Enterprise Community Partners, powered by Stake, announces that its affiliate Enterprise Community Investment (Enterprise) has launched the Renter Wealth Creation Fund, a first-of-its-kind innovation designed to provide renters the wealth building opportunities traditionally limited to homeowners while preserving up to $1 billion in affordable and workforce homes. Backed by Enterprise’s national affordable housing platform and decades of fund management experience, the fund, which has set a goal to raise $250 million from investors, offers a return for investors and upward mobility for renters, who earn both immediate cash back for on-time rent payments and the opportunity to share in the appreciation of the property over the long term. Enterprise expects the fund to preserve 7,000 homes.
“The Renter Wealth Creation Fund is a direct response to what renters have told us they want: more cash in hand today, and the opportunity to achieve upward mobility over the long term,” said Lori Chatman, president of Enterprise’s Capital division. “With their feedback, we created a financial innovation that offers returns to investors, loyalty and stability to property owners and—for the first time—real wealth-building potential for renters.” (Chatman will assume the role of interim co-CEO of Enterprise beginning in November.)
Informed by residents, the Renter Wealth Creation Fund provides critical benefits to residents of affordable rental housing developments in which it invests:
- Cash Back: Every month, residents who make on-time rent payments receive cash back through Stake, a mobile app that allows the seamless transfer and use of these reimbursements.
- Resident Services: Each property will offer services tailored to the needs of the residents.
- Shared Appreciation: Like homeowners cashing out from a sale, long-term residents—current and former—can receive a share of the profits if the property is refinanced or sold for a profit. When this occurs, investors receive a targeted financial return of 4%, and residents who lived in the building for at least four years are expected to receive 80% of the financial upside thereafter as an additional cash-back reward.
Homeownership has historically been the gateway to upward mobility for most Americans, and the average homeowner today has 40 times the wealth of a renter. But systemic inequities have kept homeownership out of reach for many low-income families, and particularly for people of color impacted by discriminatory housing policies. More than half of Black and Latino households are renters. The Renter Wealth Creation Fund rebalances the dynamic with a commonsense solution.
“The Renter Wealth Creation Fund recognizes that there is more than one way to build wealth, and more than one way to define it,” said Chris Herrmann, chief investment officer and fund manager of Enterprise’s real estate equity business. “Through focus groups and surveys, residents made it clear that wealth is not just a long-term return. Wealth is also having enough money to know next month’s rent bill will not break the bank; to order dinner in instead of cooking after a long day at work; or to treat the family to an afternoon at the movies. The Renter Wealth Creation Fund was designed to reflect that reality.”