TIME real estate

You Could Win a 35-Acre Farm Just By Writing an Essay

“This place has so much potential for somebody who has imagination and drive"

A Virginia couple offered writers a shot at owning their bucolic, 18th century horse farm, so long as they can explain in 1,000 words or less why they’re worthy of the property.

Owner Carolyn Berry, along with her husband Randy Silvers, said that she harbored no ill will toward real estate agents, but dreaded the idea of a potential owner “traipsing across the property, and pointing out what they might consider a flaw,” according to local radio broadcaster WAMU.

To safeguard against gut renovations, the couple has announced an essay competition to give away Rock Spring Farm in Essex County, a property valued at $600,000, Berry says, to “somebody who loves the land as much as we do.” Essays will be evaluated by an expert panel of “educators, hobby farmers, and horse enthusiasts,” according to the contest’s submission guidelines.

The catch? Contest rules require a $200 submission fee, which the couple hopes will net enough funds to pay off their mortgage and retire comfortably in the knowledge that their farm won’t be redeveloped into a property solely for humans.

MONEY millionaires in the making

How to Make Money Like a Millionaire

It's easier than you may think.

A seven-figure nest egg may feel far off, but these millionaires—and millionaires in the making—have figured out the keys to financial success. From smart investing to aggressive saving to launching a business, check out their tips for reaching your million-dollar payday. (And then read the rest of our advice for How to Reach $1 Million.)

Scott Jones

Debra Cohen, 48, Long Island, N.Y.
Her Approach: “I feel very strongly that if you have some drive and want to make a million dollars, you should be in business for yourself,” says Debra Cohen, president of Home Remedies and creator of the Homeowner Referral Network (HRN).

After recognizing a need to help connect quality contractors and consumers, she borrowed $5,000 from her husband’s 403b to start a contractor referral business. After six months, she paid the money back. Three years later, she got a call from a woman in Boston who was interested in starting her own referral network. Sensing the widespread appeal of contract referral businesses as self-employment options, she wrote The Complete Guide to Owning And Operating A Successful Homeowner Referral Network, a business plan that has helped establish more than 400 HRNs nationwide.

The popularity of the HRN model helped propel the company’s revenue to $1 million in 2007—a feat Cohen celebrated with a family trip to Puerto Rico. As her net worth continues to grow, Cohen has incorporated other cost saving measures, like remodeling her home instead of buying a new house, a move she estimates saved her $400,000 over 10 years.

Want to learn more about becoming an entrepreneur? Check out our Small Business Startup Guide.



Simon Margolis

Simon Margolis, 30, San Francisco
His Approach: Ever since he started investing in 2007, Simon Margolis has viewed downturns in the market as opportunities to buy.

“I haven’t really been concerned with investment performance too much over the past 10 years or so,” he says. Even with the Great Recession hitting just when Margolis was getting into his investment groove, he still opted to offset paper losses with new investments. “I thought of it as an opportunity to buy cheaper stuff than I had the previous week.”

With a net worth of $450,000, the 30-year-old’s strategy is paying off. He makes a point of maxing out his 401k and IRA, favoring low-fee exchange-traded funds. Though initially attracted to S&P 500 index funds, he’s since diversified his portfolio by including international exchange-traded funds, REITs, and commodities, and has taken a larger cash position, all to help hedge some risk.

Based on his current savings rate and investment returns, Margolis predicts he’ll hit the $1 million mark within the next five years. His advice to investors who want to follow in his footsteps?

“Pay yourself first. Make sure you invest before you do anything else. Before you buy a car, before you pay for dinner, pay yourself first.”

Want to invest your way to $1 million? Here’s help getting started.



Dan Malkin, 27, New York City
His Approach: “For me, it’s all about saving—and saving properly,” says Dan Malkin. Set to hit seven figures by his 30th birthday, the 27-year-old contributes to his company’s 401k, as well as auto-deposits money from each paycheck into an investment account comprised of exchange-traded funds and two to four individual stocks.

