THE MOST SUCCESSFUL OPERATORS ARE NOT AVOIDING LOW-INCOME TENANTS.
HOW SMART CAPITAL AND OWNERS ARE RESPONDING
Smart capital and experienced owners are taking one of two paths. Some are moving decisively toward assets that reduce political and regulatory exposure entirely. These include newly built multifamily outside of rent control regimes, Build- to-Rent communities, single-family rental portfolios, and ground-up development with clean regulatory frameworks. Others are strategically targeting institutional- level affordable housing where policy support can be leveraged. This includes utilizing federal and state tax credits, local zoning density increases, tax abatements, and other incentives that align long-term cash flow with predictable, government- backed structures. Capital has not left housing. Even in highly regulated markets, investors continue to deploy capital into high-amenity, A+ location new-build multifamily projects. At Relevant Partners, our upcoming downtown Los Angeles multifamily developments (over 750 units between two
buildings) have already secured commitments from domestic and international investors, reflecting this broader trend. Investors are seeking assets that combine robust fundamentals with insulation from the legacy regulatory and political risks affecting older Class B and C portfolios. At the same time, some financial firms see opportunity in providing high leverage debt to struggling operators, while others are positioning to acquire Class B and C properties at significant discounts to recent pricing. These strategies aim to capture upside, but they require careful underwriting of growing political, regulatory, and voucher-driven risks. These risks can quickly erode cash flow if assumptions on rent levels, funding, or policy enforcement shift unexpectedly. The most successful operators are not avoiding low-income tenants. They are strategically managing exposure to unpredictable governance while maintaining optionality, cash flow stability, and long-term liquidity.
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