Havens Homes is using existing practices in a novel way to address our affordable housing shortage, so we understand you may have questions. Here are answers to some of the most common. If you have a question we didn’t answer here, please feel free to contact us!
What is the mission of Havens Homes?
Our mission is two-fold – first, to increase the availability of affordable for people making 30-120% of median income; and second, to show that a business engaged in such an endeavor can be profitable. We currently operate in one of the most expensive housing markets in the country; and if we can make it work here, we’re confident we can do it in less expensive areas as well. As we grow, we will plan to hire others to employ our business model in other communities. Together, we can make a huge impact in a goal that all of us share – to have enough affordable housing for everyone.
Where did the idea for Havens Homes come from?
We realized that right now, all across America, millions of people are living in mobile homes, duplexes, 4-plexes, townhomes, and apartment buildings. They’re already built, they’re already zoned for residential purposes, they require no new construction, and their neighbors aren’t complaining that they’re there. These are homes in every sense of the word, except that the people living in them can’t buy them. They can rent them for the rest of their lives, but the vast majority of these people can’t purchase the buildings they live in – which means they can’t build equity, guarantee themselves a fixed monthly payment, or develop generational wealth.
But what if they could? That’s the question our business is trying to solve.
How exactly do you “convert” a building from rentable to purchasable?
The difference between an apartment building (which is full of rented units) and a condo building (which is full of purchased ones) is largely a legal issue. The apartment building is owned by a single entity, while the condo building is owned by individual owners. Structurally, however, the two types of residences are essentially identical.
The process Havens Homes will undergo, therefore, is primarily a legal one. We will first contract surveyors to re-plat the building – that is, to create individual, discrete units out of a building that is currently considered a single entity. After doing any repairs/upgrades necessary to make the individual units sale-worthy, we will work with lawyers to “condominiumize” the building – that is, create the legal framework by which each unit is legally identified as a stand-alone property, develop the HOA agreements necessary to deal with shared expenses, and so forth.
The easiest way to think of this is that we are turning an apartment into a condo (or a mobile home park owned by a single entity into individual mobile homes owned by their occupants).
Are the buildings you plan on purchasing ones that people would actually want to buy?
The buildings we are targeting are duplexes, 4-plexes, apartment buildings, and mobile home parks. In terms of quality and design, they are identical to pre-fabricated homes, townhouses, and condominiums. The only difference is that the units in our target buildings currently cannot be purchased by individual owners. Our business will make it so that homeowners can buy individual units, the same way that people currently purchase townhomes or condos.
We are NOT planning at this time to purchase single-family homes that have been converted into multiple apartments or commercial/industrial buildings that have been converted into housing. Those buildings often involve structural or design elements that make them less attractive for long-term homeownership.
How will Havens Homes make money?
We plan to attach a fixed-percentage surcharge to every housing transaction. We are currently targeting an 8% profit. (By comparison, new construction typically involves a 10-40% mark-up). Our goal is to strike an intelligent balance between having a profitable business and keeping costs as low as possible in order to offer truly affordable housing for median-income earners.
What’s to prevent people from purchasing these homes and then repurposing them as rentals or reselling them at a profit?
We plan to include a deed restriction on each property stipulating that the home being purchased shall be used as a primary residence (“owner-occupied”). This should eliminate the risk of these homes being “flipped” or used as rental properties (which is exactly the problem we are attempting to solve). However, once they are sold, they are no longer our property. If a homeowner chooses to resell their property at a profit, that is their right just like any other homeowner, and it is one of the goals of the business – to help people build equity and develop generational wealth.
How will Havens Homes handle areas of shared concern (maintenance to parking lots, shared structures, etc.)?
Residents of Havens Homes buildings will pay into an HOA or condominium association fund, just like residents of any other multi-family housing. Havens Homes will create the necessary paperwork and legal/financial structure for those agreements, and the fees paid by homeowners will cover any shared expenses. Special assessments may also be needed from time to time – again, no different than the financial vehicles that homeowners in current multi-family buildings employ.
What will happen to the current tenants of properties acquired by Havens Homes? Will they be forced out of their current home?
In an ideal world, we would acquire properties whose current tenants will be interested in and able to qualify for purchasing the units they currently live in. When this happens, we will simply connect them to our partner lenders, continue with our condominiumization, and facilitate the transfer of deed. This will not happen in every case, of course. However, the process of purchasing and converting any given property is likely to take 4-6 months, which will give current tenants ample time to make other arrangements if they have determined not to purchase their units.
What happens if Havens Homes is unable to sell a unit?
We don’t anticipate difficulty in selling any units, as the need for affordable housing is acute. However, if this were to occur, Havens Homes will simply continue to rent unsold units at market rates until a purchaser is found. These rents will cover any unanticipated expenses resulting from longer-than-predicted sales times and will ensure that Havens Homes does not become undercapitalized.
How will Havens Housing projects be affected by the Colorado Condo Defect Law?
Colorado Condo Defect Laws are designed to address potential issues regarding new construction. Because the buildings we plan to purchase already exist, there should be no liability under Colorado Condo Defect Laws. Pursuing a building inspection with the city or county, accompanied by the proper legal documentation prior to selling any individual unit to a qualified buyer, should be sufficient to eliminate this particular risk.
How will you address possible zoning issues?
All of the properties we intend to purchase are already built. They are already zoned residential, and our local zoning offices have already indicated that there will be no zoning concerns.