To stay on track, Malkin checks his account balances regularly. “I’m big on comparing expenses one month to another,” he says, doing it with the help of the expense tracking and budgeting app Wallet. The app offers insight into his spending habits, which he tries to manage by walking to work in the summer and cooking his meals at home instead of eating out with friends. Another major savings strategy? Reasonable rent.

“I try to live in a place without insane rent,” he says. “I know people paying 70% of their salary in rent.”

You, too, can save your way to a seven-figure retirement account if you follow these real people’s examples.



Alison Doyle

Alison Doyle, 58, Alexandria, Va.
Her Approach: Alison Doyle didn’t set out to establish a grand real estate investment plan–it was more of a natural progression. After deciding she wanted to upgrade from a condo to a townhouse in 2004, she recognized the potential of her neighborhood and decided to rent the unit instead of putting it on the market. Four years later, she found herself regularly traveling to her hometown of Buffalo to visit her mother and help plan her high school reunion. With all the back and forth, she decided to purchase a duplex, rent one side and live in the other.

“[Investing in real estate] became more intentional as I learned how well it worked,” says Doyle. “Did I sit down and come up with an investment plan? No, and I probably wouldn’t now. That’s a lot riskier than what I did. I guess I’m more conservative.”

Doyle now manages five rental units: two condos in Arlington, Va., and two duplexes in Buffalo (she keeps one half of one of the duplexes as a vacation home for herself). With all the properties paid off, the recently retired lawyer lives off the rental income and her savings, opting to let her retirement accounts grow unfettered.

Interested in investing in properties? Learn how to unleash your inner landlord.



Colin Wiesner, 34, Milwaukee, Wisc.
His Approach: With the help of his parents, Colin Wiesner graduated from college debt-free. To honor his folks’ commitment to his education, he decided to make the best use of his income—and that meant maxing out his 401k and an IRA straight out of school. His contributions, plus employer match, allowed him to save $25,000 to $30,000 a year.

Retirement saving became such a part of his routine, Wiesner had a hard time scaling back his 401k contributions when he and his wife decided to save for a house. “It was actually kind of difficult for me to do mentally,” he says, “but I understand the need to scale back my saving to attend to my short-term future instead of my long-term goals.” Though he was still maxing out is IRA, he gradually got used to reallocating a portion of his 401k contributions toward a down payment on a home.

Wiesner also tracks his and his wife’s net worth, which is already more than $500,000, with the website Personal Capital. Based on his current savings rate, he anticipates reaching $1 million within 10 years.

“In the back of my mind I’m always concerned [about losing it], but I know I’m in a much better situation than a lot of my peers and my elders,” he says. “I would rather be in the position I am than [that of] people approaching retirement with less than $100,000.”

Think you can’t max out your retirement savings? Think again.



Sue Carlson

Sue Carlson, 62, Anna Maria, Fla.
Her Approach: In 1984, Sue Carlson took a chance on a $32,500 distressed property Traverse City, Mich. Over the next four years, she committed nights and weekends to updating the home, eventually selling it for $67,000.

“I was able to double my money with that first investment, so I purchased another one, then another one,” she says. “The rest is history.”

Instead of focusing on long-term rentals, Carlson saw the opportunity in short-term vacation rentals in Michigan and Florida. In late 1999, she opened Anna Maria Island Accommodations. In 2005 she sold the company, which had grown to include 75 rental properties on the island. Five years later, she started a second rental property company, Coastal Cottage AMI.

Carlson now owns $2 million in real estate holdings, and, with the exception of a $185,000 mortgage on her home in Anna Maria, her other properties—a second home in Longboat Key, Fla., a rental property in Bradenton, Fla., another rental unit in Anna Maria, and a home in Kewadin, Mich.—are paid off.

Think you’ve got what it takes to launch a business? Here are 5 creative ways to fund your startup.



