Low income housing is property that is deemed affordable to those with a specified median household income. While the property may look like luxury homes, it is reserved for a special range of income. Real estate investors should consider low income housing as a viable investment option. With a high return-on-investment and a lower initial investment, this could be the perfect opportunity. If you are interested in investing in low income housing, see our tips below to find out how you can turn a profit from these affordable properties.
Understand Your Neighborhood
The first key to investing in low income housing is to understand your neighborhood. When you invest in a piece of property, you are also investing in the area around it. Not all low income neighborhoods are the same. Some are up and coming while some are crime ridden. To get started, find an area and property that you are comfortable investing in. Then, you can worry about other details like how to keep your heating bill costs down.
Do Your Research
If you are planning on investing in low income housing properties, you need to do your own research beyond your own neighborhood. You want to know more than just the names of possible locations. Thankfully, there are resources online available for this. Make sure you do research regarding the total number of low-income units available, the year placed in service of each location and the actual address, of course. No matter where you do your research, make sure you find out as much as you can about possible investment opportunities in low income housing. You want to be prepared to make the best decision possible.
Make A Large Down Payment
Low income housing is tempting to real estate investors because it can result in a high return. In order to maximize this return, you should make a large down payment on your property. By making the down payment the top of your mortgage checklist, this will help to lower your monthly payments. Minimizing your monthly costs will help to increase cash flow and allow you to turn a profit much faster.
Find Good Tenants
Another important tip to follow when investing in affordable housing is to find good tenants. No matter where you invest, your tenants will be the key to your success. Of course, low income does not have to mean low quality tenants. Taking the proper precautions will help you to avoid the constant hassle of tracking people down for rent. Remember, an online credit check is not the only measure of what makes a good tenant. Be sure to screen potential tenants properly so that you can fill your property with reliable, considerate people.
Upgrade Security Measures
Although not every low income area is dangerous, security is still an important factor. Every tenant, low income or otherwise, wants to feel safe in their home. To help improve their experience, your first project should be to upgrade security measures for your property. Because you intend to provide affordable housing, you can forego the usual upgrades that would help to increase rent. Instead of granite countertops, purchase new security cameras. Your tenants will feel safer and your property will be better protected.
Maintain Your Properties
Finally, another important tip for investing in low income housing is to maintain your properties. Your more affordable spaces should receive the same amount of care and attentiveness as a luxury property. Neglect will only allow your tenant’s problems to escalate. This could cost you more in the long run. If someone calls about a leak, fix the problem right away to maintain your property development investment. Happy tenants mean less turnover and vacancies, which means a steadier, long-term income for you.
Real estate investors who are interested in low income housing should consider these tips above. Affordable housing can be a great investment option for those willing to provide the extra care that these properties need. By screening your tenants carefully, improving security measures and making a large down payment you can earn a considerable profit from low income housing thank you can take to the business bank.
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