Landlords asked to 'step up'... due to housing 'crisis'.

Raleigh, North Carolina
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Landlords asked to 'step up'... due to housing 'crisis'.

Chris Martin
Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes

There is a story on about Forest Hills Apartments, on 7th Avenue in Garner. Apparently a lot of people there are on S-8 through RHA (apparently) and have been given notice to vacate.

The apartment sold on 2/21/2017 and the new owners plan to renovate, according to the story. I would expect rents would have a different price range after the renovation. Up... not down;) Regardless, the existing tenants have to go. From the story:

"There is a shortage of affordable housing in Wake County," said Sig Hutchinson, chairman of the county Board of Commissioners. "We need more landlords to step up and accept tenants with rental assistance vouchers so that these families can be sure to have a roof over their heads on June 16."

While I no longer follow RHA rates after , when we exited (94%, we still have 1) the S-8 program due to large rental rate cuts to landlords, I do wonder if Sig knows local HA history. I've posted about it . And . Blast from the past!

While I think it would be great if local landlords 'step up' and join 'the program', I can't help but wonder if Commissioners will brand landlords as 'slumlords' when S-8 tenants are put out. My view is that for real estate investors it's a lose/lose. The winners are making more than positions in LA, Chicago, and NYC with 10x the size.

I'd help, but I don't have any vacancies. We are down to only 3 properties in Raleigh proper. 1 is Section-8. That's 33%.

The real answer is to make new affordable housing. I'd like to hear if anyone is interested. I'm not in if it is in Raleigh, but surrounding communities... I'd consider. Doesn't have to be Wake county either. The game for me is small, affordable, with local town support, can be through HUD or not, and numbers have to have a chance after credits, incentives, and grants. Let me know what you think;)

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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
9y

@Chris Martin  I do see a shift in some of the markets I work and or were I live or lived.

Napa CA... for instance just approved a 100% low income project in the city proper.. that would NEVER have happened 10 years ago.

Portlandia just passed an ordinance that any new multi with 20 units or more must have 20% of the units set aside for low income..  what did this do.. well developers in Q4 of 2016 pushed through permits for 7500 doors.. :)  since the law went into effect applications in the first half of year are in for 120 doors.... developers will simply not build those units. so city trying to force private developers into subsidized housing shot themselves in the foot..

I tried once to do a tax credit low rate bond deal for 120 unit apartment site I owned on the Oregon coast.. IT was painful and after 6 months and 30k or so I just gave up on it.. its a specialty that you have to create a niche and be very good at.... I just replatted and built townhomes  LOL

then again in our area of the world section 8 is  a fraction of what it is in the deep south and mid west to begin with.

in most of the markets I work in those areas Section 8 pays HIGHER than market rent.. that is one of the appeals of it to landlords..

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  • Eric James
    Investor · Malakoff, TX · Member since 2017 · 2k+ posts · 2k+ votes
    9y
    For a start, how about the Section 8 admin 'step up' and reduce the bureaucracy and hassle of taking these tenants? Maybe they'll start invoking mom and apple pie soon to convince people to clean up their mess.
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  • Christopher K.
    Real Estate Developer, Investor, and Broker · Raleigh, NC · Member since 2017 · 99 posts · 82 votes
    9y

    @Chris Martin I wouldn't be surprised one bit if Commissioners, editorials in the bigger newspapers, local TV news reporters, and the like start throwing around terms like slumlord to refer to or report on these types of situations. They want to call us all out and 'step up' without alleviating or even addressing the underlying issues that made these programs essentially obsolete in this market. I'd wager to say most of us in the REI community really do care about these issues within our communities (affordable housing, etc), but at the end of the day, (most of us) are running businesses - not non-profits. It's just too easy to point fingers and not actually step back and see what brought them/us to where we are now.

    +1 @Eric James as well. The amount of red tape and hoops Sec. 8 often makes you jump through to house these tenants seems really counter-productive to solving the affordable housing crisis that they seem to be pretty in tune with.

    With interest rates still as low as they are and the amount of people that are still moving into the bigger metro areas on a daily basis coupled with the sheer amount of investors in these regions descending in immediately on anything even resembling 'affordable', renovating, and reselling for top dollar - it's hard to imagine the availability of affordably priced rentals increasing any time real soon.

    Again, RHA could help itself (and the people they are supposed to be charged with helping) by reassessing and increasing rental rates, as well as reducing or streamlining the arcane bureaucratic processes that discourage landlords from wanting to rent to S8's.

    Once the market finally cools and the banks are flooded with what I'd bet will likely be massive amounts of short sales, and properties can be bought again on the downswing then I think we'll start to see a noticeable increase in the availability of affordable rentals. Many of my thoughts here are viewed largely through a SFR (1-4 unit) lens, because that's the area I've been focused in for a while now so it's the one I'm most familiar with.

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  • Andrew Johnson
    Real Estate Investor · Encinitas, CA · Member since 2016 · 3k+ posts · 3k+ votes
    9y
    Chris Martin Curse you and your evil money grubbing friends 😂 You're still in the "mild" bucket compared to good ol' California where you run into cities with rent control. There's really no good answer in these scenarios. No NIMBY is going to want "the projects" near them and those S-8 residents want to live 20 miles out of town. So you'll get a bunch of bloviating, name calling, etc. It's always that way. Cities love gentrification, property tax increases, etc. for a while then turn on the developers when they keep building higher end units. Bring on Cabrini-Green 2.0!
    1Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    9y

    @Chris Martin  I do see a shift in some of the markets I work and or were I live or lived.

    Napa CA... for instance just approved a 100% low income project in the city proper.. that would NEVER have happened 10 years ago.

    Portlandia just passed an ordinance that any new multi with 20 units or more must have 20% of the units set aside for low income..  what did this do.. well developers in Q4 of 2016 pushed through permits for 7500 doors.. :)  since the law went into effect applications in the first half of year are in for 120 doors.... developers will simply not build those units. so city trying to force private developers into subsidized housing shot themselves in the foot..

    I tried once to do a tax credit low rate bond deal for 120 unit apartment site I owned on the Oregon coast.. IT was painful and after 6 months and 30k or so I just gave up on it.. its a specialty that you have to create a niche and be very good at.... I just replatted and built townhomes  LOL

    then again in our area of the world section 8 is  a fraction of what it is in the deep south and mid west to begin with.

    in most of the markets I work in those areas Section 8 pays HIGHER than market rent.. that is one of the appeals of it to landlords..

    Podcast Guest on Show #222
    JLH Capital Partners51 Review
    WebsiteView Page
    2Reply
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