households in the U.S. were experiencing an affordable housing crisis says Maxwell Drever. Almost half of these disempowered individuals couldn’t afford a roof over their head and were living at risk of eviction should they not pay off their rent in time. Fortunately, because of the introduction of the moratorium last year, it has been easier for people unable to pay rent due to the financial shock of this outbreak to renegotiate with their landlords without having to worry about the risk of eviction. While many low-income people have trouble finding adequate housing, most good news comes from the private sector focused on building affordable rental homes, specifically for the missing middle-income group.
Every city is exploring innovative solutions to alleviate the housing crisis for this integral part of the community. Restructuring rundown or closed hotels into affordable housing units is one example. Since foreclosed properties don’t add any more value to the ecosystem than being a physical burden, hotel owners also show a keen interest in their revival for two reasons – an opportunity to make a social impact and renew their financial stream. With this, state and local governments are also taking necessary steps to speed up this process. Maxwell Drever talks about a few aspects to show what to do and how.
Inclusionary zoning
Today, inclusionary zoning is a tactic many cities use, to maintain economic diversity within a rapidly developing neighborhood. It requires that a particular share of residential units in new projects have affordable pricing suitable for families under an income threshold of about 80% of the area’s average earnings. So, it can be an attractive proposition for investors who want value for their money while efficiently contributing to the community. More precisely, they can build a mix of units targeting different neighborhood sections to ensure everyone gets what they need.
Financing
When planning to convert a hotel into housing, it is essential to do your research with experts. Who have knowledge of different economic factors and how they might relate to this property. There are many factors involved in deciding on remodeling. Such as understanding the differences in rent between office buildings and housing, as pointed out by Maxwell Drever. It’s also important to know the difference between multifamily and single or mixed-use properties. And how each one can affect your business. Then, some tax incentives can also be available based on the remodel you choose.
Of all the asset classes, multifamily has its benefits because of being recession resilient. In other words, it can withstand economic downturns without requiring much attention to keep the building functioning efficiently. Workforce housing or those who rent or lease these spaces are generally more financially responsible. Than the luxury segment that contains “high-end” renters who take large paychecks.
If you are a hotel owner or an investor, you may consult companies that specialize in housing construction for guidance. Their experience and expertise can increase your project’s success rate. Or help you save your money from investing in the wrong place.