Buying and renovating older Class B and C apartment buildings has proved to be a good strategy for widening the renter demand pool. Savvy investors working value-add opportunities seek to improve older buildings. The strategy typically is to raise rents with certain improvements that attract residents who want more than a typical, aging Class B or C property but can’t afford to pay the type of rent currently being charged for new Class A apartments.
The demand for affordable housing remains strong and provides economic benefits to communities. The Low-Income Housing Tax Credit (LIHTC) is an investment incentive for affordable housing to help meet the demand. It offers tax credits and subsidies to investors who build housing for residents that meet certain income level requirements.