Identifying SMMF Properties for Preservation


This brief discusses the identification and evaluation of small-to-medium multifamily (SMMF) properties for the purpose of rehabilitating and preserving their affordability. This is intended to provide guidance to existing owners of SMMF properties and those interested in acquiring existing SMMF properties for the purpose of preservation. The information may also be helpful for public agency staff and others in the real estate industry who are interested in understanding the factors that make some properties more or less feasible to preserve.

Considering Subsidized vs. Unsubsidized Properties

There are many uncertainties for SMMF properties, including what is deemed a good opportunity to developers or investors. Unsubsidized SMMF properties exist in a largely privately-owned and unregulated environment with few systems focused on supporting or tracking this market segment as it relates to affordability to guide decision making and public policy. SMMF properties, therefore, are typically traded between sellers and buyers who have adequate resources and who are motivated by profit more than preservation of a dwindling supply of affordable options for residents. Preservation activities for SMMF properties are therefore highly competitive and frequently driven by opportunity, requiring a willing seller who may have to wait longer for a transaction to close and a qualified buyer, often a community-based nonprofit, small local property owner, or other similarly mission-driven entity.

Subsidized properties are regulated and thus more easily tracked through national public databases, like the National Housing Preservation Database, or local databases such as Colorado’s Affordable Housing Preservation Database that is maintained by the Colorado Housing and Finance Authority. They also have defined affordability periods and expiration dates associated with the subsidies and typically carry specific requirements such as tenant relocation conditions and alignment with public policy priorities. They may also have more available information about the current residents, property conditions and operating and maintenance expenses. The greater level of information available, existing ties to a public interest, and the predictability of when a sale or repositioning is likely to occur (e.g., coinciding with a subsidy expiration) enables preservation activities to be more driven by strategy, policy and compliance on a thoughtful time frame compared to unsubsidized properties.

As a result, there’s a need for a common decision-making framework to help identify and evaluate both property types. These factors can be used by developers, local elected leaders, municipal staff, and housing advocates to identify properties at risk of loss, understand developer interest in them, and strategize to preserve them. There are tradeoffs with preserving both types of properties that can be vetted during the property identification phase. On one hand, subsidized properties come with more compliance requirements but also more opportunities to use mainstream housing resources (depending on overall size and ability to achieve economies of scale). On the other hand, unsubsidized properties have fewer compliance requirements, depending on their use of financing, but carry more risk and uncertainty because they are not as highly regulated.

Key Factors in Identifying and Evaluating Opportunities

This section discusses five key factors that can be used to identify and evaluate SMMF properties for the purposes of preservation – property characteristics, preservation feasibility, local market conditions, neighborhood access, and the potential to advance community and organizational goals. While the details and information available may vary somewhat between subsidized and unsubsidized properties, viewing properties through the lens of these five factors allows for a consistent evaluation process. Each of these factors is discussed in more detail below.

Factors for Property Evaluation and Example Considerations

This factor focuses on the overall condition of the property, its size, and who the property serves today. Common criteria include the building size, the number of units, the physical condition of the property, the reputation and compliance record of current property management, the presence of environmental risks (and evidence of due diligence processes in this regard), the presence of existing subsidies, and the household income of existing tenants.

For subsidized properties, evaluation should place additional emphasis on understanding any requirements of existing subsidies, including those related to tenant relocation, and your ability to meet those requirements, including during the rehabilitation process, leasing, and ongoing property management. Public approvals required as part of acquisition and lease up should also be understood.

For unsubsidized properties, evaluation should place more emphasis on the age and physical condition of the property, with an eye toward health and safety, resilience, and sustainability. The number and quality of local inspections and associated interventions varies considerably between jurisdictions. To the extent that there have been inspections, consult available records or inspection personnel in evaluating the property. It is also critical that, prior to making a decision to acquire the property, you are able to access the property with a contractor or other professional who can help you estimate the degree of rehabilitation that will be needed, and the cost and expertise required to do so.

Finally, property assessment should include property management considerations such as building type and unit concentrations that could impact your property management approach and associated feasibility. For example, if the property is a scattered site portfolio, but your organization is not currently set up to manage this type of portfolio, this needs to be factored in.

