Affordable Housing Investment Fund

September 15th, 2022
housing, ideas
Lots of people are looking for investments they can feel good about, which makes me think people might be interested in putting a portion of their savings toward helping resolve the housing crisis if it offered a reasonable return. The idea is that you construct 100% affordable housing in places like Somerville that offer large density bonuses for affordable housing. Sketching some numbers, it looks to me like this is:
  • Potentially very profitable: ~2x ROI over ~3y, which is about ~25% annual growth. It's likely not actually that amazing when you factor in other aspects I don't know about, but there's a lot of room for a lower ROI that's still pretty attractive.

  • A large opportunity: you could build 8k units in Somerville for ~$2.8B. This is ~$0.8B in land purchase (assuming city assessments are half the purchase price on average) and ~$2B in construction (assuming a cost of $200/sqft). Much larger when you consider all the other municipalities that have similar programs.

A group of neighbors pooling their funds to help resolve the housing crisis is also a lot more politically robust than independent for-profit developers coming in.

Does anything like this exist? Has anyone considered starting something?

Referenced in: Better Construction Cost Estimates?

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