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HUD & FHA Glossary
Last updated on Feb 19, 2023
1 min read

What is Single Room Occupancy (SRO) Housing?

Housing consisting of single room dwelling units that are the occupants’ primary residences. HUD requires new construction, conversion of non-residential space and reconstruction SRO units to have either food preparation areas or bathrooms (or both).

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Single Room Occupancy (SRO) Housing and the HUD 221(d)(4) Loan Program

Housing consisting of single room dwelling units that are the occupants’ primary residences. HUD requires new construction, conversion of non-residential space and reconstruction SRO units to have either food preparation areas or bathrooms (or both). If the property is an acquisition or rehabilitation, neither food preparation nor sanitary facilities are required in each unit. However, the building must have shared sanitary facilities. While in some areas, SRO buildings are protected by city or state regulations, in general, SRO housing is not particularly profitable, and many such developments face a great deal of pressure to be converted into more profitable units.

To learn more about HUD multifamily construction loans like the HUD 221(d)(4) loan, fill out the form below and a HUD lending expert will get in touch. 

Related Questions

What is the definition of Single Room Occupancy (SRO) housing?

Single Room Occupancy (SRO) housing is housing with single room dwelling units which are the occupants’ primary residences. HUD requires new construction, reconstruction of SRO units, and the conversion of non-residential space to contain either food preparation areas or bathrooms (or both). If a property is an acquisition or rehabilitation, neither of these (food preparation nor sanitary facilities) is required within each unit. However, the building itself must have shared sanitary facilities.

Source: Single Room Occupancy (SRO) Housing Definition

What are the benefits of SRO housing for commercial real estate investors?

SRO housing can be a great investment for commercial real estate investors. It can provide a steady stream of income, as well as potential tax benefits. Additionally, SRO housing can be a great way to provide affordable housing in areas with high demand. The HUD 221(d)(4) loan program can provide financing for the construction, acquisition, or rehabilitation of SRO housing. This loan program offers low interest rates, long-term financing, and non-recourse options. To learn more about the HUD 221(d)(4) loan program, click here.

What are the drawbacks of SRO housing for commercial real estate investors?

SRO housing is not particularly profitable, and many such developments face a great deal of pressure to be converted into more profitable units. Additionally, HUD requires new construction, reconstruction of SRO units, and the conversion of non-residential space to contain either food preparation areas or bathrooms (or both). If a property is an acquisition or rehabilitation, neither of these (food preparation nor sanitary facilities) is required within each unit. However, the building itself must have shared sanitary facilities. HUD multifamily construction loans like the HUD 221(d)(4) loan can help finance SRO housing, but investors should be aware of the drawbacks.

What are the eligibility requirements for SRO housing?

The eligibility requirements for SRO housing depend on the type of loan being used. For HUD 221(d)(4) loans, the property must be a new construction, conversion of non-residential space, or reconstruction of SRO units. The building must have shared sanitary facilities, and if the property is an acquisition or rehabilitation, neither food preparation nor sanitary facilities are required in each unit. For more information, please refer to the Single Room Occupancy (SRO) Housing and Single Room Occupancy (SRO) Housing and the HUD 221(d)(4) Loan Program pages. To learn more about HUD multifamily construction loans like the HUD 221(d)(4) loan, fill out the form on the HUD Multifamily Construction Loans page.

What are the financing options for SRO housing?

I don't know.

What are the tax implications of investing in SRO housing?

Investing in Single Room Occupancy (SRO) housing can have a variety of tax implications depending on the type of investment. For example, if you are investing in a new construction or reconstruction of SRO units, you may be eligible for tax credits or deductions. Additionally, if you are investing in an acquisition or rehabilitation of SRO units, you may be eligible for tax deductions for certain expenses related to the project. It is important to consult with a tax professional to determine the specific tax implications of investing in SRO housing.

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