When landlords are creating housing units or deciding on what properties to purchase, they have to keep the nature of their offering in mind. For instance, if they would like to offer luxurious apartments, they are going to focus on very specific regions of their city. If they want to build affordable housing, however, they are going to look for low-income regions. And although both alternatives have a lot of benefits, it may be easier to recognize the benefits associated with luxurious housing. For instance, making one’s apartment luxurious allows landlords to increase rent and invite tenants that are earning more.
Nevertheless, there is a reason why a lot of landlords decide to pursue affordable housing options. Some of these include things like government-based incentive programs, more demand in the market, and less competition. On the other hand, the benefits that tenants who need affordable housing will experience are innumerable. Given the limited amount of income that many of them may be dealing with, having price-friendly homes is certainly significant.
How Tenants Benefit from Affordable Housing Options
Obviously, the first and most important advantage of affordable housing is the lower rent. People who live around or below the poverty line often have to minimize the amount of money spent on rent to have enough disposable income to survive. Well, courtesy of housing with fixed, affordable rent, there are millions of families that can thrive without sacrificing nearly all of their earnings.
– Employment Opportunities
In 2015, affordable housing projects that were built led to the creation of more than 329,000 jobs. Many of these jobs were given to low-income individuals who already lived in these types of housing options. Thus, this increase in the job supply led to a reduction of the unemployment rates and more earnings among this disadvantaged demographic.
– Government’s Involvement
During 2014, the Federal Government gave out more than $50 billion to low-income families who reside in affordable housing. This money was given through numerous tax breaks as well as incentives that encouraged them to sign long-term leases. Thus, the government’s involvement is another important benefit that people who are considering affordable housing should keep in mind.
How Landlords Benefit from Affordable Housing Options
Given the percentage of those who live below the poverty line in the United States, landlords will have no shortage of applicants for affordable housing. Meaning, they will have a greater supply of candidates who want to be tenants than if they offered high-end, luxurious apartments. This makes it easier to be profitable consistently and reduces their risk of having an insurmountable turnover.
For those unfamiliar, turnover depicts a situation where a landlord is unable to find new tenants once someone moves out. Also, the increased supply will contribute to a reduced competition between landlords in the same area. After all, when there are more people seeking housing than there are housing options, it is unnecessary to go against other property owners.
– Section 8
According to Aaron Gorin of Cedar Grove Partners, LLC, relying on government assistance to tenants can be beneficial to landlords as well. Take Section 8, per se, as an example of how property owners can leverage federal involvement. Section 8 is a program where people who follow a specific set of guidelines related to income and employment will receive aid with rent. In many cases, it means that a portion or entirety of their rent will be covered by the government. So, how exactly does this affect landlords?
Well, according to Cedar Grove Partners, LLC, it helps them find residents that will be able to make timely payments. When the government is the one covering someone’s rent, it is more than reasonable to expect no problems with collecting that rent. Moreover, people who qualify for programs like Section 8 or 42 often have to be able to meet many strict requirements. This lets the landlord know that the tenant is compliant with many income-based rules and has stable employment.
– Helping the Community
Ultimately, helping the community by offering affordable housing is one of the most important reasons for landlords to choose this alternative. When people are able to find homes that are within their price range, they will be taking a first step towards overcoming the poverty line. In the long-run, the community may end up prospering, and the landlord will accumulate more profits!