This factor focuses on a project’s ability to meet basic regulatory requirements, including compliance with land-use standards and building codes, a project’s eligibility for financing and public subsidies, and existing relationships with key stakeholders (tenants, surrounding community residents, local government staff, and real-estate professionals). Common criteria include whether rezoning, variance, or other land-use exemption is required; ability to meet all applicable building codes; ability to meet all infrastructure requirements (e.g., water, sewer, road capacity); funding eligibility; issues associated with shared land easements and fixtures; conditions associated with existing partnership or community agreements that must be considered; and whether the existing relationships with stakeholders are likely to support or obstruct the process.

In assessing both regulatory and financial feasibility, it will be important to understand any public processes, including their approval timelines, and community engagement requirements (for instance, some rezonings require a community meeting). Even if local governments do not require community engagement, relationship building is an important aspect of generating support for your project and can help inform ways to support tenants both during and after preservation, such as identifying property features to incorporate into any planned improvements.

It is also important to understand any regulatory requirements that may have been put in place after a property was built and whether your rehabilitation plan would trigger the need to comply with them, which would affect your overall cost. Common requirements that may be triggered include non-confirming land uses, accessibility requirements, energy efficiency requirements, standards to increase resilience to earthquakes and hurricanes, or the addition of fire sprinkler systems, among other things.

Depending on local regulations and the urgency of the rehabilitation needs, it may be possible to purchase and operate the property for a period of time before substantial rehabilitation and financing. For example, if the current property condition poses a health or safety risk to residents, or some units are not currently habitable due to the severity of rehabilitation need, then rehabilitation may need to take place immediately. In other cases, it is possible to use a phased approach. This approach may be especially helpful in markets with a high number of transactions to enable mission-driven or community control of the property while a longer-term preservation strategy for the property is developed. In this case, preservation feasibility can be considered for each step independently – for example, purchasing the property; obtaining interim financing to enable you to continue to operate it; using projected financing to support capital improvements; and finally accessing permanent financing.

This factor focuses on how local market conditions, including those in the specific neighborhood the property is in as well as the broader regional housing market, are changing or may change, based on indicators of market activity. Market activity can impact many aspects of preservation, including the risk of displacement or loss of unsubsidized affordable SMMF properties, perceived risk by capital providers, and whether there is an economic incentive for owners of subsidized properties to decide to convert to market rate units after subsidies expire. Common criteria for this factor include changes in rents and sales prices, vacancy rates, building activity and permits pulled, changes in incomes or demographics over time, and evidence of displacement occurring such as eviction rates.

While a formal market study may be required to secure financing, those seeking to evaluate SMMF properties for acquisition or the broader purpose of supporting preservation, should collect these data themselves to understand the level of competition to expect in acquisitions and the urgency of preserving the property’s affordability.

This topic is expanded in the section below titled "The Impact of Market Conditions."

This factor focuses on access to important amenities, hazards and common destinations relative to current or future resident needs and public policy priorities. Common criteria include access to employment centers; access to transit service; access to healthy foods; access to quality schools, and risks posed by environmental hazards (see table below for guidance on measurement of these factors). Preserving affordability in areas with better access to these types of amenities can promote economic mobility and addresses long-standing racial and economic disparities in a community.

There is also a relationship between these factors and neighborhood housing market conditions, though the details of this vary across markets. In general, all other factors being equal, better access to amenities (and lower exposure to environmental hazards) tends to be associated with higher property values and rents. This can make properties in higher amenity areas more costly to acquire, but also well-positioned for long-term financing and targeting of public support.

This factor can also be used to compare opportunities in different neighborhoods for the targeting of limited public preservation resources. It is common to see public preferences for transit accessibility, for example.

Measurement Guidance for Neighborhood Access and Environmental Quality


Evaluation considerations

Selected metrics &
data sources

Access to employment centers

Access to employment centers can be measured through simple proxies, such as commute times for the area where the property is located relative to the average commute time citywide or regionally, or more complex yet replicable spatial analysis like those used in these studies for job accessibility by transit and automobiles.

