Affordable and Workforce Housing: What Apartment Investors Should Understand

Apartment affordability is one of the most persistent issues facing U.S. households.

According to Harvard University’s Joint Center for Housing Studies, nearly one in two renter households is cost-burdened, meaning they spend more than 30% of their income on rent and utilities. Roughly one in four is severely cost-burdened, spending more than half of their income on housing.¹

The supply picture also adds pressure to this problem.

Research commissioned by the National Multifamily Housing Council and National Apartment Association estimates that the U.S. needs 4.3 million new apartment homes by 2035, including an existing shortage of roughly 600,000 apartments.²

For apartment investors, affordability creates a practical question and an opportunity.

How can quality apartments remain within reach for residents while the property is managed with enough discipline to sustain income and long-term value?

Affordable housing, workforce housing/attainable housing are terms often used together. They are related, but different in their structure.

What Is Affordable Housing?

Affordable housing usually refers to apartments reserved for lower-income households, generally around 60% of Area Median Income, or AMI. For example, if the AMI in a market is $100,000, then 60% of AMI is $60,000. A property serving residents at 60% of AMI is generally serving households at or below that income level, with limits adjusted by household size.

Affordable housing may serve working families, seniors, residents living on fixed incomes, and other lower-income households that need rent-restricted housing to remain within reach.

Rent is kept below market because the property follows income and rent limits tied to an affordable housing program.

One of the most common affordable housing structures is the Low-Income Housing Tax Credit, often called LIHTC. The LIHTC program provides tax credits to support the development or preservation of affordable rental housing. In exchange, the property must serve residents within certain income limits, keep rents within the required affordability range, and remain affordable for a set period of time, typically at least 30 years.

HUD Project-Based Section 8 is another structure, where rental assistance is tied to the property. The resident pays an approved portion of income toward rent, and the government pays the difference between the resident’s payment and the approved contract rent.

Public Facility Corporation structures, often called PFC structures, are used in some markets, including Texas. In a PFC structure, a public entity is typically involved in the property’s ownership or structure. In exchange for affordability commitments, the property may receive a property-tax benefit. Terms vary by jurisdiction and by deal. We discuss more about this in our article titled, Unlocking Texas’ Multifamily Tax Advantage.

Some properties use self-imposed affordability. In that case, the owner voluntarily commits to keeping rents within certain limits. The property may not be a traditional LIHTC or HUD-assisted community, but the owner still accepts an affordability commitment as part of the business plan.

For sponsors, affordable housing is both an investment strategy and an operating responsibility. The property may receive tax credits, rental assistance, tax abatements, or other public-private benefits, but each benefit comes with requirements.

For example, a LIHTC property may need to confirm that a resident’s income fits the required AMI limit before move-in and during annual certification. A HUD Project-Based Section 8 property may need to document the resident’s approved income contribution while the subsidy covers the remaining approved rent. A PFC property may receive a property-tax benefit in exchange for keeping a portion of units affordable to households at certain income levels.

In each case, the operator must manage the apartment community well while also staying inside the rules of the affordability program. The work ranges from qualifying residents and documenting rent limits to keeping the property maintained, leased, and financially sound.

Workforce or Attainable Housing: Serving the Middle of the Renter Base

Workforce housing, often also called attainable housing or middle-income housing, usually refers to apartments serving households in the middle of the income spectrum. These renters often earn too much to qualify for traditional affordable housing, but not enough to comfortably afford newer market-rate or luxury apartments.

This category is often discussed around households earning roughly 80% to 120% of AMI. If the AMI in a market is $100,000, then 80% of AMI is $80,000 and 120% of AMI is $120,000. Workforce or attainable housing generally serves households in that income range, though the exact definition can vary by market, sponsor, and structure.

Residents may include teachers, nurses, municipal workers, first responders, hospitality employees, service workers, and other households that need reasonably priced rental housing near jobs, schools, transportation, and daily life.

Unlike traditional affordable housing, workforce housing is often not tied to a subsidy program.

A workforce property may simply have rents that are naturally within reach for working households because of location, age, unit mix, or rent level. In other cases, a workforce property may include formal or voluntary affordability commitments, especially if a public-private structure is involved.

Market-rate apartments are generally priced based on local rental demand, without a formal affordability program controlling the rent. Workforce housing often sits below newer luxury apartments and above the most income-restricted affordable housing, serving the middle of the renter base.

Bill Stoll, our Chief Investment Officer, describes this part of the market through the difference between renters-by-necessity and renters-by-choice.

Renters-by-necessity are households that need rental housing because ownership is out of reach or because their income requires affordable rent. Affordable and workforce housing generally serve this group. These residents may include teachers, nurses, first responders, service workers, seniors, and working families looking for quality housing at a rent that fits the household budget.

