Unlocking Investment Potential: LIHTC Properties in Orange County
In the ever-evolving landscape of real estate, affordable housing remains a hot-button issue, especially in coveted regions like Orange County. A notable opportunity has emerged with the listing of a substantial multifamily asset: a 439-unit portfolio encompassing both the 335-unit Park Place Apartments and the 104-unit Plaza Court Apartments in Stanton. Managed by the Foundation for Affordable Housing, these properties are now up for grabs, presenting a significant chance for investors interested in affordable housing alternatives.
The Low-Income Housing Tax Credit (LIHTC) portfolio is not merely an investment; it’s a means to engage in socially responsible housing solutions. Both properties cater specifically to households earning between 40% and 60% of the area’s median income. Working alongside brokerage firms Newmark and Voit Real Estate Services, the seller has provided insights but withheld specific pricing guidance, making it an intriguing prospect for serious investors.
Strategically located along vital Orange County thoroughfares, the Park Place Apartments, established in 1996, and Plaza Court Apartments, dating back to 1963, provide essential accessibility. While Park Place lies at 7622 Katella Ave. with a significant presence of over 150 feet of street frontage, Plaza Court spans 3.24 acres at 11400 Court St. Both properties are situated a stone’s throw from popular attractions like Disneyland and UC Irvine’s $1.3 billion medical center, promising steady demand.
Financially, the structure of this portfolio hinges on California’s welfare tax exemption, effectively eliminating property taxes for units servicing lower-income families. This unique tax advantage, coupled with federal LIHTC allocations, creates an enticing investment profile. Though there are limitations, including capped rent levels and regulations on tenant selection, benefits like predictable cash flows and reduced operating costs make it appealing. Investors can achieve stable income streams while positively impacting the community.
A closer examination reveals the current operations leave substantial room for growth. The properties operate at below-market rents in the affordable segment and currently have lower-than-allowed Housing Choice Voucher tenant acceptance. Furthermore, opportunities exist for increased ancillary income through provisions such as storage rentals, parking fees, and pet fees. An intriguing aspect of the portfolio is the possibility for zoning upgrades, allowing for accessory dwelling units, though this would demand regulatory oversight and additional capital investment.
As the affordable housing pipeline in Orange County has notably slowed, this portfolio stands out. Currently, there are no new developments underway in the Stanton submarket. Struggles regarding construction costs and financing terms have hindered new projects. With a dwindling supply, the potential for rent growth could be significant as demographic shifts lead to more income-qualified households needing housing solutions. This listing comes at a strategic time, coinciding with an uptick in affordable housing transactions following a period of stagnation in early 2024.
Recognizing the growing appeal of LIHTC properties, investors range from nonprofit housing organizations and impact-focused funds to traditional real estate firms looking to diversify their portfolios. The unique opportunity offered by this Stanton LIHTC portfolio not only aligns with investor goals of financial returns but also champions a crucial social need. With Dean Zander of Newmark and Joe Leon of Voit Real Estate Services steering the sale, parties interested in maintaining sustainable investment models while addressing affordable housing should consider this potential acquisition.
For those looking to explore investment options in the affordable housing sector, particularly within prospects like the Stanton LIHTC portfolio, this is an opportunity that shouldn’t be overlooked. The long-term financial security and community impact promise to resonate in attempts to tackle the affordable housing crisis currently facing many urban areas.
For more information on this listing and the broader implications of LIHTC properties, check out The Registry Southern California Real Estate News.
