Distressed hotels turned into apartments for affordable housing

We found one company that took a hotel in Virginia that used to be full of issues, like drugs and shootings, and completely turned it around

Finding a place to live can be difficult, especially as rent prices continue to rise, but there maybe a solution. Taking old run-down properties, like hotels, and turning them into apartments that are affordable.

We found one company that took a hotel in Virginia that used to be full of issues, like drugs and shootings, and completely turned it around.

“They [Roanoke city officials] were very supportive right out of the gate,” said Sam Difrank, the Chief Investment Officer at Saul Urban.

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“Seeing rebirth of an existing structure or an existing site is very exciting for us,” said Chris Chittum, Roanoke’s Executive Director of Community Development and Placemaking.

“This is my first big apartment that I got on my own, it’s fancy, but it’s affordable,” said Malerie Garrett, a new renter.

The housing crisis

Roanoke has a “pretty extreme shortage on our hands right now,” said Chittum about the local housing crisis. “Scarcity. It’s simple supply and demand and scarcity will drive the cost up. People are really surprised about how rents have escalated. Something that was $900 a month, a couple of years ago is north of $1,300 now.”

Affordable housing is a big problem not only in Roanoke, but across the country. So we went looking for a solution. The new “Lodging to Living Fund” at Saul Urban is hoping to address high rent prices. The company is using the model of getting well-located, distressed hotel properties, below replacement cost and converting them into apartments for renters.

“We’re identifying properties that are vacant or problematic, that have crime. We are then acquiring them, emptying them out and converting them to brand new apartment communities. So we’re solving a local neighborhood problem with crime and vacant properties, and we’re solving a housing problem,” said Difrank.

Difrank said by using existing buildings instead of building from scratch, the project cost is about half, which is how they are able to offer “affordable housing.”

Housing is considered affordable when you pay 30% or less of your income a month, according to the federal government. But in Roanoke, more than half of renters pay more than 30% and many of those pay more than 50% of their income for a place to live. Add in groceries, gas and everything else you need, and it can mean difficult choices every month.

“They are often faced with choices about whether they can pay rent, or if they can pay for groceries, or they pay the utility bill, or they pay for car repairs so they can get to work. Seeing rebirth of an existing structure, that’s our bread and butter here in Roanoke because we are fully developed out. We don’t have a whole lot of vacant land,” Chittum said.

The solution

“This is The Heights at Gateway Park. We call this a workforce housing community,” said Difrank, standing in the parking lot of the apartment building. “We’re looking for a structure that can be practically converted to apartments. We generally don’t have to figure out whether it’s needed. We just have to figure out whether the property itself can be turned into apartments. There’s no real magic to it. It has to still be standing. Once we figure that out, we go in with our architect and redesign the interiors and come up with layouts that are attractive to the renting community.”

Inside the model apartment, everything is brand new and includes hardwood flooring, stainless appliances and more. For the standard one bedroom, one bathroom apartment, they used two old hotel rooms to make a new long, shotgun format living space.

The old space, as a Days Inn hotel, was a cause for concern for some businesses and residents nearby. There were concerns about the number of unhoused who used to panhandle around the area. In addition, from assaults to overdoses, about 250 calls were made from the hotel’s address to Roanoke’s E-911 Center from January-September 2022.

The city says taking the 180 hotel rooms and turning them into 88 apartments has a huge plus for economic development, especially as there is a lack of one-bedroom apartments in Roanoke. It took about a year for the renovations.

“That certainly sets the stage for more development to happen in that area, more redevelopment,” Chittum said. “There are a number of vacant properties over there, commercial properties, and we would hope that this would spur it, give people confidence to invest in that area.”

For renters like Garrett, finding something affordable was difficult. She looked at other properties before signing with The Heights at Gateway Park.

“That’s what drew me to here, because they had a special, where you could move in for $500 and then just pay your first month’s rent and I thought that was a good price for a brand new apartment,” said Garrett, who likes the view from her patio. “You can see downtown very well. It’s nice and spacious back here. It’s fresh air, so that’s what I like the most about it.”

Chittum hopes this becomes something we see more in Roanoke, saying, “That’s a great model for these older hotels and motels to get developed out in the fifties, sixties and seventies and they are kind of worn out now.”

He points to commercial corridors across Roanoke on Melrose Avenue, Williamson Road and other areas where he says this kind of development would be very beneficial.

There are limitations when looking at a project like this. Chittum said sometimes it is a race against the clock.

“When you identify a project and start to run the numbers and everything, and then the clock starts ticking and things may be changing out from underneath you. Interest rates, for example, are obviously a factor, and the quicker you can get under construction, the better,” Chittum said.

“I think the limitations are just simply finding properties in different locations that need it. And that limitation is just the effort required and searching out these types of properties to convert,” Difrank said.

Garrett said she’ll be there for at least eighteen months or longer.

Difrank said he thinks most renters have been pretty happy, “It’s exciting. You feel good that you’ve been able to deliver something that people want, that they can afford, that makes them happy.”

How do they figure out the monthly rental price? Difrank said they are priced for “workforce renters” and they look at the average household income within a five mile radius. For The Heights, Difrank said the average income is about $51,000.

According to the federal government definition of “affordable” people who live there should pay about $1,300 a month or less for rent and utilities.

Difrank says the one bedroom rent currently ranges from $1,133 to $1,250 and they are running a special promotion, offering first month’s rent free for move-in by April 30.

The Heights is the first project completed under the Lodging to Living Fund that by description, “will seek to acquire well-located, distressed hotel properties, below replacement cost and convert them into apartments for renters.”

Saul Urban cites the National Apartment Association, saying about “4.6 million new middle-income multifamily housing units will be needed by 2030.”

Difrank said Saul Urban is also looking outside of Roanoke at properties in the New River Valley and Lynchburg for similar developments, but would not specifically say where in those areas.

You can find more info on The Heights at Gateway Park in this link. It’s off Orange Avenue, near Interstate 581.

This article is part of “Solutionaries,” our continuing commitment to solutions journalism, highlighting the creative people in communities working to make the world a better place, one solution at a time. Find out what you can do to help at SolutionariesNetwork.com.

About the Author

You can see Jenna weekday mornings at the anchor desk on WSLS 10 Today from 5-7 a.m. She also leads our monthly Solutionaries Series, where we highlight the creative thinkers and doers working to make the world a better place.

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