Challenges and Lessons in Constructing Affordable Housing

“We must ask ourselves, Is it going to make money? Is it not going to make money? Are we going to do it anyway? How are we going to get paid? What are we doing and can I leave the city in a better place than when I started?” -Jordan Klinger, director of finance at Douglas Development Corporation

Affordable housing is disappearing, and that is going to be a negative for everyone. Whether you are living below the poverty line or you simply have just graduated from your undergraduate university, it is really difficult to find housing when you live on an entry-level salary, and that is a real issue. That is part of the reason cities such as Dallas and Austin erupted. They were affordable. It is really tough to find affordable housing in D.C., Boston, New York, and San Francisco, for example. If you want to live somewhere and have a normal standard of living without taking on more debt, you may not be able to do it. However, in order to attempt to solve this issue, we must understand the challenges and lessons learned in the industry.

CHALLENGES

From a managerial perspective:

• Cost
• Sometimes you must abide by a variety of programs/rules and dealing with the city can be difficulty
• Must do something to enhance the city

From an economic perspective:

• Data avaiability
• Time
• Tension with forecasts relative to what the brokers are hearing and saying
• Zoning
• Difficult to build affordably
• Regulations

LESSONS

From a developing perspective:

• Persistence
• Never allow yourself to be undercapitalized
• Qualify your tenants
• Establish a sense of community