IMPACT MAKES THE MATH WORK
New research is helping to quantify and communicate how investments in affordability and sustainability create financial value for investors.
For years, there has been a widespread public assumption that investing in affordable rental housing requires investors to either take on more risk or give up strong returns to do good.
That public assumption flies in the face of what experienced affordable housing property owners and investors have known for a long time. When an apartment building maintains affordable rents and supports a healthy living environment, the people who live there are less likely to move and more likely to be able to pay rent on time. When apartment owners invest in making their property more energy and water efficient, they are more likely to save more money on their utility bills.
The logic makes sense: Healthy, financially stable renters and efficiently managed properties are essential to financial performance. But the challenge has never been understanding the logic. The challenge has been building the evidence and making the case to prove it.
Making The Business Case for Impact
Interest in impact‑driven multifamily housing investments has grown steadily among private equity investors, pension funds, endowments, insurers, family offices, and high‑net‑worth individuals. While much of the early interest shown by investors began with a strong desire to address rising rent burdens and climate risk, it has been sustained by the fact that these investments support their fiduciary obligations as well.
That is a really big deal. Because if we want to attract more private capital into affordable and sustainable housing, investors need more than a feel-good story. They need to know that it makes money. They need data and research that explains how affordable housing programs, resident services, and sustainability practices also improve a property’s cash flow, reduce risk, and create long-term value.
In recent years, some great academic research has been published to support this argument at the broader portfolio level. A study from Columbia Business School and the Erasmus School of Economics found that properties with more affordable rents generate higher risk‑adjusted returns than higher‑rent properties, while a University of California, Berkeley Haas School of Business report showed that energy‑inefficient properties are significantly more likely to default than those that make energy and water efficiency improvements.
Together, they indicate that affordability and sustainability are not just social goals; they are material financial variables that can be measured and assessed.
But more needs to be done.
The Multifamily Impact Council Research Initiative
In 2024, the Multifamily Impact Council (MIC) began a research initiative to dig deeper and focus on how specific impact‑driven practices might affect performance and risk at the property level. Our goal is to combine the operating history and experience of the MIC community with the analytic rigor and methodologies of leading business schools and research institutions across the country.
Last month, the NYU Stern School’s Center for Sustainable Business (CSB) published the first research report from this initiative, examining how resident‑focused and sustainability‑oriented impact practices influence financial performance in multifamily housing using CSB’s Return on Sustainability Investment (ROSI) methodology.1 Our initial findings are important because they begin to quantify the financial value of specific impact practices at the property level using terms that investors understand. Higher economic occupancy. Lower operating expenses. Stronger risk management.
What the NYU Stern CSB Study Examined
Using the ROSI methodology, the research team at CSB evaluated specific practices aligned with the Multifamily Impact Framework2 that property owners were deploying across their properties. Through multiple case studies with members of our MIC community, the research assessed how each practice influenced financial outcomes at both the property and portfolio level.
The research questions were straightforward:
Can impact practices be measured not only by their social and environmental benefits, but also by their contribution to operating performance and risk management?
Do these practices create measurable financial value that supports long‑term asset stability?
And the initial answer to each question was, for the most part, yes.
Housing Stability supports NOI
One of the strongest and most intuitive findings is that housing stability drives financial performance.
At properties serving residents eligible for Section 8 assistance, implementing housing support plans led to higher, more consistent revenue flows and lower costs related to legal actions, vacancy loss, and turnover.
Residents who used rent‑splitting services stayed approximately three months longer on average than residents who did not, producing higher rental income, reduced turnover, and lower bad debt in a business where small changes in retention can materially affect NOI.
In practical terms, a resident who can remain stably housed is not only better positioned to improve their own life; they also reduce the property expense associated with vacancy, delinquency, legal proceedings, and high frequency unit turnover.
Resident Services are Effective Tools for Managing a Property
The research also shows that resident services can reduce risk and accelerate income stabilization when they are integrated into a property’s operating model rather than treated as an add‑on program.
Placement services that help residents who may not meet typical application criteria supported faster rent‑up, higher rental income, and helped reduce eviction, marketing, and bad debt costs.
Health‑related services, such as telehealth offerings delivered through the property, were associated with longer average lengths of stay and, in turn, stronger operating efficiency and lower vacancy and turnover costs.
Higher levels of resident engagement and participation in community programming correlated with higher rental income and lower bad debt, reinforcing the link between resident wellbeing and asset performance.
The broader lesson is that resident services should not be treated as peripheral programming disconnected from core operations. When designed well, they function as an operating‑expense efficiency tool that reduces instability, improves payment predictability, and supports long‑term asset performance.
Sustainability Practices are Expense Management Practices
The study also confirms the financial relevance of sustainability investments.
Solar installations improved operating efficiency, with payback periods of roughly five years when government incentives were included and about ten years without incentives.
Retrofit strategies reduced embodied carbon by roughly 2.6 times compared with new construction while lowering utility and operating costs.
For affordable housing, this reframing is critical. Sustainability is often seen as an added cost or compliance obligation. The NYU Stern CSB analysis suggests a different, more practical perspective: sustainability can be a tool for expense management, risk mitigation, and long‑term asset preservation. For owners with limited ability to raise rents, lower and more predictable utility and operating costs directly affect the property’s financial resilience.
The Power of Stacking
Perhaps the most important takeaway is that these strategies work best as an integrated system rather than isolated initiatives. Affordability is the baseline, but affordability alone does not capture the full value proposition.
When owners stack practices from across the Multifamily Impact Framework, housing stability services, resident support, engagement programs, and sustainability investments, they can move multiple financial levers at once. Retention improves, turnover costs fall, revenue becomes more predictable, bad debt declines, utility costs decrease, and risk is better managed. The result is a compounding effect on NOI.
The financial case for impact investing in multifamily housing is not that every individual program always pays for itself in isolation; it is that a well‑designed operating model can align renter stability with financial performance in ways that improve the long term durability of the asset.3
Why This Matters to Institutional Capital
For institutional investors, these findings have real implications.
Impact‑oriented affordable housing is too often seen through a narrow lens: does it meet an impact objective, and does it come at the expense of financial performance? The NYU Stern CSB work identifies a more accurate question: does it meet an impact objective that supports financial performance, and can it be measured consistently across portfolios?
Because impact investments must do more than improve lives and strengthen communities, they must also encourage investors to do more.
This is where the work being done by the Multifamily Impact Council matters.
Our Multifamily Impact Framework maintains industry standards based on a common language for defining, measuring, and reporting impact in rental housing, and our research initiatives help explain and quantify how applying the framework at the property level translates into better risk management and long‑term value.
Together, these actions can help move multifamily impact investing from a decision based on values to a decision that is rooted in economic fundamentals.
What Comes Next
The CSB report is the first in a series of research and case studies that the Multifamily Impact Council will be producing with NYU and other leading research institutions across the country. Not only will this enable us to build a more robust library of research to inform the industry, but it will also enable us to develop a more consistent approach and methodology for collecting and analyzing property level data that connects financial value creation with social and environmental impact.
Impact practices should not be treated as separate from the fundamentals of multifamily operations. They are essential components of a well-managed multifamily housing property and portfolio. They can improve lives, build stronger communities, and make money.
Do well. Do good. Do more.
The logic makes sense. But it is incumbent on us to make the case.
The ROSI methodology has been used to successfully quantify financial performance of global impact initiatives in the agricultural, health care and apparel industries. You can learn more it here.
I know this sounds boring, but it is a very big deal.