Rehabber converts distressed single-family home into a fourplex that improves an upscale neighborhood—and provides affordable housing.

The Opportunity

LNH Capital saw an opportunity to rehab a highly distressed 1-bedroom, 1-bathroom property to match the look and feel of the multimillion-dollar neighborhood in which it is located—and realize hundreds of thousands of dollars of equity via value appreciation.

Exit Strategy

The exit strategy was to refinance into a long-term investor rental loan.

Solutions & Outcomes/Results of Loan

As a result of the rehab, the property value increased more than a million dollars. Total rental income went from $4,000 a month as a single-family residence to $10,000 a month across four units. This earns additional income for the housing provider, and based on local rents, means more affordable housing for local families.

An important aspect of the approach involved partnering with Section 8 housing assistance programs. Under this arrangement, Section 8 provided a premium to relocate families from lower-income areas to higher-income neighborhoods. Not only did this provide better living environments for these families, but it also allowed for the optimization of revenue streams. Previously, landlords were burdened with property maintenance costs resulting from tenant neglect. However, with the evolution of Section 8 policies, tenants are now responsible for property upkeep. This shift has been instrumental in enabling a 24% increase in revenue by renting to Section 8 tenants.

By focusing on Section 8 tenants, LNH Capital realized its tenant demographic was predominantly single mothers with multiple children. With the highest density of voucher holders being three-bedroom vouchers, LNH ensured units were tailored to appeal to this demographic.

By transitioning the property into multiple units, LNH created the opportunity to house more families and give them access to newly renovated dwellings in desirable neighborhoods. This not only elevates their living standards but also presents opportunities for better schooling and enhanced community amenities, fostering a mutually beneficial environment for all stakeholders involved.

This project showed the borrower’s dedication to providing quality housing solutions while uplifting communities and improving lives.