Assessing Property Management for Affordable Housing

This research examines how nonprofit owners of affordable multifamily rental housing choose their approach to property management. It draws on existing literature on property management, insight from leading policymakers and practitioners, and survey responses from Neighborhood Reinvestment Corporation's NeighborWorks organizations that participate in the Corporation's Multifamily Initiative. The paper explores how the structural features of a nonprofit's portfolio and local market, the owner's priorities driven by its mission and resources, and the capacity and incentives of managers shape the property-management approach that the owner embraces. It encourages owners to evaluate these factors and seek out a range of choices. By considering portfolio size and stage of organizational development, the importance of property management to the core mission, and the quality of property-management options in their local market, nonprofits can align their property management approach with the financial and mission-driven double bottom-line focus of their organization. The paper also presents findings that describe how third-party managers tend to bring economic advantages of efficiency, while nonprofit managers often better serve owners seeking to organize and empower resident communities.

Policymakers should be mindful of the constraints that limit nonprofits from being effective stewards of their properties: burdensome requirements for regulatory compliance, insufficient financial resources to support asset management, and an underwriting process in which funders and developers can underfund operating budgets because of a desire to stretch limited subsidies. Policymakers and intermediaries can improve the quality of property and asset management by continuing to invest in property- and asset-management training and funding for the growing numbers of nonprofits becoming owners and developers of affordable housing. They can also contribute in a meaningful way by helping nonprofits to clarify their mission focus and by providing them with examples of effective decision-making and ongoing management practices drawn from strong self-managed and vendor-managed properties.