When it comes to investing in residential real estate, there are a variety of things to consider. The options are endless when it comes to residential properties. Properties range from low-end to upscale. There are also different types of residential properties including condos, townhouses, single family homes, duplexes, and more. While many seek to fill their real estate portfolios with high-end or upscale real estate, there are many benefits to investing in low-income housing. While it may seem like a challenge, here's what you should know about investing in these types of properties.
There Are Plenty of Properties to Choose From
The first thing that you should know is that there are a variety of low-income housing options to choose from. When searching for housing, it's important to choose properties that fit in your budget and that are in an area that is attractive to potential renters. Many affordable housing communities were built with funding from federal low-income housing tax credit program, or LIHTC. Around 1.1 million of these properties have reached the end of the 15-year compliance period and are able to be sold. You may want to see if there are any of these properties in your area.
They Can Be A Great Investment
Another thing to know about affordable or low-income housing is that there is a misconception that it doesn't offer much of a return on investment. However, affordable housing is typically targeted at households that bring in between $30,000 and $70,000 each year, or the majority of Americans. Because of this there is always a high demand for this type of housing. Low-income rental properties typically have very little turnover and high occupancy rates. This can mean a steady stream of income for investors.
Renovation and Repairs
When it comes to low-income housing, chances are you will be able to find very affordable properties to purchase. However, the real costs are typically the repairs and renovations that are required to get the property in good shape for new tenants. The key with low-income properties is to renovate enough to make the property comfortable for the new tenants but to skip expensive finishes. Before investing in a property, it's important to carefully consider how much renovation will be needed.
Investing in low-income housing may seem like a challenge, but it can be profitable. There are a few things that you should know before taking the plunge. First, there are a variety of properties on the market that may work for your needs including ones that were part of the LIHTC program. These types of properties also typically have little turnover and high occupancy rates, making them a great investment. Renovation and repairs are often needed with these properties, something you should consider before investing.