According to Enterprise Community Partners, affordable Arvada townhome communities Sheridan Ridge Townhomes and Willow Green Townhomes, owned by Archway Communities, are the first investments of a just announced Renter Wealth Creation Fund, the nation’s first innovative investing approach that provides wealth building opportunities for lower and moderate-income renters.
Historically, homeownership has often been the only route to build wealth through housing in the U.S. The Renter Wealth Creation Fund hopes to change that paradigm. Residents of Sheridan Ridge and Willow Green Townhomes who make on-time rent payments are expected to receive cash back each month; all residents can gain access to services tailored to community needs; and long-term residents may have the opportunity to share in appreciation of the properties if and when it is realized through a recapitalization or sale. The properties will also see $1.7 million in renovations while preserving rent and income restrictions in one of the country’s most expensive markets.
“With the Renter Wealth Creation Fund, we hope to demonstrate that renters can and should have access to the wealth building opportunities that have historically only been available to homeowners,” said Chris Herrmann, chief investment officer and fund manager of Enterprise’s real estate equity business. “We’re excited to pioneer this model in partnership with residents of Sheridan Ridge and Willow Green, as well as the sponsor, Archway Communities, and our investors and funding partners.”
“Resident services and support are central to our work at Archway Communities, and this fund provides a new approach to fund these critical services and support our residents on their path to a more stable future,” added Sebastian Corradino, president and CEO of Archway Communities. “We celebrate Enterprise’s creativity and could not be more pleased to be partnering with them on this important initiative, as we are always looking for ways to help bring long-term security to our residents.”
The Renter Wealth Creation Fund’s investment in Sheridan Ridge and Willow Green Townhomes will provide three key benefits to renters:
- Monthly cash back: As part of the Renter Wealth Creation Fund’s mission to promote financial stability, Enterprise will partner with Stake1 to offer a monthly cash back program. Residents who make on-time rent payments will be offered a percentage of cash back each month, which could increase over time based on property performance, plus additional rewards if the cash back is saved through the end of the month. The cash-back component was created based on feedback collected during the fund’s design, when focus groups said monthly payments could help budgets go further.
- Resident services: The fund will provide funding for resident services tailored to the needs of the community. Services could include financial education, support groups, youth programming, wellness activities, and more. On-time rent payments can also be reported to credit bureaus to help establish and boost resident credit scores.
- Shared appreciation: Like homeowners cashing out from a sale, long-term residents — current and former — may receive a share of the profits if the property is refinanced or sold for a profit. Like home equity, shared appreciation has the chance of delivering transformational income to renters without the same risk of financial loss.
The resident services, credit reporting, resident outreach and possibility for additional cash back rewards components are being supported by a grant from the New York Life Foundation.
“The New York Life Foundation is focused on fostering generational wealth-building solutions for traditionally underserved communities,” said Heather Nesle, president of the New York Life Foundation. “The Renter Wealth Creation Fund fits that focus as an innovative strategy that actively encourages savings and provides direct financial support to renters, thereby paving the way for increased asset accumulation over time. We’re excited to be a part of this initiative and thrilled that the first properties have been identified.”
As rents in the Metro Denver area continue to rise and homeownership remains out of reach for many, the Renter Wealth Creation Fund aims to offer an alternative pathway to wealth-building over the long term.
Sheridan Ridge Townhomes and Willow Green Townhomes, constructed in 2003 and 2005 respectively, include 125 apartments spread across 13 residential buildings in both communities. Sheridan Ridge offers one-, two-, three- and four-bedroom layouts that will be affordable to residents earning between 30%–100% of the area median income (AMI), along with market-rate homes. Willow Green offers two- and three-bedroom layouts affordable to residents earning between 30%–60% AMI.
In addition to repairing floors, roofs, and windows, the communities plan to install upgraded security measures, better drainage systems and other improvements. Both properties are transit-accessible, serviced by the Regional Transportation District, with bus stops offering residents easy access to other parts of the Denver metro area.
Archway Communities is the developer and property manager of Sheridan Ridge and Willow Green and will manage resident services at both properties.
