(Illustration by David Plunkert)
Estes Park is a small mountain town in Colorado that hosts millions of adventurers passing through to Rocky Mountain National Park. But for the employees who keep the town’s economy running, housing costs are making Estes Park too expensive to call home. Property values exploded by 57 percent since 2018 according to Zillow, placing heavy burdens on the local workers supporting the town’s hotels, grocery stores, and small businesses. The very people making Estes Park “the Gateway to the Rockies” increasingly cannot afford to live there.
Across the United States, working-class households are getting priced out of where they live and locked out of one of the most common ways Americans have built wealth across generations: through their homes. Rent hikes and stagnant wages mean millions of working families confront an impossible choice: Take on an unsustainable rent burden, or leave the communities that depend on them.
Homeowners, on the other hand, are insulated from the cost pressures of renting. Each month, a homeowner’s mortgage payment splits into two parts: one part covering the interest of the loan, and the other to pay down the loan’s principal. In a standard 30-year fixed-rate mortgage, each of these payments amortizes until the home is the owner’s outright. That reliable path to equity appreciation is supported by a consistent, fixed payment—which holds steady against rising housing prices. Homeowners thus gain a claim on any appreciation on their home’s equity value, in addition to tax breaks on associated costs. Beyond the forced saving their mortgage requires, homeowners also gain a subsidized stake in asset appreciation.
A rent check, by contrast, does not divide. For the tenant, every dollar is an expense that supports someone else’s return on investment. Tenant rents service the building’s financing and operating costs, with residual cash flow held by landlords as profit. Though renters supply the income driving the appreciation of the asset they live in, they hold no claim on that appreciation itself. A mortgage builds the household balance sheet, while a rent payment builds the balance sheet of the landlord.
But Estes Park is one of many communities nationwide that are charting a new course. In 2024, the town’s housing authority enrolled a 66-unit development, Fall River Village, in Colorado’s novel Tenant Equity Vehicle (TEV). This innovation in housing finance was enabled by Proposition 123, a pioneering state law passed by voters in 2022 that dedicates 0.1 percent of state income-tax revenue to housing supports and investments statewide.
The development—picturesque, cabin-style homes with mortared pillars along the Fall River—offers “workforce housing,” or apartments with rents affordable for those earning roughly 60 to 90 percent of Larimer County’s area median income (AMI). Those rents range from $1,324 for a one-bedroom apartment to $2,796 for a four-bedroom unit. Renters who pay on time receive a monthly cash-back rebate, deposited directly into a digital wallet they control—which the state will match, dollar-for-dollar, if they save it all for one year. Their on-time rent payments are reported to credit bureaus, building credit scores. And upon a property sale or refinancing, renters receive a share of the profits—all without a mortgage, down payment, or credit check.
The program is young. Its profit-sharing distributions are on the horizon, and small rebate sums are only beginning to grow. But for the first time, the renters in Fall River Village and their counterparts across Colorado can participate in the value their tenancy helps create. The TEV converts rent from pure expense to partial investment.
Early experiments like the TEV signal an expansion of what housing could mean for the American dream. In aggregate, renters comprise nearly a third of all American households yet hold less than 3 percent of the accumulated wealth of homeowners.1 Neither fact of nature nor accident, this gap represents the predictable result of policy and financial instruments built, over the course of nearly a century, to center homeownership as the primary tool for intergenerational wealth creation.
The United States should invest the same level of innovation and intervention it once did for homeowners to benefit renters, extending the public commitment that made homeownership the foundation of the middle class. The TEV is one of a handful of models today reimagining how rental housing can build wealth for working-class families across the country. The financing infrastructure that the United States built for homeowners can—and should—be built for renters, too.
How Policy Made Homeownership Possible
Homeownership wasn’t always inseparable from the American dream. Before the 1930s, unregulated homebuying came with inaccessible and precarious conditions such as short-term loans, massive down payments, and balloon payments of the loan principal at the end of its term.2 These factors created dangerous conditions for homeowners, especially during economic downturns. As Depression-era foreclosures mounted, risky loans threatened the stability of the nation’s housing market.3
From 1989 to 2022, the median wealth gap between homeowners and renters—the “renter wealth gap”— increased by 70 percent. Homeowners now hold more than 40 times the median net worth of renters.
