A man we’ll call Alex recently embarked on an innovative housing project in the Midwest. Alex and his family bought a 43-bed hotel last summer and, over a few months, transformed it into small efficiency apartments with a large commercial kitchen, dining room, meeting area, and lobby.
The Project’s Motivation
The project’s motivation was the severe housing shortage in the area. Alex and his family met with the local housing authority to ensure all the rooms were inspected and ready to accept section 8 vouchers. After the conversion, they had 42 rooms, each roughly 320 square feet, and a large courtyard.
How He Did It
Alex secured an 80% loan from a local bank, with a wraparound product that provided the 20% gap and an additional $50,000 for repairs. The family spent about $170,000 on the updates, including new furniture, updated appliances, and two laundry rooms with eight coin-operated washers and dryers.
They also added new window heating/cooling units in all rooms. The family made these updates by doing much of the work and paying for the repairs out of pocket.
The apartments are rented for $850 a month, which more than covers the bills. The family has around $15,000 monthly, which covers property taxes, insurance, gas, payroll for two full-time employees, TV, internet, and miscellaneous expenses. They are always full, with an average of 41 rooms paid for each month.
The family has also committed to giving back to the community by using the apartments as a resource for support with meetings, job training, and community functions. They are also accepting donations from the community, with some tenants being helped through rehab and a dozen disabled veterans living in the apartments.
The project is an LLC but acts as a benefit corporation. Alex and the other two owners have yet to make any profits, with the goal being to make the project self-sustaining and possibly sell it and build another. They owe around $475,000 on the property and will have spent around $750,000.
Alex’s message to others is to consider alternate housing avenues, especially if they can work with their local voucher program. Nine out of 10 voucher holders in his area need help to find a landlord willing to work with them, causing them to expire.
In rural areas like his, only 3% of vouchers are used, highlighting the urgent need for alternative housing solutions. Alex hopes his success story will inspire others to try something similar and show that it is possible and can work.
Here is how the internet responded.
I’ve Seen This Before
“Someone did this near where I went to college.” This user elaborated that international and grad students loved the studio-style apartment without roommates.
You Need a YouTube Channel
“What a fantastic project. You need a YouTube channel!” One excitedly wondered how the kitchen worked, if it was staffed, available for tenants, and, if it was available, how it all worked.
There Is a Need for This
“Congratulations!” A final user explained they read about a program in Oklahoma for children with nowhere to go after aging out of the foster care system. So they built “tiny homes” for them to transition into. “There’s a need in many parts of the country to help people hope it can be a fruitful relationship for all parties involved.”
Alex’s innovative approach to converting an old hotel into affordable housing with zero down and the help of volunteers is a model to inspire other people to build up communities facing similar challenges.