In the last two weeks, we reviewed the California housing crisis and the steps that municipalities can take to resolve it. This week we want to speak to real estate developers on how these investments can benefit their portfolio.
The case for developing low-income housing
Across the United States, and especially here in southern California, many developers choose to build luxury homes. Large, lavish homes that would look amazing on any Instagram account are definitely attractive investments. However, when homes are built without a specific buyer in mind, there is a risk that a market will never develop.
While there is no shortage of wealthy individuals in the market for an expensive second home with a vista view, the evidence of empty houses begs another conclusion.
Why sit on a vacant luxury home?
The practice of holding onto a vacant, expensive home or set of homes is a waiting game. Purchase of the land, building the home, all of that may be far less expensive than the ultimate sale. One could stand to make a great deal of money provided a buyer ever materializes and the market does not collapse.
However, with all people searching for affordable housing, involving yourself in the right community with the right property development can yield dividends. Motivated renters moving into an easily expandible manufactured home park could become a steady source of income.
And, as we mentioned last week, you do not have to be in the investment for the long haul. It’s a steady income return, with a simplified exit away from long-term costs and repairs.
A housing shortage could be an opportunity
Every business, every municipality, every investment comes with a degree of risk and uncertainty. It takes a truly innovative partnership to attempt to turn a troubling situation, such as a housing shortage crisis, into a benefit for a community and a company’s bottom line.