The federal government intervened, creating the modern mortgage as a tool to provide financial security and wealth-building through the housing market. The Federal Housing Administration (FHA), created through the National Housing Act of 1934, insured approved mortgages with low down payments, fixed interest rates, and longer loan durations. Those actions established the 30-year mortgage as a fully amortizing asset with more sustainable terms.4 Four years later, the government chartered the Federal National Mortgage Association (Fannie Mae) as an enterprise authorized to buy those loans and create a secondary market, which supplied sufficient liquidity for underwriting at scale.5 After World War II, the GI Bill helped provide federally guaranteed, often 0 percent down-payment loans for qualifying veterans. Alongside successive legislation creating tax credits and subsidies for homeowners, these policy interventions transformed homeownership from a high-risk transaction into a stable loan for households aspiring to the middle class.
Owning a home became a dual forced-saving and investment plan in American residential real estate, underwritten by the federal government. Homeownership rates climbed,6 and housing became a cornerstone of the economy—with residential investment and consumption spending on housing services anchoring 15 to 18 percent of US gross domestic product (GDP).7 Homeowners shared in the sector’s gains. In the last 33 years, the median and average wealth of homeowners increased by nearly $165,000 and $900,000 respectively, adjusted for inflation.8 Through homeownership, the federal government charted a pathway that carried tens of millions of families into the middle class.
But the federal government did not open that pathway to every American. The same agencies that democratized credit and homebuying for white families withheld those benefits from Black families. Through a practice that came to be known as redlining, federal appraisers graded Black and immigrant neighborhoods as “hazardous” lending risks, subverting credit access and capital investment.9 The FHA tacitly endorsed restrictive covenants, further separating Black families from generational access to homeownership.10 According to the Bipartisan Policy Center, homeownership rates today are more than 30 percent lower for Black households compared to their white counterparts.11 In the rental market, US Census reporting shows that Black households still experience proportionately higher rent burden throughout the United States.12 These market conditions reflect the generational implications of barriers to housing wealth, shedding meaningful light on the nation’s renter wealth gap.
Whereas homeowners gained access to wealth-building through policy, renters received little by comparison. Federal policy intervention for renters primarily targeted the lowest-income households, and far from successfully. The same period saw the creation and collapse of federal public housing and the development of voucher programs to lower rent costs. During this time, the private rental market also became more burdensome for working-class families. After decades of chronic underbuilding, deferred rehabilitation, and restrictive zoning, the United States now faces a 7 million rental-unit supply gap.13 Nationally, renters now need $80,949 in annual income to afford the typical unit—roughly $20,000 more than the median American salary and a staggering 34.9 percent increase from 2020.14 Nearly two-thirds of all working households lack income to cover basic expenditures, like food and healthcare, after covering rent.15 Just one income shock, such as a surprise medical bill, is enough to trigger housing instability.
(Illustration by David Plunkert)
Compounded over decades, these two policy tracks—homeownership and renting—created a growing divide between those who can access housing wealth and those made more financially insecure by their housing costs. From 1989 to 2022, the median wealth gap between homeowners and renters, called the “renter wealth gap,” increased by 70 percent, according to research from the Aspen Institute Financial Security Program (Aspen FSP), a nonprofit research organization advancing the financial stability of American families.16 Homeowners now hold more than 40 times the median net worth of renters. Even beyond home equity, Aspen FSP finds that homeowners’ rates of broader asset ownership eclipse renters’ by 30 percent.17 Homeownership gave some households a head start, while renting failed to match pace.
