The Covid19 pandemic proved once again the truth in the saying ‘every cloud has a silver lining.’ Although the pandemic has been extremely devastating, killed millions of people worldwide, and still cropping up its deadly head at various places, it has created new investment opportunities in real estate. If availed correctly, the opportunities can significantly help to improve the supply of affordable workforce housing and mitigate the crisis to some extent, although things will not change overnight, feels Maxwell Drever.
The hospitality sector was the worst hit by the pandemic. As vaccinations gain momentum and the government relaxes various Covid related curbs to accelerate the economic revival, there seems to be some hope for the sector making a turnaround. Since hotels and motels might take about 2-3 years to ensure full recovery, it poses questions about survival during this time. Instead, converting the properties into affordable workforce housing provides a lifeline to hotel owners who can monetize the property and look for other means of survival instead of hoping for the best and chasing an elusive recovery target.
Converting the distressed properties into affordable housing
Maxwell Drever has been a pioneer in affordable workforce housing for many years and contributed immensely to the real estate segment for mitigating the housing crisis. To overcome the challenges of constructing affordable housing from scratch that goes through a complex process involving several agencies at the federal, state, and local level with the high cost and longer time for delivery, it is easier to convert hotels and motels into multifamily units. Since hotels have similar structures, plans, and home amenities, minimal modification is necessary to convert them into workforce housing. Moreover, the investment is also lower than any Greenfield housing project, which helps to keep the costs considerably lower. Consequently, the rentals of the properties are well within reach of the middle income group that can afford to access the property more conveniently.
Low ownership costs
One of the ways of keeping costs low is to ensure maximum utilization of hotel space that allows the creation of more living units that are much better than the affordable housing for low-income groups built with the help of government subsidies. Besides investors and property developers, architects play a critical role in evaluating the property to assess the possibilities of conversion by maximizing the space in the best way possible. The efforts pay back well as reducing rents by almost 20% through sensible conversion without making major changes to the property.
Since hotels’ construction, design, and layout have close similarities to residential homes, the efforts and investments for conversion are lower than building new homes. It does away with the high cost of construction materials, which is why the exceptionally high price of new homes.
Proper evaluation of the property by a team of developers and architects helps identify the potential for quick conversion and determine the project’s economic feasibility so that it meets the expectations of creating low rental properties.