The housing market has certainly made its share of headlines during COVID.
While commercial real estate all but dried up for a time due to office closures, individual home mortgage rates plunged to record lows. As some fled traditionally dense cities, others bought new places to hunker down for extended lockdowns, leading to historically low housing stock.
And the pandemic only exacerbated the affordable housing crisis. Now, a growing number of individuals are looking for alternative housing options.
Call them tiny houses, backyard cottages, or ‘granny pods’ — Affordable Housing Units (ADUs) have become increasingly popular over the course of the pandemic. The City of Atlanta, which reformed its ADU codes a few years ago, has seen interest in these new buildings. But according to the Department of City Planning, financing such construction projects continues to be an issue. GROUNDFLOOR’s new pilot program hopes to leverage its existing investing infrastructure to build more ADUs.
The team announced this week that the platform will begin offering financing options for ADUs.
“We’re always looking for products that would benefit both our borrowers and our investors,” said Rich Pulido, Senior VP at GROUNDFLOOR.
Pulido spoke to Hypepotamus about the new program and how it could impact community development across Atlanta.
ADUs are often built in backyards and serve as an extra income opportunity for a homeowner. In other cases, they serve as multigenerational living units — an increasingly popular option for grandparents during the pandemic. GROUNDFLOOR believes ADUs increase property value and bring new residents to the community, thus increasing the density and tax revenue in a particular area.
“I’m really anxious to see what sort of involvement we see from neighbors. This is literally an opportunity for a community to come together and help each other,” said Pulido.
“There may be people who are in a long-term ownership position of a house but don’t have the financial ability to fix that house. Being able to facilitate the construction of an ADU, we give the owner the ability to 1) fix up the house and 2) get capital to build the ADU. This gives the owner some flexibility. They could move into the ADU and rent out the main house, or rent out the ADU.”
GROUNDFLOOR is currently working on ADUs in specific neighborhoods in Atlanta, but the trend is steadily growing across the Southeast. Over the summer Raleigh changed its laws to allow ADUs to be built without having to go through the rezoning process.
COVID and the real estate market
Pulido pointed out that COVID slowed down the city-wide permitting process, which in turn delayed GROUNDFLOOR’s loan repayments.
But on the investor side, the WealthTech platform has seen record growth. “While others were concerned about their investments in other asset classes, we had record inflows because people wanted exposure to real estate. And the record capital flows, which obviously only benefits our borrowers.”
Such growth over the past few months helped land them on Deloitte’s 2020 Technology Fast 500™ List. The team is currently around 50 people, but they are currently hiring for key operations, engineering, and sales roles.