PolicyMap offers a precalculated value for job accessibility and Metropolitan Planning Organizations or transit agencies may also have completed studies or maintain community- or region-specific data sources.

Jobs within 45-minutes
(via auto travel)

Jobs within 45-minutes
(via transit)

Travel time to work


Access to transit service

Access to transit can be measured by proximity (i.e., is there a transit stop nearby). Another indicator of transit service is commute mode (i.e., how many people in the area around the property use transit as their primary way to commute to work).

PolicyMap enables you to look up distance to public transit and commute mode for any address.

Distance to nearest stop

CNT’s Housing + Transportation Affordability Index

Chicago only:
CNT’s eTOD Map Tool

Access to healthy foods

Access to healthy foods can be measured by how close a property is to a healthy food source, such as a full-service grocery store, and a household’s ability to use food assistance.

The USDA maintains an online tool to look up low food access areas (i.e., share of the population’s distance to the nearest supermarket, supercenter, or large grocery store, based on urban or rural location). In this tool, select the "LI and LA at 1 and 10 miles" variable (shaded in green). Areas shaded in green are in low food access areas.

SNAP retail locations

Number of farmers’ markets

Low food access

Access to quality schools

Access to quality schools can be measured by understanding what schools or other educational institutions are nearby (i.e., would a resident need to travel a long distance to take their child to school), as well as other key metrics like overall transportation access.

Ideas about school quality vary. Additional metrics that speak to a school’s resources and overall performance, such as student to teacher ratio, total expenditures, and graduation rate, are provided for school districts via PolicyMap.

State and local departments of education also generally maintain publicly available data on school performance. For example, the California’s Education Data Partnership website presents data on a range of district and school-level factors.

Educational locations

Student-teacher ratio

Expenditures on education

Graduation rate

Environmental Hazards

Environmental hazards can be grouped into two main categories:

  • Hazards that currently exist (e.g., lead paint in a rental home or no ventilation for a gas stove)

  • Hazards that may occur in the future (e.g., a property located in a flood zone or area with frequent wildfires).

Some hazards can be mitigated at the property level, such as through incorporating resilience measures into rehabilitation. But many exceed the ability or authority of an individual property owner to mitigate, even as they may carry additional risks for owners and residents.

Both types of environmental hazards should be factored into decisions about the value of preserving a property and the options and costs for mitigation, assuming options are available. These types of hazards and risks can be assessed using data available from local, state, and federal agencies that do environmental monitoring and by talking with existing residents and other property owners about their experience.

Existing reports on environmental conditions such as Phase I Environmental Site Assessments or Desktop Reports can also be a great source of information. When seriously evaluating a specific site, you can request existing reports from the current property owner.

CDC’s Environmental Justice Index (see specific indicators rather than the overall index values)

NOAA Disaster and Risk Mapping Tool

Enterprise Portfolio Protect Tool

FEMA Flood Maps

Local Department of Public Health

EPA Lead Assessment, Inspection, and Risk Assessment

Weatherization Assistance

Indoor Air Quality Guide for Tenants (Environmental Law Institute)

This factor focuses on how well preserving the property serves goals beyond those mentioned in the other factors. This includes the potential of preserving affordability to improve racial and economic equity in a community, which is a key public goal in many communities and often aligns with organizations’ mission and values. For example, reducing displacement pressure on Black, Indigenous and people of color (BIPOC) by preserving affordable SMMF properties in a gentrifying neighborhood may improve racial equity. Preserving affordable SMMF properties in areas with better-performing schools or access to other amenities can also advance this goal.

Some approaches to preservation can also emphasize inclusion (which is often a vehicle to improving equity). Giving residents and local community members a voice in the preservation process and incorporating them into decision-making about the property is one example. Some buildings may be important to the community based upon history, neighborhood character, culture or relationships and must, therefore, be evaluated through this lens. For more information, see the briefs focused on Engaging Stakeholders and opportunities to advance racial equity through housing preservation.

