When you get started in real estate, it is best to choose a focus. That’s what I did. I decided I wanted to help working people in my community live in nice, affordable homes. It felt economically smart. Professionally, it filled me with pride. My chosen path is to buy affordable housing (grade C to B properties) with value-add components.
I planned my strategy to go this route based on greater economic conditions. I will continue to invest in this sector for the foreseeable future. As an advocate for buying affordable housing, I’ll list the factors that weighed into my decision.
Income Disparity and the Wealth Gap will Continue to Grow
Unemployment is low, but median income has not increased. The gap between the wealthiest and the less fortunate in society continues to widen. The middle class is hurting. The population in this segment is being squeezed out—either elevating to the upper class or moving closer to the poverty line. Logic says the majority of this segment will experience a trend in the direction of affordable housing. Demand for affordable housing is predicted to increase under these conditions.
There is Limited Supply in the Market
Affordable housing is in tight supply with no signs of that supply increasing. Simple supply and demand dictates that tight supply and increased demand ultimately lead to increased rents. Assets generally become more valuable under those conditions. Increasing rents should be done responsibly. There is a fine balance between raising rents to keep pace…