What makes workforce housing different than other asset classes? Why should you choose workforce housing when investing? And why not just develop instead of choose an existing community? We give you the low-down on what makes workforce housing a great choice for multifamily investors, straight from the experience and advice of BAM founder and CEO, Ivan Barratt, in today’s BAM blog…

 

Workforce Housing is…

Typically when we talk about asset classes, there are A, B, C, and D. A classes are luxury and high-end properties, B and C properties are workforce housing, and D are older properties often located in less desirable areas that may have upkeep and other problems.

Workforce Housing Appeals to…

Since the recession, renting has become more appealing than ever. There are those who rent out of affordability issues, and some who rent due to frequent moves, like military members who live off-base. Workforce housing is ideally clean, appealing, affordable, and safe.

 

The Benefits of Investing in Workforce Housing 

  • Workforce housing is far more stable in times of economic uncertainty and during downturns. Luxury properties are often the first to take a hit during a downturn, while workforce housing stays the course.
  • Workforce housing will always be in demand. Other asset classes may struggle with occupancy, but workforce housing demand will remain relatively stable.
  • It’s far less risky than development. Development takes years and you can lose equity quickly if the market turns.

Investing in Workforce Housing  

  • Ivan’s typical example is that he’ll look at 200 deals before finding the one right opportunity. Don’t go with the first deal that looks good at a glance – do your homework.
  • Pay attention to location! Factoring in elements like ensuring the property has good transportation access as well as a solid school district can be crucial.
  • Look for the property that is run like a good business. Look for a well-run business that has strong cash-flow, as well as a good operating history.

 

BAM bottom line: Finding the right deal in workforce housing can be a solid investment, even in an economic downturn because this asset class is always in demand and outperforms other asset classes in troubled times. Make sure you pay attention to location and take your time finding the right deal, looking for a well-run business.