Tikkun Olam One Apartment at a Time: A New Funding Model for Affordable Housing

Tikkun Olam One Apartment at a Time: A New Funding Model for Affordable Housing by Eddie Lorin, published in Jewish Philantropy: I have been in the “workforce/affordable” housing business for many years by taking blight and making light. Having lost my father at 10 months old and my mother at 17 years of age, I struggled to make ends meet and have never forgotten the humiliation and fear that being poor grates on your psyche. For my entire real estate career, I have remained committed to the right of each of our fellow citizens to a clean, safe and affordable place to live, to treat all who dwell under our roofs with respect and dignity so they can stay, pay and refer their friends. This is the ultimate impact investment above all others in my opinion. It’s hard to educate a child when they are sleeping on the streets, hard to support solar when these folks are only exposed to the sun, hard to worry about clean water or low flush toilets when a family has neither a toilet nor water. Out of the Great Recession I have seen how rents have dramatically risen and the result on hard working folks finding it next to impossible to afford the basics. We need to keep units affordable before they become out of reach as we have seen in major cities across the country like San Francisco and New York.

According to the National Coalition for Affordable Housing there is a 7.2 million unit shortage of affordable housing in the United States and growing as we only build about 50,000 units per year and lose to attrition over 150,000 units per year as affordability covenants expire.

Traditional methods using housing credits, rent controls and other government sector solutions are great but not enough by themselves. The issue is definitely a basic supply and demand issue where we need to build as many units as we can but also at the same time we need to stabilize the existing affordable units before they get gentrified and rents rise there as well. I believe that we, as Jewish foundation stakeholders, can join forces together to use program-related investments (PRIs), grants and mission-related investments (MRIs) in public-private partnerships to make a difference with a great new solution.

How can we do it?

Our HAPI foundation, in conjunction with another Jewish funder, the KBVF Foundation of Malibu, CA, just purchased the first pilot program with the City of Los Angeles to provide supportive housing to affordable residents. This Koreatown 1920’s building is 50 units comprised of studio and one-bedrooms and what we call NOAH (Naturally Occurring Affordable Housing), which, simply put, is taking older, neglected apartment buildings and deeming them affordable for 55 years. This makes a lot of sense for two reasons: 1) it is a purchase at 40% of replacement cost; and 2) it avoids the issues of “NIMBY” (Not In My Backyard) because the building already exists and neighbors can’t stop us from doing it. This approach may seem obvious, but of course some of the best solutions are common sense rather than something sexy, shiny and new.

How did this public-private partnership come together? Our two foundations provided a 2% interest Program Related Investment in the amount of $3.2 million to a bridge loan of $7.2 mm in order to purchase the asset. Our $3.2 mm of PRI loans will be refinanced out down to as little as $500K with new financing from the state of California and “soft money” loans from the State of California and the City of Los Angeles. As a “quid pro quo” for providing all the units as affordable at various levels of Area Median Income, we expect a property tax abatement from the County Assessor to help offset this reduction in market rents.

In addition, the current affordable rents are in most instances not quite high enough to make these older rehab deals work. An additional solution we have come up with is a “supplemental voucher” program which would be in the form of a grant (as opposed to a PRI). As little as $150 per month in rent per affordable unit can often be what is needed to bridge the gap to break even and after 3 or 4 years the affordable rents will catch up to the rents needed on such NOAH investments.

This is a prime example of how collaboration is the only way to solve these challenges, and we at the HAPI Foundation are doing our part by proving a model for others to follow.

Please join and collaborate with us and we can help repair the world (Tikkun Olam) one apartment at a time. We have taken the hardest step in proving the model – now it is time for everyone else to jump in too! I am looking to form the first “PRI Affordable Housing Fund” and invite you to email me to join us as we make history at elorin@strategicrh.com.

Article originally published in Jewish Philanthropy.

 

How You Can Help Fix America’s Affordable Housing Crisis – Originally Published in Forbes

 

housing crisisEvery day across America, individuals and families are looking for clean, safe houses and apartments that are affordable, a term the U.S. Department of Housing and Urban Development defines as “housing for which the occupant(s) is/are paying no more than 30 percent of his or her income for gross housing costs, including utilities.” Homes that are affordable are a necessary and tangible asset for any adult or family to survive and thrive, but there simply aren’t enough of them to go around.

Federal Reserve findings indicate a growing percentage of renters are either cost-burdened or extremely cost-burdened by rising rents and stagnating incomes. The Joint Center for Housing Studies (JCHS) of Harvard University published a 2017 study that found more than one-third of U.S. households were rental units. The research further suggests that overall household growth will be strong over the next decade as larger numbers of the extremely large millennial generation move out on their own — therefore pushing the number of households in our country, higher.

