Affordable Housing Can Be Crowdfunded. Just Ask This Phoenix Investor.
Neighborhood Ventures' Jamison Manwaring on converting a former American Inn into housing.
Converting hotels into affordable housing is a growing trend in many cities. In Phoenix, a metro that has experienced a lot of in-migration and mostly high-end construction, a hotel-to-residential conversion recently secured zoning approvals and is on the verge of a making a difference.
Neighborhood Ventures is the company behind Venture on Country Club, a Mesa, Ariz., project that aims to convert a dilapidated hotel into a 120-unit multifamily community.
Besides providing much-needed affordable housing, the project also shows how the local community can contribute to easing the housing crisis. Almost 300 Arizona residents have invested a total of $3.5 million in this venture through the firm’s crowdfunding model.
During an interview with Multi-Housing News, Neighborhood Ventures CEO Jamison Manwaring expanded on Phoenix’s housing market dynamics and how crowdfunding can serve as a timely and cost-effective way to address the housing shortage.
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What specific challenges does the Phoenix metro face in terms of affordable housing availability?
Manwaring: Phoenix has been experiencing consistent growth in new residents, and we anticipate that demand for housing will remain steady for the foreseeable future. While Phoenix is among the top cities for introducing new housing units to the market, many of these are Class A apartments, which are not considered affordable housing.
With the demand for rentals remaining high and a projected slowdown in new unit construction in 2025, there may not be enough new units to meet the ongoing demand for housing. To address these challenges and help provide a solution, we have recently converted Venture on Country Club from short-term rentals to long-term rentals, thereby adding more affordable units to the market.
How exactly will hotel-to-housing conversions contribute to easing the housing crisis?
Manwaring: Converting hotels into housing will help ease the housing crisis by quickly and affordably adding more places for people to live because it is often cheaper to convert a building to multifamily than it is to build from the ground up, especially with inflation and interest rates being up.
Besides the cost savings, what are some other benefits of converting hotels into affordable housing vs. building new units from scratch?
Manwaring: Converting hotels is faster than building new units, which means people can move in sooner. It also makes good use of existing buildings, often revitalizing underused spaces. Plus, hotels are often in areas where new housing isn’t usually allowed, so converting them can sidestep zoning issues.
How will the Venture on Country Club hotel-to-housing conversion impact the local housing market?
Manwaring: We acquired Venture on Country Club in the summer of 2021. Initially operating as a hotel, we spent three years renovating the interior and running it as a short-term rental. Last month, we successfully obtained approval for rezoning, transforming it into a traditional multifamily housing building. This conversion benefits the local Mesa housing market by adding 120 affordable housing units to an area previously lacking in such options.
Making affordable housing projects pencil is difficult today, but you found an innovative way to fund this project. Tell us about that.
Manwaring: Before acquiring Country Club, we had successfully crowdfunded nine other properties, and we’ve added five more since then, thanks to our loyal investor base who believe in our mission and vision. The 294 investors in the Venture on Country Club project made this endeavor possible, marking it as our largest individual project funding to date.
Why do you think almost 300 Arizona residents invested in this project?
Manwaring: Our investors truly believe in our mission and vision as a company and are confident that this project will yield great returns. They prefer to invest in the community and in concepts they understand. With the Venture on Country Club project, they not only recognize the investment potential of the conversion but also appreciate the positive impact it will have on the Mesa community. We maintain a high level of transparency and communication about the building’s progress and are confident that even greater successes lie ahead for Venture on Country Club in the near future.
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How are you ensuring transparency and communication with so many investors?
Manwaring: We keep our investors and account holders informed through weekly emails called Neighborhood News, which provide updates on our projects, the real estate market, our podcast, and more. For major updates to the Venture on Country Club project, we regularly reach out to our active investors with phone calls. Additionally, we host a quarterly live stream where we delve into the details of each investment project and conduct a live Q&A session. These live streams typically draw over 200 investors.
What kind of returns can all these investors expect, and over what timeframe?
Manwaring: When we first announced the Venture on Country Club project, we projected a target hold period of three years, with investors expecting a 12 percent preferred return on their investment. Although we are approaching the three-year mark, the rezoning process took longer than anticipated. Now that rezoning is complete, the next steps for this project should progress rapidly.
What are your long-term goals when it comes to contributing to easing the affordable housing crunch in Arizona?
Manwaring: Along with Venture on Country Club, we also have other projects, such as Venture on Mountain View in the Sunnyslope District, which is quite affordable. Now that we got through our first big rezoning project, I could see us doing more in the future.
What message would you like to convey to other businesses considering crowdfunding for their development projects?
Manwaring: Crowdfunding is a powerful tool that can democratize investment opportunities and build a strong community around your project. It not only provides an alternative source of capital but also engages a broader audience who can become advocates for your vision. Ensure you communicate transparently, offer real value to your backers and cultivate trust. With the right approach, crowdfunding can significantly boost both your funding and your project’s impact.
