Proptech Steps Into the Affordable Housing Void

From pre-construction to financing and compliance, real estate technology aims to chip away at a huge national problem — and make some money in the process


Even as consumer prices dipped last week, the high cost of housing continued to be arguably the main cause of inflation in the U.S. as buyers and renters sought affordable homes.

Moreover, the scarcity of housing, particularly affordable housing of any kind, remains a huge economic obstacle, as supply is failing to meet demand and tenants cannot afford much of what is available.

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Proptech is approaching the untying of this affordability Gordian Knot from a number of entry points in the housing process, according to real estate technology experts.

For instance, owners of affordable multifamily housing are strong consumers of proptech that allows them greater efficiencies to cope with smaller profit margins and to control operating expenses, said Robert Cooper, co-founder and CEO at Embue, a Boston-based energy management technology company for such buildings.

“Interestingly, they are actually leaders in adopting certain kinds of technology,” said Cooper. “It’s not necessarily going to be bringing in dog walker services, but it’s going to be stuff that really makes a difference.

“Just in terms of service delivery to residents, properties where the residents are paying for their electricity and maybe gas are definitely seeing the benefits. I was actually shocked to see data that said 30 percent of all kinds of renters experience energy poverty, which the government defines as having to make a choice at least once a year between paying the electric bill and buying food.”

Proptech innovations can be linked directly to making housing more affordable, Cooper added.

“When people are penciling out these projects, they are trying to look for every way to make the operating expenses manageable,” he said. “What’s interesting is that there’s been a number of incentives, direct incentives around energy efficiency from utilities. But also indirect ones through the financing agencies, like green mortgages, where they will underwrite a loan for an affordable housing property, based like any loan on the operating expenses and profits of that business.”

Energy savings from technology such as solar panels can contribute to green mortgage underwriting, giving an economic boost to the creation of affordable housing, he said. “It’s a kind of an underlying subtle take on, ‘How can proptech affect affordable housing?’ ”

In fact, a growing number of proptech startups are applying technology to make all kinds of housing more affordable, said Christine Wendell, co-founder and CEO at Pronto Housing, a Manhattan-based company that attempts to make it easier to build, invest in, and maintain affordable housing in the first place.

“One of the biggest issues is the bureaucratic processes — from qualifying residents for affordable housing at lease-up and on an annual basis — to finding housing and applying for funding,” said Wendell. “The vast majority of the ecosystem of developing and operating affordable housing processes are very manual and paper-driven, adding time and cost.”

Wendell pointed to some proptech companies attempting to address affordable housing issues, such as Esusu, a rent payment platform that helps renters build credit; PadSplit, an affordable furnished rooms rental company; Redist, a public financing tech platform: and Stake, a  platform to facilitate cash back, credit building and equitable banking services for renters.

In looking at such diverse approaches to bettering affordable housing, the key is adoption, said Wendell. “The real estate industry as a whole is pretty tech-hesitant, and that is particularly true in affordable housing with many property owners and managers who have been in the business for decades.”

As defined by the federal government, “affordable housing” is a specific and stringently regulated real estate ecosystem, said Allen Feliz, vice president of U.S. affordable housing at real estate technology giant MRI Software.

“What makes affordable housing in the U.S. unique is the fact that we have all of these complex programs, many that come from the federal government like Section 8, the federal Low-Income Housing Tax Credit, and a host of other financing programs or rental assistance,” said Feliz. “And then you have a variety of state programs and local programs that all provide resources for affordable housing.

“What all these programs have in common are household income, maximum allowable rent restrictions, and a host of compliance requirements. That’s what’s fundamentally different about affordable housing: You have all these requirements, lots of regulation, lots of paperwork that you have to manage for all of the residents that live in these units. So software in the affordable housing space has to be able to help you handle all of these compliance responsibilities. It has to be more robust in terms of helping operators with a host of compliance requirements that you don’t see on the conventional side.”

In addition to compliance issues, Feliz and Embue’s Cooper both pointed to proptech-related technologies such as 3D printing, modular construction, zoning software to identify potential affordable housing sites, and other innovations as potential near- to long-term solutions.

Jewel Crosswell Stone, a Columbia Business School venture fellow and MBA candidate intern at proptech venture capital firm MetaProp, has been working on an affordable housing research project for the company.

“The thesis I’ve been working on has been primarily focused on lowercase ‘A’ affordability, not affordable housing as it is defined by the U.S. government,” said Stone. “But I can definitely speak confidently that MetaProp is specifically keen on growing their portfolio and investing in improving affordability for renters or owners.”

Based on her research, Stone said she’s likely to recommend the area of pre-construction in affordable housing as an especially worthwhile investment opportunity for MetaProp.

“The pre-construction phase is clearly so fragmented and disorganized,” said Stone. “There are 10,000 pages of building codes for every jurisdiction, and over 19,000 jurisdictions are in the U.S. So it makes sense that this is really ripe for innovation.”

OnSiteIQ is a Manhattan-based construction technology platform that works with developers, private equity firms, investors and lenders to help document and monitor project progress and verify payments. Working on affordable housing projects is about “5 to 10 percent” of the company’s work and the sector is strictly regulated, often state-financed, and requires public transparency, said Ardalan Khosrowpour, CEO and founder at OnSiteIQ.

OnSiteIQ helps such projects be “a much more efficient construction process and a transparent end-to-end deployment of capital,” he said. “So we come to the risk management side of this and make sure all these developers’ projects fulfill their fiduciary responsibility. And it’s public information. People can log in to see the projects and how they’re progressing. Building that trust with the community and public institutions in these projects is paramount. That’s where we play a role in affordable housing.”

Focused on affordable residential rental buildings, Matrix Rental Solutions takes another proptech approach to reducing housing costs by making the rental application process more efficient for renters and landlords, said Sipho Simela, CEO and founder of the Stamford, Conn.-based startup. The 2-year-old company claims that its AI-powered technology expedites the process by up to 50 percent.

A particular problem for renters of affordable housing is their ability to use government-issued vouchers in the renting process, he said.

“Think about a person holding a voucher,” said Simela. “That person may go through three, four, five nonrefundable applications before they finally land at a unit that’s willing to take into consideration what their source of income is.”

Matrix’s application process attempts to simplify the voucher process so that renters save time and money, he said. “Affordable housing extends far beyond just a supply side problem. It has to do with the consumer. Unfortunately, today, when it comes to affordability, they don’t have much control over their journey. We are empowering the consumer to show their best financial self, and we do that using technology.”

Another even more nascent proptech startup approaching affordable housing is McAllen, Texas-based Homebase, which offers individual investors and homebuyers a fractional interest in a home, said Domingo Valadez, the company’s co-founder and CEO.

“The thesis for Homebase is that we think real estate will continue to get more and more unaffordable over time, especially with big institutional players that are continuously buying up real estate, never selling it, and forever renting it,” said Valadez. “So, how do we give people the ability to still be owners in the properties that they’re living in?

“Our first property was sold last month. That was a big experiment. Do people even want fractional ownership? And turns out they did, so now we’re getting ready to do our second home. But a big piece of that is also having the tenant live in the property and be a fractional owner of the property as well. Right now we’re aiming for people to invest, but eventually we’re going to let tenants that live in the properties also be co-investors. So, in effect, you become a homeowner of the property you’re living in. We’re not actually creating new housing, just giving more people the ability to become owners of properties.”

Philip Russo can be reached at