Investing in real estate can be a very lucrative endeavor. However, choosing a focus sector when you start your property purchases can spell the difference between average and amazing profits.
One good strategy is to invest in affordable housing with a goal of providing people in a community with nice and cost-effective dwelling spaces. Below are some reasons why investing in affordable housing in South Florida is the way to go.
Lingering income disparity and wealth gap
We continue to observe economies where the gap between the rich and the poor continue to widen. Majority of a country’s income is made by only a minority of the population. This may be a sad fact but it is the truth, and the scenario is seen to stick around in the decades to come.
Some studies have observed that the middle class in America is diminishing, “squashed” either towards the upper class or the poverty line. Unfortunately, more are moving closer towards becoming poor. This trend is seen to benefit the affordable housing segment as more and more people join the population that drives the demand for more economical lodging higher. It would be logical to pour your capital into the affordable housing sector of the real estate industry.
A limited supply of affordable housing in the market
You may not be aware of the fact that affordable housing is in narrow supply, and the future looks bleak when it comes to having more options in this segment. As we know from the simple law of supply and demand, tight supply will naturally drive market prices up.
Properties will naturally appreciate in value under low-supply conditions. Not only will house prices go up, but even rental rates for these dwelling spaces are seen to rise along with it. If you are invested in affordable housing today, you can expect capital growth and increased rental income in the years to come.
In addition, most construction projects you see today involve properties that cater to the grade A/B market class because it gives the best return on investment for construction companies. There are very few affordable housing properties up for grabs, so take advantage of the available supply while it lasts.
Rent demand will continue to stay especially during recessions
Economies and markets follow a cycle, and in that cycle, there is an upswing and a downturn. In times when we experience an economic downturn, the real estate segment that’s most negatively affected is the grade A/B property sector. These are not entry-level houses, and their upkeep requires a good amount of money.
On the other hand, the demand for affordable housing will remain robust even during an economic downturn as a greater number of people switch to cheaper housing options as a response to the slowdown.
In terms of the real estate industry, we can see that investing in the affordable housing sector can become a lucrative venture in the long run. It proves to be a resilient investment even during economic recessions. The advantages are many and demand for it is seen to linger and even grow in the future.