Chip Downes, 51, Harleysville, Pa.
His Approach: Downes‘s path toward seven figures began when he was 23 years old and started investing in individual blue-chip stocks. Now 51, he has maintained an aggressive strategy, compiling a portfolio that is 95% stocks. Though he still has the individual stocks he originally purchased in his 20s, he now opts for low-fee exchange-traded funds to help diversify his portfolio. While his strategy isn’t right for everyone, especially in his age bracket, he says buying and holding the equities has worked well, even during the financial crisis.

“I’m just willing to take the ups and downs over the years with the expectation that the percent gain will be better than a savings account,” he says.

He anticipates weathering another market downturn before he retires from his position as an information technology consultant. Until then he will continue to funnel any raises into retirement savings while maintaining his current cost of living, a practice that has helped him gradually up his 401k contribution to a healthy 12%.

An added interest maintaining rental properties—he currently owns two rental units—has also helped push his net worth above the million-dollar mark.

Want to live well while spending less? Here’s how.

Read Next: How to Manage Your Career Like a Millionaire

TIME housing

Here’s Why the Real Housing Recovery Is Just Getting Started

Construction At A Toll Brothers Development Ahead Of Housing Starts Figures
Bloomberg—Bloomberg via Getty Images A worker builds a new Toll Brothers home.

Home builders are busier than they've been in years.

The year of the construction boom just got even better for American homebuilders.

The Census Bureau and the Department of Housing and Urban Development announced Friday morning that builders launched new housing projects at a seasonally-adjusted annual rate of 1.17 million in June — that’s up nearly 10% from May, and 27% from June 2014. The rate is also just shy of the eight-year high of 1.19 million set in April.

The numbers were driven by a big increase in multi-family construction, as housing starts of single-family homes actually shrank by 0.9% in June. As you can see in the chart below from Calculated Risk, the housing construction recovery has been dominated by the construction of apartment buildings, reflecting a shift in demand for urban over suburban housing, and the fact that the recession has made it difficult for many Americans to qualify for mortgages to buy a home.

But even if many Americans aren’t able to buy homes, they still need somewhere to live. In the years following the real estate bubble, data suggested that Americans were increasingly doubling up, and living with friends and family rather than starting households of their own. Now that trend appears to be shifting, with more recent data showing stronger household formation that at any time since the housing crisis.

Although more data will be necessary before we can declare the housing construction slump officially over, 2015 is shaping up to be a great year for builders.



MONEY buying a home

7 Ways to Avoid Real Estate Negotiation Nightmares

Fuse—Getty Images

#3: Keep stubbornness in check

Do you squirm at the thought of negotiating with sellers at garage sales, flea markets, and antiques stores? Even if you’re pretty confident (if you do say so yourself), the process of buying a house can be filled with real estate negotiation nightmares.

Here are some out-of-the-box negotiation ideas that can help turn a possible nightmare situation into a good deal for you.

1. Don’t shy away from a challenging deal

Rachelle Schreiber, a real estate agent with Realty Group International, comes right out and discloses to potential buyers when a deal could be “challenging.”

For example: Divorcing spouses don’t always agree — on anything, but especially not selling their marital home. But that doesn’t mean you should walk away. Instead, rely on the agent to guide the process. That way, “when the sellers don’t agree on terms, we have a less painful reaction [from buyers].”

2. Be realistic about repairs

You really want to sell your house as is, but the only acceptable offer you’ve received includes making repairs — and you don’t have the time to devote to the research, vetting, and oversight those repairs require. Don’t fret. You may be able to get the buyer to do the legwork for you.

“The buyer needs to carefully calculate the cost of doing the repairs,” says Susan Naftulin, CEO of Rehab Financial Group. The seller can then offer a credit for the cost of repairs at closing instead of risking a lost sale.

As the seller, you should carefully double-check the buyer’s numbers so that you’re not reducing your price by more than is absolutely necessary.

3. Keep stubbornness in check

Sometimes egos can ruin a home sale. When that happens, take a deep breath and remember your goal.