So what can we do? Eddie Lorin, Member of the Forbes Real Estate Council, presents to ForbesCommunityVoice readers a few ways we can help fix the housing affordability crisis (and potentially earn financial returns along the way).

Read Forbes Article –>>

Download PDF Version –>>

New Socially Focused Impact Housing REIT to Acquire Maryland Apartment Community

Investors Can Own a Piece of This Property and Future Properties Through the Impact Housing REIT Offering; To Learn More About This Investment Opportunity, Register for a Live CrowdStreet Webinar Here

LOS ANGELES, CA / March 8, 2018 / ImpactHousing.com is a new social impact Real Estate Investment Trust (REIT) on a mission to purchase and transform old, neglected and/or mismanaged apartment communities nationwide while keeping them affordable for low and middle-income residents. The REIT is set to acquire its first multifamily apartment community, a twelve-story, 143-unit high rise located in Southern Maryland, just outside Washington D.C.alongside a group of sophisticated real estate investors who have already committed over $5.5 million to the project. Currently, at 96% occupancy, this apartment community is categorized as a “Naturally Occurring Affordable Housing” (NOAH) asset, which means it’s affordable for those with incomes at or less than 80% of Area Median Income (AMI).

Under the direction of Impact Housing REIT’s Founder, Eddie Lorin, an Affordable Housing Preservationist, the Company plans to keep it that way – affordable for hard-working individuals and families, while delivering positive financial, social and environmental (“Triple Bottom Line”) returns to investors through low cost, high value aesthetic and eco-friendly interior and exterior improvements, and free onsite after-school activities, fitness classes, health and wellness programming through its non-profit partner, the Healthy Apartment Property Initiative (HAPI) Foundation.

For a brief video overview of the Southern Maryland investment opportunity, click here. To read about it in more detail on the Company’s website, click here.

“Not only is this asset a ‘diamond in the rough’ socially responsible investment (SRI) that has the potential for the same great financial returns we’ve achieved in past for institutional and private investors, but also it helps solve a real problem in our country. The lack of quality housing that’s affordable is a real problem that affects all facets of our society,” commented Eddie Lorin, Founder of Impact Housing REIT and its Sponsor Strategic Realty Holdings LLC.

Lorin added, “We’re doing our part by deeming this first investment in Maryland – just outside our nation’s capital – affordable, and by allowing anyone and everyone to invest alongside us. To make sure everyone has an opportunity to invest, not just the wealthy, we’ve reduced the minimum investment to $1,000 for this project. We welcome investors across the globe to co-invest with us in what we believe will be the first of many impact-driven socially responsible investments in the workforce housing multifamily sector.”

Management will be hosting a livonline Update Webinar Friday, March 16th, from 1:00 PM – 2:00 PM EST / 10:00 AM – 11:00 AM PST to discuss the project, the investment opportunity and the roadmap for 2018 before opening the event to Q&A. Current and potential Impact Housing REIT and CrowdStreet investors are welcome to attend for free. To register for the event, click here.

Impact Housing REIT’s Sponsor, Strategic Realty Holdings, has an impressive track record. Over the past 9 years, their team acquired 72 multifamily properties similar to Southern Maryland. Of those properties, 40 have completed their full investment cycle from acquisition to renovation to lease-up to sale, and on average, achieved:

  • 48% increase in Net Income
  • Annual cash on cash returns of 8.55%
  • Annual Internal Rates of returns averaging 24.77%

Note: Past performance does not guarantee future results. This property may or may not ultimately close escrow subject to due diligence and other various factors. Impact Housing REIT cannot guarantee that this specific property will end up being one of the multiple assets owned by the fund.

With a lower minimum investment, Impact Housing REIT has made it possible for any person, foundation, corporation, family office, a fund that’s committed to socially responsible investing – to earn real returns that help solve real problems. See more on how to invest, click here. If you would like to join our effort and invest alongside us in what we expect will be the first of many impact-driven multifamily investments, please visit ImpactHousing.com or email us at invest@ImpactHousing.com.

About Impact Housing REIT, LLC

Impact Housing REIT, LLC is a company founded by Edward (“Eddie”) P. Lorin, a 30-year multifamily real estate veteran, focusing primarily on value-add and/or under-performing multifamily properties nationwide. Since 2001, the Impact Housing management team has participated, as Principal or Advisor, in the purchase and transformation of more than $3 Billion worth of multifamily real estate amounting to more than 180 communities with approximately 40,000 apartment units nationwide. For more information on Impact Housing REIT, visit: ImpactHousing.com, watch our video, like us on Facebook, follow us on LinkedIn and Twitter at @theGOODREIT

Read more: http://www.digitaljournal.com/pr/3688814#ixzz59XzZekBH

Eddie Lorin to Keynote ‘Impact Real Estate Bootcamp Series’

The series is sponsored by the Jacob and Anita Penzer Foundation, produced by Alexander Golding, in Partnership with Jewish Funders Network

LOS ANGELES, CA / November 29, 2017 / Impact Housing REIT, LLC (Impact Housing) Founder and CEO, Eddie Lorin, will keynote the launch of bootcamp series on Impact Real Estate on Monday, December 4th in New York CityThe speaker series, designed to convene and connect real estate investors and owners, and educate around the material topics that encompass impact real estate, will be comprised of roundtable discussions hosted by experts in the field.