Renters-by-choice have more flexibility. They may be able to afford homeownership or higher-priced rental options, but choose to rent for lifestyle, location, amenities, or convenience. This is more common in luxury or high-end market-rate apartments.

This distinction helps explain why affordable and workforce housing can have a different demand profile than luxury apartments. The demand is tied less to lifestyle preference and more to the basic need for well-located, reasonably priced housing.

Why Is Steadfast Positioned for Affordable and Workforce Housing?

Affordable and workforce housing strategies require a sponsor that can manage the deal structure and the apartment operations at the same time. When a property includes tax credits, rental assistance, tax abatements, or affordability commitments, compliance becomes part of the business plan.

Steadfast has experience on both sides. Since inception, we have acquired, managed, refurbished, or developed more than 55,000 apartment units and directed more than $8 billion of real estate activity across acquisitions, development, and management.

Our affordable housing experience spans LIHTC communities, HUD Project-Based Section 8 housing, Public Facility Corporation structures, self-imposed affordability, and mixed-income assets. We have also overseen twelve tax credit equity funds with approximately $240 million of asset value for institutional partners, including JPMorgan Chase, GE Capital, and Fannie Mae.

That experience includes the compliance work behind these structures, from income qualification and annual certifications to rent limits, documentation, inspections, and program reporting. Affordable housing comes with a learning curve, and Steadfast’s experience across these structures is already built into how we underwrite, manage, and operate these communities.

Our current affordable and mixed-income portfolio includes 1,903 affordable or mixed-income units under ownership or management. Separately, our current market-rate owned portfolio includes 1,222 units.

For investors, this breadth and depth of experience shows that Steadfast has worked across several versions of affordable and mixed-income housing, each with its own operating requirements. LIHTC communities involve income qualification, rent limits, compliance files, reporting, and long affordability periods. HUD Project-Based Section 8 includes subsidy contracts and resident income-based payments. PFC structures can pair affordability commitments with property-tax benefits. Mixed-income assets require the operator to manage market-rate and affordable units within the same community.

Estraya Boerne is one example. The 288-unit San Antonio-area community includes 50% market-rate units and 50% affordable units at 80% of AMI through a Public Facility Corporation structure. Through a long-term ground lease with a public-sector housing partner, the property receives a 100% property-tax abatement, reducing one of the largest operating expenses in the property’s budget. That expense reduction supports NOI while the affordability commitment keeps half the community reserved for households within the required income limits. The example shows how affordable and mixed-income housing depend on both structure and execution. The public-private framework helps shape the economics of the property, while our role is to keep the community compliant, well-managed, and financially disciplined.

Investor Considerations for Investing in Affordable and Workforce Housing

Affordable and workforce housing can offer a different value proposition than conventional market-rate apartments.

The first potential advantage is demand stability. These properties serve renters who need reasonably priced housing, often in communities where the gap between household income and newer apartment rents has widened. When rents sit below nearby market-rate alternatives, the resident pool can be deeper and occupancy can be more resilient.

The second advantage is structure. Some affordable housing deals include tax credits, rental assistance, property-tax abatements, or public-private partnerships that help support the economics of the property. A property-tax abatement, for example, can reduce one of the largest operating expenses in an apartment community, which may support NOI when the structure is properly underwritten and managed. These tools can strengthen a business plan when the sponsor understands how the rules work and how the property must be operated.

The trade-off is that affordable housing usually comes with more rules than a conventional market-rate apartment deal. The property may have limits on how rents are set, who qualifies to live there, and what must be reported each year. Inspections and documentation can also become part of the regular operating process.

These requirements can be managed, but they leave less room for loose execution. The opportunity can be attractive when the sponsor understands the program, the property, and the resident base.

These are still multifamily investments and should be evaluated with the same discipline as any apartment opportunity. Investors should look at the purchase basis, resident demand, debt, rent framework, reserves, capital needs, and the operator’s ability to execute after closing.

At Steadfast, we see affordable and workforce housing as part of a larger American housing need. Teachers, nurses, first responders, service workers, seniors, and working families all need quality places to live near the communities they help sustain. Private capital can play a constructive role when it is paired with disciplined underwriting, clear structures, and responsible operations.

Footnotes

1. Harvard University Joint Center for Housing Studies, America’s Rental Housing 2026.

2. National Multifamily Housing Council and National Apartment Association research on U.S. apartment demand through 2035.

Disclaimer: The information provided in this article is for informational and educational purposes only. It is not intended to serve as investment, tax, or legal advice, nor should it be interpreted as an offer to buy or sell any security. Private real estate investments carry significant risks, including the potential loss of principal, and are intended for accredited investors who understand and can bear those risks. Any discussion of tax treatment relates solely to the property-level structure and does not reflect or predict individual investor outcomes. Tax implications vary based on each investor’s circumstances, and readers should consult their own financial, legal, and tax advisors before making any investment decision.