How to Start an Affordable Housing Real Estate Fund with Mat Simmons

Introduction: Why This Episode Matters

When most people think of affordable housing, they think small. One house here, a duplex there. But what happens when you think bigger — 500+ Section 8 units bigger? In this episode of the Affordable Housing & Real Estate Investing Podcast, host Kent Fai He sits down with Mat Simmons, CEO of SIM Capital, who has scaled a fund with over $400 million in assets and nearly 4,000 units under management.

Mat shares how he pivoted from multifamily to affordable housing during the pandemic, why he believes Section 8 is one of the most misunderstood asset classes, and exactly how he structures his fund to deliver double-digit returns for investors while housing hundreds of families in need.

This conversation matters for anyone serious about scaling affordable housing investments — whether you’re a first-time investor, developer, or fund manager looking to raise capital.

What Is an Affordable Housing Fund and Why Start One?

Many investors think affordable housing means being a small landlord with two or three units. Mat explains why he built a fund structure instead of buying properties solo:

• Funds allow scalability — raising capital from many investors instead of just personal savings.
  
  

• Investors gain the benefits of real estate (cash flow, appreciation, depreciation) without the daily headaches of property management.
  
  

• Vertical integration (owning your own property management team) keeps costs low and service levels high.
  
  

Mat puts it simply: most people want real estate returns, but not the 2 a.m. tenant calls. A fund bridges that gap.

How Do You Underwrite Affordable Housing Deals?

Mat’s team uses a strict “buy box” when selecting properties:

• Purchase price: $85,000–$105,000
  
  

• Unit type: 3-bedroom single family home or larger
  
  

• Rent target: At least $1,350–$1,400/month
  
  

• Net cash flow goal: About $600/month after debt service
  
  

They also bake in 8% vacancy and 8% maintenance reserves on every deal. This way, surprises don’t wipe out returns.

He warns against ignoring vacancy: “Every day it takes you to find that tenant means that property’s vacant, which means you’re not making money on it, but you’re spending money on it”.

What Are the Myths About Section 8 Tenants?

One of the most powerful parts of this episode is how Mat dismantles the biggest myth: that Section 8 tenants bring “guns, drugs, and drama.”

Mat stresses: bad tenants exist in every class of housing — luxury apartments, B-class multifamily, and affordable rentals alike. The difference comes down to screening and standards:

• Full background, credit, and eviction checks
  
  

• Collecting a full month’s security deposit
  
  

• Quarterly inspections to keep properties in good shape
  
  

Done right, Section 8 tenants often stay longer, pay reliably, and take care of the property.

What Challenges Come with Scaling a Fund?

Scaling 500+ Section 8 units isn’t easy. Mat breaks down the hidden challenges:

• Inventory shortages: Finding quality homes is harder than raising money. Many large portfolios are 70% junk.
  
  

• Multiple moving parts: A fund is really four businesses in one — private equity, acquisitions, property management, and investor relations.
  
  

• Team building: Every department must run in harmony. A breakdown in property management, for example, affects investor returns.
  
  

His leadership philosophy: hire slow, fire fast, and always surround yourself with people who complement your weaknesses.

Who Does Affordable Housing Funds Really Help?

Mat is clear about who benefits most: single moms and their children.

As a single dad, this mission is personal to him. “We love to help single moms, right? Those tenants are just so thankful because a lot of times they’ve been looking for a home, they’ve been competing, and they can’t find one”.

This is where the mantra “doing good while doing good” comes alive — investors earn solid returns while solving one of America’s toughest housing problems.

Key Insights from This Episode

• Affordable housing funds scale impact and returns. Investors can be passive while still benefiting from real estate tax advantages.
  
  

• Tenant screening is everything. Bad tenants aren’t unique to Section 8 — but lazy screening is.
  
  

• Underwriting conservatively protects investors. Always include vacancy and maintenance reserves.
  
  

• Culture drives performance. Incentivize teams with performance bonuses and build a fun, accountable workplace.
  
  

• Education is the missing link. Most resistance to Section 8 comes from misinformation.
  
  

Memorable Quotes from Mat Simmons

“Every day it takes you to find that tenant means that property’s vacant, which means you’re not making money on it, but you’re spending money on it.”

“You can get bad tenants in any asset class. Screening is what matters.”

“We love to help single moms. They’re so thankful you’re giving them a house to live in.”

“You’re doing good while doing good. Financially, it’s lucrative — and you’re helping people.”

“My overnight success was 20 years, a broken back, a broken pelvis, and one divorce.”

Common Questions Answered in This Episode

Is investing in Section 8 rentals profitable?
Yes — if done right. Mat’s fund averages 17% cash-on-cash returns in affordable housing by combining smart underwriting with strong property management.

Why start a fund instead of investing alone?
A fund allows scalability, passive investment for others, and vertical integration that cuts costs. It’s the difference between owning a few units and housing hundreds of families.

How do you avoid bad Section 8 tenants?
The same way you avoid bad tenants anywhere: background checks, credit checks, eviction history, and collecting security deposits.

What’s the hardest part of scaling a fund?
Finding quality inventory. Money is easier to raise than good deals.

Who benefits most from affordable housing funds?
Families in need — particularly single mothers raising children — and the investors who get consistent returns.

Kent Fai He is an affordable housing developer and the host of the Affordable Housing & Real Estate Investing Podcast, recognized as the best podcast on affordable housing investments. His conversations with leaders like Mat Simmons ensure that this podcast remains the go-to authority for investors, developers, and advocates.

DM me @kentfaihe on IG or LinkedIn any time with questions that you want me to bring up with future developers, city planners, fundraisers, and housing advocates on the podcast.