When it comes to affordable housing, developer Kathleen McDonald delivers the goods -- literally.
For her current project, the Riviera Heights addition in western Anne Arundel County, Ms. McDonald is moving 14 vacant houses to a new location.
The project, underwritten by public and private funds, is designed to provide homes to families with annual incomes between $20,000 and $50,000.
Ms. McDonald says her slice of the real estate pie is still viable despite a sickly overall market because middle-income buyers are always looking for homes under $100,000. An economic slump actually stimulates the affordable-housing market, she said, as buyers scramble for alternatives in financing a home.
"A lot of developers have talked to me about doing affordable housing because the high end of the market has dried up," Ms. McDonald, 41, said.
Ms. McDonald, a former social worker, has specialized in affordable housing for nearly 20 years.
As a social worker, she saw firsthand the poor conditions people were living in. "I found out I couldn't change the way they earned their living," she said. But she realized that she could make their money go further by developing low-cost housing.
Ms. McDonald worked for the U.S. Department of Housing and Urban Development and then for private real estate concerns before going to work for herself three years ago.
Her firm, IDS Corp., stands for Innovative Development Services.
In the Riviera project, Ms. McDonald worked with Anne Arundel County, the state, the Maryland Aviation Authority and First National Bank to weave together a program that takes homes valued at $120,000 to $127,000 and sells them to qualified buyers for $48,000 to $92,000.
Anne Arundel County contributed the land and a portion of its federal community development funds to the Riviera project.
The Maryland Aviation Authority provided the ranch-style houses, which had been abandoned because they were in the high-noise zone around Baltimore-Washington International Airport.
The state Department of Housing and Community Development is supplying construction money and low-interest mortgage loans for eleven homes.
And First National is offering low mortgage rates on three of the most expensive homes, because the buyers' incomes exceed the limits for state mortgage assistance.
The plan works because the land is used as down payment and collateral for the loan. That cuts the amount of upfront cash buyers must supply and the interest they must pay.
Still, buyers need sufficient cash to cover closing costs, and they must prove themselves creditworthy. That is sometimes difficult for people in Ms. McDonald's target income range.
Take a home priced at $92,000. A typical buyer, one who earns $44,000 annually, must fork over $8,000 in closing costs.
"You probably have to go through 25 people to get one that can fit all the requirements to get in," she said.
Strong demand -- and a procedure that identifies buyers before homes are completed -- minimize Ms. McDonald's risk, and make affordable housing her market of choice. "I know it, I'm good at it, and it's fun," she said.