“I just had a deal where my buyers paid $300,000 over the asking price for a single-family home,” says Roh Habibi, a real estate broker with Coldwell Banker and star of the TV show Million Dollar Listing San Francisco.

But even so, the deal almost fell through because the sellers wouldn’t include a washer and dryer in the sale.

Note: Just erase a zero (or two) from this example and you’ll see that the advice applies no matter the budget. Don’t let a small setback become a deal breaker.

4. Look at the big picture

You’ll be more likely to win a negotiation battle of wills if you’re not stuck on a specific number.

Sellers and buyers often enter a stalemate over minimal sums, says Chris Leavitt, a broker at Douglas Elliman who also stars on the TV show Million Dollar Listing Miami.

When that happens, Leavitt suggests that sellers consider the monthly carrying costs. “Do you really want to be on the market for potentially a few more months?”

For buyers, it’s about whether they really want to lose their potential new home over a small amount of money.

“Almost 100% of the time, both parties will meet in the middle,” says Leavitt.

5. Understand the difference between prequalified and preapproved

When lenders prequalify buyers, they simply estimate how much buyers might be able to borrow, and they base that figure on what buyers reveal. Being prequalified is not a guarantee that buyers will get a loan.

However, being preapproved means buyers have a loan in place that they’ll probably get if they act within a specified time.

Both buyers and sellers save time and negotiation skills when the buyer comes to the table with a preapproval letter from a lender.

6. Be realistic about short sales

Negotiations don’t work the same way when you’re dealing with a short sale. In this case, sellers are considered to be in dire straits financially, which means they can’t afford to make repairs or provide a repair credit, so that one’s off the table. These sellers also might have outstanding liens on the property that they want or need their buyer to pay.

As a buyer, you’re under no obligation to take whatever the seller dishes out. But if you still come out ahead after calculating costs of repairs and liens, then you might want to go for it.

7. Prepare to walk away

Sometimes people become unreasonable and even resort to bullying as a negotiation tactic.

“You can almost always work out an agreement, even when some part of the transaction has gone terribly sideways or down,” says Bruce Ailion, an Atlanta real estate agent.

But when someone is unwilling to engage in a civil way, Ailion says, it’s time to walk away. “Life is too short to deal with difficult people. Some transactions are just not meant to happen.”

More From Trulia:

MONEY Ask the Expert

Can You Write Off Your Vacation Home?

Ask the Expert – Everyday Money illustration pulling cash out of wallet
Robert A. Di Ieso, Jr.

Q: I own a vacation home on the beach. I want to rent it out for part of the year and use it myself the rest of the time. Can I write off my expenses?

A: The answer depends on how much you use the home yourself. If your property is rented most or all of the time, you should be able to deduct your rental expenses, although you’ll also be declaring the rental income. But when you also use a rental property as a home, deductions may be limited.

One key thing to know: The IRS defines personal-use days broadly, including days a property is being used by relatives — even if they pay market-rate rent — as well as time the property is being used by non-family members who do not pay market-rate rent. Any days you fully devote to repairing or maintaining the property are not counted as personal use days, however — no matter how relaxing you find rewiring the bathroom.

Taxpayers tend to fall into three different categories, say CPAs, depending on how often they rent the space and their level of personal use.

Limited Rental Use

If the property is rented for fewer than 15 days a year, or less than 10% of the total number of days you could rent it to others at a fair rental price — whichever is greater — you do not have to report or pay taxes on any of the rental income you receive, says Jerry Love, a CPA in Abilene, Texas.

Love calls this the Masters Golf loophole, as it can be a huge boon for owners of properties located near events like the Masters Golf Tournament, the Super Bowl or Mardi Gras that tend to drive up rental rates for a short period of time.

You will not be eligible for a Schedule E deduction for any expenses associated with renting the property. You can, however, deduct qualified residential interest expense and real estate taxes as itemized expenses on Schedule A, as you would with your primary residence or other property used for personal needs.

