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Seven Strategies for Successfully Marketing and Stabilizing the Occupancy of Mixed-Income/Mixed-Race Properties - Summary Report

June 16, 2006

Mixed-Income rental properties that include extremely low-income households (below 30 percent of AMI) are a valuable strategy for community health. They simultaneously address two critical challenges: housing for those most in need and desegregating poverty. Understanding how to operate mixed-income apartments profitably is important to increase the development and underwriting of these properties.With the generous support of the Ford Foundation, NeighborWorks America undertook this study of management and marketing practices of successful mixed-income properties that have served extremely low-income families while maintaining positive cash flow for at least five years.This report describes seven strategies used by these properties to stabilize and maintain high occupancy rates with healthy operating budgets. For each strategy, we provide concrete implementation examples.

Strategies for Successfully Marketing and Stabilizing the Occupancy of Mixed-Income/Mixed-Race Properties: A Case Study of Academy Homes 1 in Roxbury, Massachusetts

October 30, 2005

Academy Homes I is a 202-unit mixed-income, mixed-race rental property located in the Jackson Square neighborhood of Boston's Roxbury district. While Roxbury's population has declined modestly (3.8 percent from 1990 to 2000), the Hispanic population has been growing steadily and Roxbury is now 63 percent Black and 24 percent Hispanic. Most (83 percent) of its residential properties are comprised of one, two and three family dwellings where the owner-occupancy rate is 61 percent. The median residential sales price in Roxbury reached $406,000 in 2003, surpassing Boston's $380,000 median sales price.Academy Homes was built in the 1960s under HUD's 221(d)(3) program. It received upgrades to major building components (such as roofs and windows) in 2000 after the current ownership took over in 1998. It has three types of units: 43 percent are project-based Section 8; 33 percent are low income housing tax credit (LIHTC); and 24 percent are market rate. It is in a mixed-income, mixed-race urban neighborhood where residents are comfortable with economic and racial diversity. It is diagonally across the street from a rapid transit "T" station. Schools, a sizeable grocery store, shopping and restaurants are all within walking distance. It is one of several large multi-family complexes clustered in the area that total 2000 units.

Strategies for Successfully Marketing and Stabilizing the Occupancy of Mixed-Income/Mixed-Race Properties: A Case Study of Auburn Court, Phase 1 in Cambridge, Massachusetts

October 30, 2005

Auburn Court is a 137-unit mixed-income, mixed-race property in Cambridge, Massachusetts. The property is nearly evenly divided between market-rate (34%) and moderate-rate (16%) units and low-income (50%) units. The surrounding community is an increasingly gentrifying mixed-use neighborhood with housing, offices, MIT research facilities, a hotel, and retail shopping. The property was completed in two phases because of the slow housing market in the mid-1990s. The first phase was completed in 1996 (77 units) and the second phase was completed in 2000 (60 units).

Strategies for Successfully Marketing and Stabilizing the Occupancy of Mixed-Income/Mixed-Race Properties: A Case Study of Cedar Road Apartments in Vista, California

October 30, 2005

Cedar Road is a 40-unit mixed income, mixed-race property in Vista, California. Vista is a fast growing city 35 miles north of San Diego. Its population grew 29 percent between 1990 and 2003 and almost all of that growth has been in the Hispanic population that now represents 41 percent of the city's population.Cedar Road is divided between very-low (30 percent) and low-income (70 percent) households. Most of the very low-income households are part of a transitional housing program for homeless families that uses 10 of the 40 units.Cedar Road was completed in 1996 as the first phase of a two-phase project. The second phase, Nettleton Road, contains 28 units and was completed in 1999. Although this study is about Cedar Road, the two phases are operated as one property and together encircle a central courtyard. The properties are located in a modest residential neighborhood of small single-family homes and conventional apartment complexes that are in fair condition. It is directly across from one of the best elementary schools in the City and is close to a busy thoroughfare of strip malls. It is the most attractive complex in the area.

Strategies for Successfully Marketing and Stabilizing the Occupancy of Mixed-Income/Mixed-Race Properties: A Case Study of Parkview Terrace in Poway, California

October 30, 2005

Parkview Terrace was built in 1998 and is a 92-unit mixed-income, mixed-race property in Poway, California. Poway has grown in just 30 years from a rural farming community with a trailer park image to a very desirable community of multi-million dollar homes with a renowned public school system. It is just 15 miles northeast of San Diego.Although Parkview Terrace's initial tenant eligibility is capped at 50 percent of AMI, long resident tenure -- spurred by an exploding real estate market and plentiful employment -- finds 43 percent of households now at or above 60 percent of AMI. The immediate neighborhood, one of the lower income ones in the city, offers an extraordinary mix of modest residential, retail, municipal, recreational and educational opportunities, all within a few blocks.

Best Practices for Small and Rural New England Property Management Firms

January 1, 2002

Residential property management is easiest to do well and profitably when a large number of units are concentrated in a small number of properties located in close proximity. Many managers of residential rental property consider 150 to 200 units a minimum threshold for undertaking the management of a property. Many managers of affordable housing throughout New England and elsewhere, however, are operating without these advantages: their portfolios are modest in size; individual properties typically have less than 50 units and are often scattered over a large geographic area.Economies of scale can prove elusive for small properties or small portfolios. It is difficult to deploy management staff to administer and maintain properties over large geographic regions. Finally, many rural communities in New England have faced declining populations and softening real estate markets in recent years, creating further obstacles to profitable property management.We visited seven property management firms, both non-profit and for-profit, who are widely regarded as doing good work even in difficult environments to learn how some property managers faced these challenges successfully. They have portfolios that range in size from 65 to 2,000 units and from one to 65 entities. (An entity is any building or number of buildings that have the same ownership structure. All but one of the organizations manage less than 1,000 units. We also spoke with four firms in other parts of the country that face similar challenges. We found that while it may not always be possible to turn a profit, a well-run company can sustain high-quality affordable housing even in the face of these challenges.This article will highlight some of the successful strategies we observed are significant in managing small, rural or scattered properties.