Another consideration related to this factor is your goals for owning and managing the property. If you plan to operate the property for the long haul (which is the best case for preserving affordability), upfront modelling of property and asset management staffing and costs will be important. If your plan is to acquire and rehabilitate the property, but not own it in the long term, some form of subsidy will likely be required to be in place (or put in place during preservation) to ensure affordability is maintained by the next owner.

The Impact of Market Conditions

Highly Competitive Markets

In competitive markets, affordability is a significant driver of preservation, and a key focus of the public sector and mission-aligned housing providers is to safeguard the current affordability before it is lost. This could be a concern across an entire jurisdiction or within a certain neighborhood or portion of a jurisdiction where the market is more competitive. In these markets, unsubsidized affordable properties are typically the highest priorities for preservation because they are the most susceptible to rent repositioning or demolition/redevelopment, resulting in the loss of affordability. However, those with expiring subsidies may also be susceptible to market-rate conversion and thus should be a priority.

Those operating in high-competition markets must be able to act quickly in acquiring properties, which for mission-aligned actors creates a need for robust capacity at multiple levels. The organization itself must be able to respond nimbly to opportunities, such as having the ability to quickly and accurately determine the feasibility and risks of preserving a property and understand key regulatory constraints when the opportunity arises. Similarly, system-level actors must create policy and financing vehicles, such as acquisition funds, to give mission-aligned transactions a reasonable chance in the face of competition. This also emphasizes the need for good working relationships between these system-level actors and those acquiring the properties for the purpose of preservation (see Key Stakeholders in the State of the Market Brief for your market for examples of the types of system-level actors you should seek to develop relationships with).

Looking for off-market opportunities that do not face the same degree of competition can be a key strategy in preserving especially unsubsidized SMMF properties in these markets. To identify them, use real estate data, such as CoStar, that classifies property condition, experience working in a specific neighborhood, and relationships with property owners and brokers. Place-based, mission-driven entities, in particular, are often well positioned to develop relationships with existing owners before properties come to market. Existing owners may have a preference for maintaining the affordability of the property and see the local focus and reputation of the organization as a positive factor for existing residents. Having a good relationship with a well-connected broker who sees the value in your mission can also provide good leads for off-market opportunities. See Working with Property Owners in this brief for more information.

Local public and community support is another key vehicle for giving mission-aligned actors a competitive edge. Leveraging local right of first refusal policies (such as the one in Prince George’s County, MD) can eliminate competition altogether from high priority properties (see the Enabling Environment brief for additional information). Similarly, support among elected leaders and public agency staff may be required to make regulatory changes or approvals needed. They may also be able to sway property owners who are deciding between multiple acquisition bids. Thus, a goal of preserving affordability in a neighborhood that aligns with public sector and community goals can improve the chances for successful acquisition where the public sector has discretion or influence.

Working with Property Owners

Even when using a commercial real estate brokerage, having a strong relationship with property owners can help increase your access to potential deals and the deal’s success.

Two key dimensions that may affect sellers’ behavior are:

  • Portfolio size (i.e., how many properties do they own?)

  • Proximity (i.e., how far from the property is the owner based?)

Generally, an owner is less likely to engage in affordable housing preservation activities when they own a large portfolio of properties and those properties are located farther away from them, unless there is a strong economic case or if they have a distinct focus on mission over profit.

Potential seller motivations

  • Increasing and maintaining a steady cash flow

  • Maximizing return on investment

  • Alleviating the burden of property maintenance

  • Inability to access capital for necessary rehabilitation

  • Alleviating the cost of rising property taxes

  • Retirement or estate planning

Mission or public benefits may motivate a property owner, but the extent will vary. Research has found that part-time or smaller- scale owners with local interests are the most willing to prioritize mission and community investment over other motivations, particularly when they are not tied to a larger organization’s bottom-line.

Portfolio Size
Mom and Pop Owners
Target for unsubsidized affordable SMMF preservation
Local or metro/regional owner
Institutional owners and investors

Considerations for building and maintaining strong relationships with sellers

  • Demonstrating sufficient capital, or an expedient timeline for assembling the necessary capital, is important for successfully engaging sellers. In such situations, bridge financing or a line of credit can be critical, particularly when competing with cash offers. See the Securing Financing section for tips on building relationships with financial institutions, who can help assemble these resources.