Hybrid Rental and Personal Use

When you both occupy the property and rent it out for 15 days or more per year, you must report the rental income you receive to the IRS, and you can deduct part of your rental expenses and depreciation.

To determine your deduction, you would need to divide your expenses between personal use days and rental days, says Love. If you plan on renting out the home half the year, for instance, 50% of the property use is rental, meaning you can allocate 50% of your maintenance, utilities and insurance costs to the rental, as well as 50% of your depreciation allowance, interest, and taxes for the property.

Note that your deductions cannot exceed the amount of income you received. “You can’t claim a loss, but you can offset the rental income,” says CPA and financial planner Ted Sarenski in Syracuse, N.Y.

The IRS recommends that for the rental portion of expenses, you use the deduction for interest and taxes first, followed by operating costs and then depreciation. Any expenses you were unable to deduct because of the limit can be carried forward for possible future use against rental income.

You can also take separate deductions — although not the depreciation — against the portion of personal use days. So in the example above, the remaining 50% of the interest you paid could be deducted on Schedule A.

Limited Personal Use

Use your rental property fewer than 15 days a year, or less than 10% of possible rental days? In that case, the property won’t be considered a residence and so your rental expense deductions are not limited to the property’s rental income, meaning you can claim the loss.

However, you still must prorate expenses to eliminate any period of personal use. Let’s say you stayed in your beach house 10 days a year, and rented it out the other 355 days. In that case, 10/365 (or 2.7%) of each expense you incurred could not be taken as a deduction on Schedule E as a rental property expense.

You do not have to prorate deductions that are directly related to renting it out, such as advertising or listing fees, says Love. You can still deduct any property taxes attributable to the personal portion on Schedule A, but not your mortgage interest, since the property isn’t a residence.

You can also deduct travel costs to your vacation home as a business deduction, says Love, as long as the reason for the trip is related to maintenance needs — like winterizing a ski condo in Colorado before renters arrive — and is not for your own family vacation.

MONEY home prices

Real Estate In This NYC Neighborhood Is Worth More Than All of New Hampshire’s

Brownstones on the Upper East Side, New York City.
Patti McConville—Alamy Brownstones on the Upper East Side, New York City

And a bunch of other states' too.

New Yorkers are known for their not-so-subtle indifference to the rest of country. Just think of that famous cartoon, where beyond the Hudson River, a featureless expanse fades into the the Pacific Ocean and a distant sliver marked Japan.

When you view the country through the lens of real estate values, New Yorkers’ view seems crazily close to the mark, at least according to data compiled by Metrocosm, a website run by real estate researcher and New Yorker (of course) Max Galka.

According to Galka’s calculations, New York City’s 305 square miles, which amount to less than one one-thousandth of the nation’s land mass, are valued at about $1.5 trillion, 5% of the $33 trillion value of the entire nation’s real estate.

Looked at another way, only three states beside New York State itself—California, Florida, and Texas— have total real estate values higher than Gotham’s.

The Upper East Side, essentially a handful of tony blocks adjacent to Central Park, is itself worth about $96.5 billion, according to Galka, more than several states including New Hampshire, South Dakota, and Wyoming. The Upper West Side, home of the famous Dakota apartment building (where John Lennon lived and Rosemary’s Baby was set), is worth more than all the real estate in either of the actual Dakotas.

Overall, Manhattan real estate is worth about $733 billion, in line with all the properties in Ohio, Michigan, and Georgia.

MONEY real estate

Home Prices Continue to Rise, But For How Long?

aerial view of subdivision
David Sucsy

Home prices rose 6.3% in May, but higher interest rates loom.

More good news for those of us looking to sell homes.

Home prices climbed 6.3% in May, marking the 39th consecutive month of year-over-year gains, according to a report by CoreLogic. Prices in 10 states, including New York and Texas, plus Washington DC, hit 40-year highs.

