Over the past several years, housing operators (both affordable and market rate) have seen their share of challenges – and I don’t just mean Covid-19, inflation, and social reckonings. We’ve also seen increased operational costs, like exponentially higher insurance and security costs along with the need to raise money to cover costs like social services. The numbers add up quickly and have made the property operation space daunting for even the most seasoned and nimble among us.
But wait, there’s more. Compounding all of this is the increase in non-payment of rent – which makes it difficult to pay lenders, keep up with maintenance, and budget for emergency repairs – and a higher level of property damage and destruction – which makes it difficult and expensive to efficiently turn over units.
While there are certainly strategies operators are exploring to mitigate these issues, there’s something bigger at play and it’s harder to solve. It appears to me that there is something cracking – even breaking – in the social fabric of our community.
Of course, this isn’t a broad brush meant to paint all residents. Far from it. However, it is something I’m seeing across the entirety of our portfolio, talking about in every room I’m in with peers from the housing operator space, and thinking about nonstop. It makes developing a fundable operating model difficult when rent isn’t dependable, fixed costs are wildly unpredictable, and residents need support that falls far outside the scope of simply providing a home.
At its core, Aeon is a real estate development organization. Navigating this new normal requires a constant focus on rebuilding systems, processes, and tactics to match the reality of the current operating environment.
As the chasm widens between finite financial resources and the constantly increasing needs of properties and the residents, it is growing more and more difficult to make ends meet. We know change is difficult. I get that. However, if we, operators in the affordable housing space are to survive, we are going to have to throw out the old playbooks and become organizations that are nimble and innovative to manage disruption in our quest to provide residents a place they can call home.
