How to Offer Affordable Housing

Question

Hi everyone, I'm looking for properties to buy and hold. I also have a desire to use my units as a type of affordable housing for single moms or pregnant women. (I.e. a 3 bed 2 bath rent each room out to a woman for 500/mo. And have someone on staff to make sure house rules are followed and the properties are cared for.) There's a huge need in my city with many homeless mothers and children. There's an area that Is in the process of being transformed by investors from a poor inner city to flipped homes for professionals. Does anyone have any idea how to structure a business to offer affordable housing and/or what benefits are there? Would i need to form a non profit? I want the properties to still belong to me so i can pass them down to my children. I was planning to form an LLC but then realized I want to do something with a purpose. Any help would be appreciated.

Isabella G. · Answer

Yes I've definitely thought about multi family units. I am connected with organizations that are doing what I'm looking to do on a smaller scale with properties that were provided to them, they weren't seeking them out. I want to actively seek out properties with the goal of improving the community and providing housing to people in need. In my example i was referring to 500/room so 1500 total for the house. And i partner with an organization that hires the residents and they do things like landscape, maintenance etc. Those are all great points.  Thanks for your reply.

Dennis M. · Answer

That’s good that you’re making this a nonprofit because single moms and pregnant women never pay their rent anyway !

Chuy Gonzalez · Answer

Dennis:

In my short time as a budding landlord, I have found this to be true as well.

Scott Mac · Answer

@Isabella G.

Instead of trying to be a charity yourself, perhaps go down to the city council and befriend someone there and discuss having them see what kind of things other cities are doing to solve this problem and then implementing it in your city.

Unless you're rich, in which case you can spend enough of your own money to solve the problem.

Good Luck!

Dennis M. · Answer

You are correct not everyone fits my stereotype, however in my experience * you would likely be considered the exception to the rule . Most seasoned landlords would agree baby mommas in general are a high risk tenant . I think it’s a noble effort and admirable to help the downtrodden or ignorant   in a 501c type arrangement just not as a profitable business .

Isabella G. · Answer

Thank you for the vote of confidence. (Sarcasm)I'm a single mom unexpectedly and was in a similar situation living in a transitional program while pregnant due to being left with nothing after escaping abuse. Every resident there worked and paid their rent. I'm a business owner with a degree. Not everyone fits your stereotype. I'd like to give back. I see people as assets with great potential and worth investing in and pouring into. Not just making a profit from.

Jason D. · Answer

@Isabella G. It may be worth calling the local housing authority. They may be able to give you some info, or maybe other investors doing what you want to do.

I dont think there is a problem with starting an LLC, but you probably want to speak with a lawyer and accountant to set it up exactly how you want.

Greg Scott · Answer

Isabella:

You have a noble goal.   I encourage you to find others in your community who provide affordable housing and get their thoughts.  They are more likely to be able to point you in the right direction.

Have you considered looking at apartments instead of houses?   Even if you get a house for free, $500 per month is unlikely to cover the long-term operational costs of a house (taxes, insurance, repairs, management, vacancy, etc.)  Another challenge with single family homes is they cost a lot more to operate.  For example, they have higher utility bills.  Someone also has to mow the lawn and plow the driveway.  People who need affordable housing may not be able to handle those extra bills.

How to Offer Affordable Housing

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