But for owners and would-be sellers, the silver cloud has a gray lining. The rate at which prices are rising, which topped 10% in 2013, has begun to slow. Moreover, a key factor driving May’s growth, according to CoreLogic was 30-year mortgage rates, which remained below 4% during throughout the first half of the year. Low mortgage rates tend to push up home prices by making it possible for buyers to borrow more. Conversely, even a small increase in rates can add hundreds of dollars to a monthly mortgage bill.

A potential problem: Last week Freddie Mac reported 30-year mortgage rates had climbed above that threshold to 4.08%. Freddie’s chief economist, Sean Becketti, recently said that much of the recent surge in home prices was the result of buyers trying to act before they climbed even further. That’s likely to happen soon, since the Federal Reserve, which as been holding rates low since the recession has said it plans to begin slowly ratcheting them up as soon as September.

Just how big can the effect be? Real estate analyst HouseCanary recently estimated that if mortgage rates reached 6%, a third of millennials—key first-time home buyers—wouldn’t be able to afford a home at today’s rates.

For the next twelve months, CoreLogic expects a more modest increase in home prices — a gain of 5.1%. But others have sounded less optimistic.

“I’m worried about it,” Glenn Kelman, chief executive of Redfin, a real-estate brokerage recently told the Wall Street Journal. “The rates have been so low for so long that trying to persuade anyone that 4% or 4.5% is still a bargain may not be easy to do.”




New York’s 30 Rock Just Got a New Name

30 Rock
NBC—NBC via Getty Images 30 Rockefeller Plaza.

Rooftop sign will replace GE's initials

The iconic 30 Rock building will now be known as the Comcast Building.

The new name may not sound as cool, but the building does get a colorful peacock to help illuminate New York’s skyline.

Located at 30 Rockefeller Plaza in Midtown Manhattan, the iconic New York City skyscraper will light up Wednesday evening with its new corporate name.

The rooftop sign will replace General Electric’s initials. Comcast acquired full ownership of General Electric’s NBCUniversal business in 2013.

According to NBC, this will be the third name for the iconic building: It was first known as the RCA building, and later as the GE building.

“I remember when it said RCA up there,” Michael Miscione, Manhattan’s borough president, told NBC. “The fact that they’re bringing GE down is just one step in a many decade evolution of the signage on the building.”

The building reportedly first opened in 1933 and is 70 stories high.

For more on Comcast, check out this in-depth Fortune feature on the company’s management.

TIME cities

New York City Just Froze Rent on One-Year Leases for the First Time Ever

Move comes after report shows renters struggling while landlord incomes grow

For the first time in its 46-year history, New York City’s Rent Guidelines Board voted on June 29 to freeze rent on one-year leases and to limit two-year lease increases to a comparatively low 2%. The freeze applies to leases on rent-stabilized apartments beginning in October.

The vote came after the board, which regulates rent for more than 1 million such apartments, released a report in April showing that while landlords’ incomes have grown for nine consecutive years, renters in stabilized housing have experienced both unchanged income and rising housing costs, the New York Times reports.

However, Joseph Strasburg, president of the Rent Stabilization Association, an organization for landlords, said the outcome is ultimately negative and that “landlords will now have to forgo repairing, maintaining and preserving their apartments, which will trigger the deterioration of quality, affordable housing.”

A 2014 housing survey conducted by the city showed that the median rent-to-income ratio was nearly 34% and that a third of rental households paid more than half of their income in rent.

New York’s move comes as San Francisco grapples with imposing a construction moratorium in its Mission neighborhood to give the city a chance to purchase property for affordable housing. New York placed third behind San Francisco and Atlanta in speed of rising rents for 2014, and the city has periodically fielded calls for stricter rent control during this decade’s tech boom.


TIME Money

How Rich Immigrants Can Solve L.A.’s Housing Crisis

Getty Images

Zocalo Public Square is a not-for-profit Ideas Exchange that blends live events and humanities journalism.

If the city wants affordable homes, it needs to tap into funds from wealthy foreign investors

How could Los Angeles pay for more affordable housing?

