In a recent article, Aeon’s Laura Russ offers insightful takeaways from this unique market on what operators face today in the Multi-Housing News, Laura Russ lays out the uncomfortable truths.
- Rent control works against capital improvements. “The strict rent control policy enacted in St. Paul, coupled with the eviction moratorium and the overall economic volatility that followed the post-pandemic boom, have all made it harder for Twin Cities multifamily operators to manage their properties, particularly for those active in the affordable housing arena.”
- Managment of affordable housing is the long haul pull, as opposed to the initial heady deal making. “I think, in general, there is an underappreciation of the management and operation of affordable housing. The fee structure incentivizes getting the deal done over the long-term success of the property as an ongoing community.”
- Crime in a rental community acts as a tax. “For example, security issues are a big topic at many of our properties right now. Essentially this adds a ‘tax’ onto our properties because of the increased spending required. Some local policies have made it harder for us to remove residents who have engaged in dangerous behavior which is sometimes required in order to protect the rest of our residents.”
- Administrative overhead caused by detailed laws takes money away from keeping property affordable. “Again, these types of policies have a lot of unintended impacts. The main one is that it is taking a lot of time and money for lawyers and accountants to understand and interpret the rules that are not well understood often even by the cities themselves. This takes away from what we would rather be doing which is producing and running housing.”
Read the whole article.
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