by Gleb Lerman, The Affordable Oracle

Mayor Mike Bloomberg’s Affordable Housing Plan has grandiose ambitions to create 165,000 affordable units. So how does an owner of a rent stabilized building benefit from this monumental commitment of tax dollars. Simple, get your low-income, rent stabilized tenants to register for the housing lotteries and hope they win. Your management company should stay on top of housing opportunities and when one becomes available reach out to the tenants and help them fill out an application. If they win you win.

Lets say you have a low-income tenant that is occupying a 4BR apartment for $700 per month. If you turn over that unit you know you can get $2,200/mo for it. In an 8% yield environment that turnover will increase the worth of you building by a quarter of a million dollars, not bad for filling out a lottery application.

Now this is a perfect scenario and in the real world and you have to consider the following things:

  • What if you tenant still wants a buy-out to move.
  • What if your tenant sublets the affordable unit to a family member illegally?
  • You will have to perform a lot of work on the apartment to get the rent up to market?
  • What if every landlord starts doing this and the chances of winning the lottery move from 1 out of 1,000 to 1 out of 10,000?

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