One answer is money from wealthy immigrants.

To build apartments that are accessible to low-income residents, high-rent cities across the country—from San Francisco to Miami—have been tapping funds from EB-5, a federal government program that offers U.S. green cards to foreigners in exchange for investments in U.S. businesses. Launched in 1990 as a vehicle to create jobs, the program requires each investor to give at least $500,000 to a business that provides 10 full-time jobs to Americans. The investment is “at-risk,” so there’s no guaranteed return.

As an immigrant, a former securities lawyer and the founder of a business, I immediately found EB-5 compelling, and have worked to spread the word about its advantages and make it more transparent. I’ve created EB5 Investors Magazine, EB5investors.com, and a series of educational EB-5 conferences.

But the program was rarely used and little known until the Great Recession hit and traditional sources of capital dried up. Since then, real estate developers have embraced EB-5 funds from foreign investors around the world as an alternative for financing all kinds of construction projects, including buildings that contain affordable housing units. EB-5 funds helped build 115 affordable units at Stadium Place, an office-hotel-retail-residential project located in front of the Seattle Seahawks stadium. San Francisco’s massive Shipyard development in Bayview-Hunters Point, one of the poorest sections of the city, includes several hundred million dollars from individual EB-5 investors. As part of its negotiation with the city, the Shipyard developer pledged to devote 30 percent of its planned 10,000 units to affordable housing. And last month, Miami Mayor Tomas Regalado said that his city plans to target EB-5 immigrant investors as a source for financing an ambitious agenda to build affordable housing.

Like Los Angeles, most of the cities that have benefited from EB-5 appear toward the top of “least affordable’’ lists of U.S. cities. They all have large populations of homeless people, although Los Angeles has the highest number. (The homeless population in L.A. County grew by 12 percent in the past two years; the number of tents, vehicles, and homemade shelters being used as housing jumped 85 percent.)

But Los Angeles hasn’t cultivated EB-5 projects that involve affordable housing. Instead, L.A. developers with EB-5 have focused on building hotels – an easier route when you have to show job creation. Flag hotels in big cities are also easier to “sell” than low-income housing with migration agents in China who connect potential immigrant investors with projects. Of course, San Francisco and Seattle projects face the same reality and have gotten deals done. That suggests that developers here need a nudge to be more creative; one nudge might involve some form of city incentives.

Yes, there are challenges. Real estate developers, will tell you that affordable housing—defined as housing priced for people making less than 50 percent of a community’s median income—is notoriously difficult to greenlight because it is perceived as unprofitable. But what they don’t understand is that the use of EB-5 funds can help developers overcome that hurdle.

The big advantage for developers is that EB-5 funds are relatively cheap capital. Most EB-5 investors want to immigrate to the U.S. to raise their families, send their children to American universities, and take advantage of the entrepreneurial opportunities. A large return on investment is down the list for these immigrants. That translates into reduced demand for a high rate of return, which ends up costing the borrower less.

Another advantage: developers don’t have to put as much cash into projects, because of the lower proportion of equity in most EB-5 deals. In a typical deal using EB-5 funding, the developer maintains equity amounts equal to between just 15 and 25 percent of the total project cost.

Los Angeles affordable housing advocates would do well to look into EB-5 funding as an alternative source for financing mixed-use projects that include affordable and workforce housing. The money is there. Investors from China, Latin America, Europe, and the Middle East already have invested billions of dollars of capital through the EB-5 program with the hope of raising their children in the U.S. What better way to use wealthy investors’ funds than by helping to finance the construction of housing for middle and low-income Angelenos?

Ali Jahangiri is the founder of EB5 Investors Magazine and EB5Investors.com, a platform allowing investors to communicate directly with attorneys, and developers to connect with EB-5 regional centers and funding sources.

TIME Ideas hosts the world's leading voices, providing commentary and expertise on the most compelling events in news, society, and culture. We welcome outside contributions. To submit a piece, email ideas@time.com.

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