Request for Qualifications: 2-4 unit development & owner-occupant market analysis

About Family Housing Fund

The Family Housing Fund (FHFund) believes that building a better Minnesota starts from the ground up—it starts with a place to call home. We catalyze change by working together with multiple partners and stakeholders to preserve and produce more homes more cost-effectively; expand access to decent and affordable homes; and inspire communities to take action toward building housing solutions that support all families. Established in 1980, we are a nonprofit intermediary supporting the Cities of Minneapolis and Saint Paul, the Metropolitan Council, and Minnesota Housing in their efforts to meet the seven-county metropolitan region’s affordable housing needs. We are unique in focusing on all facets of the housing system and working across sectors to ensure real change.

About the Project

FHFund is seeking consultant(s) to work closely with FHFund staff to research financing and real estate market offerings/gaps for new prospective owner-occupants of small 2-4 unit properties. The information will be used to inform Family Housing Fund’s strategy to increase moderate-income households’ ability to purchase small multifamily buildings and to reduce racial wealth gaps in our region.

The research will cover two distinct aspects of the market, “Supply” and “Demand.” Consultant applicants may seek to cover one or both topics. Research methods will likely include a mix of secondary research/review of market data and qualitative interviews with industry leaders.

A. Supply: 2-4 unit development, acquisition, and rehab

• Why have 2-4 unit homes declined within the overall Minneapolis housing stock, from 31,180 units in 1990 to 24, 844 in 2018 (per Metropolitan Council analysis of Census and ACS data)?
• How many 2-4 unit buildings are trading on the market now (months/units of supply)? How much do these properties cost in different market types and conditions?
• How many 2-4 unit buildings are being built now? What would incentivize more development?
• How much do 2, 3, and 4-unit properties cost to build (with/without land costs)?
• How do investors typically identify and acquire 2-4 unit properties?
• What does a typical investor competing for these properties look like?
• In scattered-site rental portfolios, what is the physical condition of 2-4 unit buildings that may be available for disposition? What would be a reasonable estimate of the cost of needed updates to make a responsible sale to a moderate-income first-time owner?
• What is the potential range of market conditions within the next 6-18 months?

B. Demand: Owner-occupant consumer mortgage financing

• How much interest are realtors and homeownership advisors hearing about interest in 2-4 unit properties from potential buyers?
• Which lenders are offering financing for 2-4 unit buildings for owner-occupants and what are their underwriting standards and terms? What has this been under recent “normal” conditions and how is it changing in response to changes caused by the pandemic?
• What kind of financing barriers do potential buyers typically face (e.g., self-employment income; unproven rental income potential; credit score; down payment)?
• Which lenders are open to piloting new innovative products to support this market—for example, an escrow function to build up a repair/replacement reserve fund for each owner?
• Are low-down payment loan products (FHA, HFA, and GSE-backed) a real option for owner-occupants? Who is offering them? Why or why not?
• What examples exist of single-family (1-4 unit) mortgage products with forced savings/ replacement reserve escrow?
• What is the potential range of market conditions within the next 6-18 months?

The consultant(s) will work closely with FHFund staff, including scheduling and leading meetings with key informants either independently or with staff participation.

Deliverables will be in the form of a written report for sole use by the FHFund answering the questions above, including summaries of, referrals to and contact information for key informants and potential partners with whom FHFund can follow up.

To Submit

Submissions should include:

• A description of the firm’s/consultant’s relevant skills, qualifications, and experience
• Estimates of fee structure and total project costs
• Timeline/availability for completing this project
• How the firm/consultant proposes to work on Supply and/or Demand topics as an individual or in a team
• Examples of any relevant work products

Qualified proposals will be reviewed for skills and experience in:

Supply:

• Small-scale residential development and rehabilitation
• Acquisition, development and construction financing
• Twin Cities neighborhood and community development
• Development market data and analysis
• Moderate/low-priced housing stock

Demand:

• Consumer mortgage financing
• Real estate transactions and brokerage Homeownership advisory services and education
• Working with first-time and moderate-income homebuyers
• Consumer market data and analysis

Qualifications should be submitted via email to Sarah Berke, Program Officer (sarah@fhfund.org; 612.274.7690). Proposals will be reviewed on a rolling basis as they are received; please submit no later than June 12, 2020.