Ted Ihde's Blog: Ted Ihde author of “Thinking About Becoming A Real Estate Developer?” - Posts Tagged "developers"

Identifying – and then acquiring – non-performing properties, on which developers can profitably build (or rehab) within neighborhoods which are in the process of being gentrified, has long been cited as one obstacle when it comes to increasing access to affordable housing. Then, once a suitable property has been identified to redevelop, would the developer elect to build affordable housing when homeownership may have been proven to be – historically speaking – difficult to attain for residents who live in neighborhoods where a disproportionately notable portion of potential future home buyers fall within a “very-low” income categorization? “Very low,” meaning, an income at or below 50% of HUD median income.

Lower credit scores for prospective home buyers who live in now-underserved neighborhoods could also be one assumption developers have. This would further exacerbate the limited-access-to-quality-affordable-housing challenge.

This being said, there are potential incentives for those who do choose to invest.

From an access-to-financing standpoint, such incentives may be able to be anchored through benefits such as lower loan costs and dedicated underwriters. For certain FHA loans.

Furthermore, it may be wise for developers to research a few HUD programs. Namely…

Section 207/223(f), Section 220 and Section 221(d)(4) may be eligible for Multifamily Accelerated Processing (MAP).

Section 207/223(f) provides mortgage insurance for FHA loans which can be used to finance existing multifamily rental housing.

Section 220 provides mortgage insurance for FHA loans which can be used to finance rental housing located within redevelopment areas.

Section 221(d)(4) provides mortgage insurance for FHA loans which can be used to finance rental and cooperative housing.