  • Agreeing on project goals and terms upfront, including the long-term relationship between both parties and the property. This agreement is particularly important if sellers plan to stay involved with the property after its preservation. For instance, mission-oriented sellers may want to be involved with property operations, such as resident services or other onsite activities.

[i] Minnesota Preservation Plus Initiative. (2013). The Space Between: Realities and Possibilities in Preserving Unsubsidized Affordable Rental Housing. Available at

[ii] Abdelgany, S. (2017). Catching Affordability Where It’s At: Acquisition/Rehab of Oakland’s Unsubsidized Affordable Housing. Available at

[iii] Treskon, M. and Sara McTarnaghan. (2016). Anatomy of a Preservation Deal: Innovations in Preserving Affordable Housing from around the United States. Report prepared for the Urban Institute. Available at

Stable and Less Competitive Markets

In stable and less competitive markets, property condition typically drives preservation priorities more than affordability. A key focus for public sector actors and mission-aligned housing providers is to maintain and improve habitability and environmental quality that may be threatened by property deterioration.

The biggest challenges in these markets tend to be that properties may be in poor condition and rehabilitation needs are substantial, yet property values are frequently lower and offer lower financial returns. This impacts the financial feasibility of preservation that address the rehabilitation needs and may also make financing more difficult or expensive to attain.

On the other hand, these lower property values can also mean lower acquisition costs that, in some markets, can help to offset the higher rehabilitation costs. There may also be lower barriers to entry and less competition for organizations who want to take on preserving SMMF properties and providing high quality, affordable housing options for residents. While it may not be feasible to fully rehabilitate properties, high-importance improvements, such as those improving health and safety, can usually be accommodated to improve the condition of the property and resident quality of life.

It is important for those preserving SMMF properties in these markets to develop relationships with lenders, philanthropic funders, and other capital providers. While they will not face the same need for nimble acquisition funds as those operating in competitive markets, building these relationships will help organizations overcome stigmas associated with the market and help the capital providers develop a realistic sense of the needs and conditions in the community.

These markets also offer an opportunity for broader neighborhood revitalization strategies led by the public sector (or other system-level actors) that can, over time, increase the financial value and returns on the properties, which in turn enable more robust rehabilitation and property condition improvements.

Self-Reflection Questions on this Topic

For Actors Seeking to Acquire SMMF Properties for Preservation

  • Are there property characteristics such as size or building type that you will specifically target or avoid?

  • Will you consider acquiring subsidized properties, unsubsidized properties, or both?

  • How will you assess the neighborhood access and environmental quality of sites? Are there particular features you are looking for given the population you hope to serve, or will you target only specific areas for preservation?

  • How do your acquisition and preservation priorities align with public sector and community goals? Are there opportunities to help local decision makers see this connection more clearly?

  • What type(s) of markets are you seeking to acquire SMMF properties in, and what does this tell you about the types of relationships you need to be building and maintaining for success?

  • If your acquisition strategy includes a focus on off-market properties, how are you currently working to identify and build connections to these owners? Where is there room to expand this?

  • How would you rate your organization’s capacity to assess potential properties as opportunities emerge? Do you have any evaluation framework, such as the one below?

For Public Sector and System-Level Actors:

  • What are the key community concerns that you would like to see reflected in SMMF preservation targeting and prioritization (e.g., affordability levels, specific locations or amenities, resilience, specific types of health and safety outcomes, etc.)?

  • How clearly stated are these priorities? Is there an opportunity to articulate or elevate these priorities in some way?

  • Is there significant competition for SMMF properties in your market? Given this, what kinds of supports would be helpful to mission-aligned developers seeking to acquire these properties to preserve affordability (e.g., nimble funding, information resources for property identification, policies that provide a competitive edge, etc.)

  • What kinds of policies and regulations impact the preservation feasibility of SMMF properties? Are there ways to improve the viability of preservation for these properties by changing these policies or creating exclusions for this property type?

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