For many real estate developers, maximizing return is a high priority. When the developers flip real estate, they buy a dilapidated home at a bargain price, fix it up and sell it at a much higher price.
With new projects, the investors build amenity-filled luxury apartments knowing they can charge high rents to their wealthy target market.
What about the middle market who can’t afford the luxury rents and don’t qualify for low income units?
The Philadelphia rental market grows
Changing economics have shifted the rental market in Philadelphia and other areas. Lending remains tight for consumers after the housing crises with fewer people qualifying for loans.
Millennials left school with lots of student loan debt and mortgages are often out of the question for them. Baby Boomers are downsizing and want someone else do the maintenance.
The biggest shift in real estate is with people starting families who continue to rent. The problem is many apartments aren’t set up for families.
Entrepreneur sees an opportunity for middle income families
Tawan Davis, a New York-based real estate entrepreneur moved to Philadelphia with a dream – to re-develop property specifically with working families in mind.
Philadelphia has plenty of distressed single-family housing. At one point in Philly’s history, the homes were built to foster home ownership. Now these properties are in disrepair, abandoned or in foreclosure. That’s where Davis comes in.
Since Philadelphia law prohibits Davis from buying large lots of these buildings from banks, he buys them one at a time. His company, Steinbridge Group, has already purchased 60 houses. He’d like to end up with around 400 to 600 properties in his management portfolio.
Community builder, not flipper
Davis intends to maintain the homes and create livable communities rather than flip them. His targeted tenants are working families, who want to live in safe, clean, affordable rental housing.
His strategy is different than most real estate developers and he believes Philadelphia is the perfect location to execute on his plans.
If you are a real estate developer, a contractor or are considering getting into the real estate business you may wish to consult an attorney who focuses on real estate law.