The first session, hosted by Eddie Lorin, will cover affordable housing, the affordability of housing, cleantech retrofits in low-income neighborhoods, securing government contracts, LIHTC considerations, important legal structures, and 21st century job re-training through green real estate retrofits, and will be followed by a cocktail party. Attendees can expect to leave with actionable takeaways to employ in your future impact real estate investments.

Date: Monday, December 04, 2017
Time: 3:00pm – 6:30pm EST.
Location: Seyfarth Shaw LLP, 620 8th Avenue #33, NYC NY

To sign up visit www.AlexanderGolding.com or Eventbrite. Members of Jewish Funders Network should contact Shira for a JFN registration code.

About Impact Housing REIT, LLC

Impact Housing REIT, LLC is a company founded by Edward (“Eddie”) P. Lorin, a 30-year multifamily real estate veteran, focusing primarily on value-add and/or under-performing multifamily properties nationwide. Since 2001, the Impact Housing management team, has participated, as Principal or Advisor, in the purchase and transformation of more than $3 Billion worth of multifamily real estate amounting to more than 180 communities with approximately 40,000 apartment units nationwide. For more information on Impact Housing REIT, visit: www.ImpactHousing.com, watch our video, like us on Facebook, follow us on LinkedIn and Twitter at @theGOODREIT.

 

SOURCE: Impact Housing REIT, LLC

Read more: http://www.digitaljournal.com/pr/3579055#ixzz50gSmDSIU

Impact Housing REIT Launches $35M Real Estate Crowdfunding Opportunity

New impact real estate crowdfunding opportunity is focused on solving the housing crisis in America. CrowdStreet, a leading real estate investment technology provider, is powering the online investment offering and providing access to their existing network of accredited and unaccredited investors.

READ MORE

Going All In: Dispatch from the Mission Investors Exchange Conference – Eddie Lorin

Article Source: Jewish Funders Network Blog

Doing well by doing good! The Mission Investors Exchange conference in Baltimore provided incredible hope and promise for a new tomorrow with over 500 of the nation’s top Impact Investors there to learn how philanthropy meets investment.

Darren Walker, president of the Ford Foundation, pledged that it is time for their “95% money” to start acting like the rest of their mission expenditures by going all in with 100% of their assets in Impact and Mission Oriented Investments. This is clearly a historic movement that he hopes will be an example to all Foundations to rethink their stock and bond portfolios and the meaning associated with them. “The time has come to innovate and create new products to serve the extraordinary interest in Impact Investing today.”

In today’s extremely competitive real estate environment, finding a solid, acceptable yield that makes both a social and financial impact is challenging at the least and downright daunting in most instances. The question is whether the financial professionals and their credit/investment committees are ready to take that lower yield in exchange for measured, social results. Is the difference worth 200 or 300 basis points between the proverbial low teens net yield and the yield associated with a true impact investment? Of course if an “Impact Investment” return is comparable to a market investment, then one must question if that investment has any true, measurable impact.

I can tell you as an active fund manager in the nationwide preservation of affordable housing, the competition to acquire buildings most difficult to match is in the form of either investors who project spending little (if any) in capital improvements (to maximize cash flow) or those who plan to displace these affordable residents by petitioning to remove the rental restrictions and bring the apartment community back to market rental rate returns. Either way, these affordable residents suffer by either living in potentially substandard conditions or being forced to find another affordable home where a massive shortage of housing stock undoubtedly already exists.

Most affordable assets were built using governmental or tax credit subsidies that expire for the original investor/developers of these assets after 15 years and the rent restrictions usually last anywhere from an additional 15 to 40 years unless a new buyer petitions to remove them. When a buyer chooses to keep restrictions in place, as we do, the rental upside is limited and capital improvement investments are usually not rewarded enough to justify a market rate investment. When you add to that social impact programming the gap clearly widens between a market return and a verifiable impact one. We acquire assets and implement a significant capital expenditure plan that starts from the street on the exteriors and ends inside each dwelling unit resulting in a completely refreshed property. Further enhancing our residents’ experience, we implement Health and Wellness through our 501C HAPI Foundation in the form of health screening, programming and after school education.

