Creating Community and Building Wealth: My Investment in Workforce Housing - Part One
Real estate remains an attractive investment sector in our current markets. It can be a valuable addition to your investment portfolio due to the consistently high demand for housing nationwide: people always need a place to live, and the tight housing market and lack of affordable options continue to make investing in real estate projects a lucrative opportunity.
Building on this potential, I’ve decided to personally engage in the sector by spearheading a major real estate development project in Los Alamos, New Mexico. This investment initiative includes 550 housing units and 100,000 sq. ft. of office/lab commercial space to be developed in the next 5 years. The goal is to create a sustainable and financially solvent solution to the region’s workforce housing shortage.
Why specifically workforce housing?
Workforce housing development projects help address the critical housing shortages plaguing essential workers, who are the foundation of our labor force and communities. Having a place to live near where they work will help build their community, and contribute to its long-term economic resilience and sustainability.
My Los Alamos project will not only promote retention of the valuable employees that make up the local workforce but also grow and foster this community by developing a true tech campus unicorn.
Los Alamos: A Center for Research and Innovation
Los Alamos, New Mexico, is a county that rose to the forefront of national security with the Manhattan Project during World War II. It’s home to the Los Alamos National Laboratory (LANL), which has evolved over the decades since the war to become one of the premier research institutions in the U.S., focusing on national security, science, energy, and environmental management.
LANL is a major economic driver for the region, with federal funding that supports local businesses and contributes to the overall economic health of the area. The lab also serves as a cornerstone of the local community, attracting workers from around the world—it employs thousands of scientists, engineers, and support staff.
The increasing demand for housing in Los Alamos, fueled by its growing workforce, has highlighted a critical need for sustainable and affordable housing solutions in the community.
Why We Need Workforce Housing
The demand for workforce housing across the country has been on the rise in recent years, due to several national trends:
Rising Housing Costs: Housing costs have skyrocketed, outpacing wage growth. This has made it increasingly difficult for middle- and lower-income earners to find affordable housing near their workplaces. Add in the rising costs of land and construction, and housing affordability has reached a crisis point.
Urbanization and Economic Growth: Expanding urban areas experience higher job growth rates compared to rural areas. This influx of people drives up the demand for housing, which leads to increased prices. Workforce housing projects provide affordable housing options within or near urban areas.
Transportation and Commuter Challenges: Long commutes by workers from more affordable suburbs and rural areas to urban job centers contribute to increased stress, reduced productivity, and higher transportation costs. Workforce housing located close to employment hubs helps reduce commute times, improve work-life balance, and decrease transportation expenses.
Economic Diversity and Stability: A diverse workforce is crucial for the economic stability of any city. By ensuring that moderate-income workers can live near their workplaces, workforce housing helps maintain a balanced and diverse economy by enabling workers with a range of income levels to reside together in a community.
My Los Alamos project targets these pressing issues for the region. Los Alamos has experienced rising housing costs due to limited housing stock and increasing demand with its rapidly growing workforce, which has made it difficult for many workers to find local housing near their workplaces.
LANL competes with other national laboratories and leading private-sector companies for top-tier talent. By providing affordable and accessible workforce housing, Los Alamos can attract and retain the highly skilled workforce they need.
The lab also employs a wide spectrum of workers beyond scientists and engineers—administrative and operational staff, maintenance, and security personnel. Affordable housing options help ensure that all employees can live nearby while promoting a stable and supportive community.
Why Workforce Housing Is a Smart Investment
Investing in workforce housing offers many benefits that can enhance your investment portfolio’s profitability and stability:
Consistent Income and Appreciation Potential: Workforce housing properties typically enjoy high occupancy rates due to the persistent demand for affordable housing, ensuring a steady stream of rental income. Properties in high-demand areas also tend to appreciate over time, providing capital gains in addition to income.
Tax Benefits: Federal, state, and local governments can provide tax benefits to both developers and investors in workforce housing, which can significantly reduce your tax liabilities and maximize your returns.
Lower Turnover Costs: Workforce housing often attracts long-term tenants who value affordable living close to their workplace. This results in lower property turnover rates and associated costs including home improvements and vacancy periods.
Diversified Revenue Streams: Including office and commercial space in workforce housing projects can create additional revenue streams, enhancing your overall returns and financial stability.
Market Resilience: Workforce housing is less susceptible to market downturns than luxury or high-end properties—it caters to a fundamental need for affordable living, ensuring demand remains strong even during economic recessions.
Inflation Hedge: Real estate generally serves as a hedge against inflation. Property values and rents typically increase with inflation, which helps to protect your investment returns.
How To Invest in Workforce Housing with Your SDIRA
As with any investment, investing in workforce housing requires you to do your research and due diligence. Do your homework and take the time to identify the opportunities that fit your objectives and risk tolerance, so you can maximize the potential of your investment.
When seeking out investment locations, focus on areas with strong employment growth but a lack of local housing—these are the areas to target. Identify suitable workforce housing properties that meet your investment criteria. This can include residential units or mixed-use developments with commercial spaces, like my Los Alamos project.
Most importantly, make sure you conduct thorough due diligence, including property inspections, market analysis, and financial projections before you commit.
At Chicago Trust Administration Services, we use our experience and knowledge to help you take advantage of real estate investment opportunities like workforce housing in your self-directed Individual Retirement Account (SDIRA) portfolio. We provide you with the necessary regulatory guidance and compliance for alternative investments in your SDIRA.
To see how we can help, we invite you to schedule a complimentary meeting with us. Give us a call at 312-869-9394, or email steve@ctasira.com.
___________________________________________________________________________
*The content and opinions in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
**CTAS professionals are not financial advisors and cannot provide advice or recommendations regarding specific investment decisions.