It is critical that the fund manager have specific, measurable reporting standards proving the social impact (and not just financial returns) provided to make sure this potentially lower return is substantially documented.

For Jewish philanthropists looking to get started with Impact Investing, a good place to start is the new Jewish Funders Network edition of the Guide to Program Related Investments by Mission Investors Exchange. It offers a broad range of practical information that Jewish philanthropists need to bring PRIs and other Mission Related Impact Investments into their work. It also contextualizes that information within the Jewish community, thanks to valuable additions to MIE’s work by Yigal Kerszenbaum from The Rockefeller Foundation.

Doing well financially by doing good! Just imagine if Darren Walker ’s pledge is followed by the major Foundations in this country and significant capital is funneled into impact investments. This movement will truly help change and heal the world. Look out bond traders!

Eddie Lorin is Co-Founder of HAPI Foundation and the Alliant Strategic Preservation family of funds in Woodland Hills, CA. He can be reached at 818-472-5666.

To view the original article, click here.

Date published: 5 – 19 – 2016

Impact Housing REIT, LLC.
$1,000
Minimum
Quarterly
Dividend
A reservation is not an investment. A reservation is non-binding and you will need to confirm your reservation when Impact Housing REIT, LLC offering is live to invest. By making a reservation, you are requesting an allocation in Impact Housing REIT's upcoming offering. A copy of the Preliminary Offering Circular may be obtained here. A reservation is non-binding and you may change the amount at any time. Reservations may be accepted in whole, or in part, or not at all by Impact Housing REIT. If granted, you will be asked to confirm your investment once Impact Housing REIT's offering has been qualified by applicable authorities and the fundraise has officially begun.


Disclaimer
Impact Housing REIT, LLC will invest in multifamily properties, income-producing real estate, a market that may produce returns that are different than the returns an investor could expect from other markets, including the stock market. Before our Sponsor receives anything, investors are entitled to a 7% annual return on their investment. Note: There is no guaranty that investors will receive any return on their investment, or get their capital back. In the last 5 years, the Sponsor has completed 28 projects (totaling 40 multifamily properties) which have achieved an average annual cash on cash return of 8.55% and an average project IRR of 24.74%. For more information about the Sponsor’s track record, see the Offering Circular, here. However, Impact Housing REIT, LLC is itself a newly formed company with no historical data of returns, and there is no assurance that it will achieve comparable success. The results that the Sponsor has achieved in the past do not guaranty that it will achieve similar results in the future. Like any investment, there is the potential to lose some or all of your investment. The ability to make distributions will depend on the availability of cash flow each quarter. There is no guarantee that we will be able to make a distribution in any given quarter. For a list of the most significant risks, click here.
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Under Contract: Maryland
* Highrise with spectacular views
* Twelve Floors, 143 Units
* Built in 1969
* Strong 96% Occupancy
* Naturally Occurring Affordable Housing
* RUBS / Water Conservation Potential
* Purchase Price: $7m to $8m
*Note that this property may or may not ultimately close escrow subject to due diligence and other various factors. Impact Housing REIT cannot guarantee that this specific property will end up being one of the multiple assets owned by the fund.
Target: Colorado Springs
* Mountain views
* Near commercial district
* 64 Units
* Built in 1967
* New roofs recently installed
* Units currently renting below market
* Purchase Price: $5m to $6m
*Note that this property may or may not ultimately close escrow subject to due diligence and other various factors. Impact Housing REIT cannot guarantee that this specific property will end up being one of the multiple assets owned by the fund.
Target: Mesquite, Texas
* Strong submarket: 96% Occupancy
* Located in suburb just outside of Dallas
* Multifamily, 190 Units
* Built in 1959 -1972
* New roofs recently installed
* Renting at 25% - 50% below market
* Purchase Price: $8m to $9m
*Note that this property may or may not ultimately close escrow subject to due diligence and other various factors. Impact Housing REIT cannot guarantee that this specific property will end up being one of the multiple assets owned by the fund.
Disclaimer
Impact Housing REIT investments are expected to be spread throughout the United States. The Manager expects Impact Housing REIT’s investment portfolio to consist of direct equity interests in individual properties. The Manager will generally target equity investments ranging from approximately $3 million to $10 million. Note that these properties may or may not ultimately close escrow subject to due diligence and other various factors. Impact Housing REIT cannot guarantee that these specific properties will end up being one of the multiple assets owned by the fund or that investors will receive any return on their investment, or get their capital back. In the last 5 years, the Sponsor has completed 28 projects (totaling 40 multifamily properties) which have achieved an average annual cash on cash return of 8.55% and an average project IRR of 24.74%. Past performance cannot guaranty future results. For information on our Sponsor’s track record, see the Offering Circular, here.