Homeownership is a foundational wealth-building tool produced by American policy. Yet for millions of working-class families, the on-ramp from renting to owning has closed. To save for a down payment, renters need access to residual income: cash left over after paying for housing costs. Today, nearly half—22.7 million—of US renters are cost burdened, spending more than 30 percent of their incomes on housing.18 Most renters only hold $630 in cash savings—far below the $2,000 threshold recommended for emergency cash and a small fraction of what’s required to seed a down payment.19 For those who aspire to homeownership, today’s challenging market conditions have made it difficult for them to generate the savings, credit histories, and lump-sum proceeds that pave the pathway to a down payment. Even without homeownership as a goal, working-class renters still lack access to economic mobility through their housing—a core tenet of the American dream.
With home prices rising and wages flagging, the supply of would-be starter homes has eroded, taking with it an economic foothold for working-class families. Households earning up to $75,000—a salary typical for teachers, nurses, and skilled trades workers—can only afford roughly one-fifth of all home listings nationally, less than half of what was available before the COVID-19 pandemic.20 The ripple effects of inaccessible homeownership are visible across generations: Only 35 percent of Millennials were homeowners at age 30, compared to nearly half of Baby Boomers.21 A mere 34 percent of American renters now see owning a home as a probable event in their lifetimes.22 Though renting is often framed as a stepping stone toward homeownership, for millions of working-class families it risks becoming a permanent stop in an increasingly inaccessible housing market.
Building Renter Wealth
Renter wealth vehicles represent a small but growing category of housing finance models in the United States conceived to help renters. In these models, renters hold a contractual claim on a share of the proceeds when a property is sold or refinanced—the realized profits of the asset’s appreciation—without holding an equity stake in the property itself. That structure allows the model to be incorporated into conventional transactions and scale. These models apply the ethos of the New Deal mortgage to rental housing by giving renters a clear, stable route to a direct financial stake in the wealth their housing creates. Though the mechanism is different—a claim on proceeds, rather than property title—these models also shift how housing is financed so residents gain access to its appreciation.
Renter-wealth vehicles provide a monthly cash-back rebate. For many low-income households, that extra liquidity provides a buffer for unexpected expenses and a step toward emergency savings.
Some renters already have access to other powerful options for wealth-building, both through matched savings programs and through equity ownership. Community land trusts (CLTs) use ground leases—acquiring ownership rights of the land upon which housing sits—and tailored restrictions on resale to provide shared equity, stabilize pricing, and ensure communities remain affordable over time, especially to those earning less than 80 percent of AMI.23 Resident-owned communities (ROCs) enable collective purchase of ground leases in manufactured housing communities, creating cooperatively governed assets for the benefit of residents, most of whom earn less than 50 percent of AMI.24 Mixed-income neighborhood trusts (MINTs) provide long-term residents with collective claims on community-level appreciation, supporting residents who are at risk of displacement while allowing for mixed-income development. And the US Department of Housing and Urban Development’s Family Self-Sufficiency (FSS) program, facilitated by leading operators like Compass Working Capital, borrows the logic of forced saving from homeownership to support Section 8 voucher-holders—renters who have government subsidy because they are low income, seniors, or disabled—in building automatic savings through each rent payment.25
Each program delivers powerful benefits through substantial levers, though statutory, contractual, or capital requirements can impose limits. They can necessitate, for example, a title transfer, formation of a cooperative governance body, a fixed geography, or enrollment in a particular federal program.
Renter-wealth vehicles, by contrast, do not come with those requirements. Instead, they attach to the financing of a property or portfolio of properties, rather than to the deed itself. Consequently, these models fit into the existing structure of conventional affordable and workforce-housing transactions—including those financed by the Low-Income Housing Tax Credit (LIHTC)—without new governance requirements, ownership transfers, and geographic or legal limitations. This compatibility makes wealth-building possible for renters without access to existing programs, especially those living in multifamily units.
Consider a conventional multifamily apartment transaction. Ordinarily, tenants’ rent services the building’s financing debt, covers operating costs, and delivers the remaining cash flow to investors—paid out through a tiered distribution structure called a “waterfall” to satisfy different return requirements. In this model, renters provide revenue, yet do not occupy a position in the capital stack—the structure that determines which investors have priority in repayment of debt and claim on equity. Renters retain no claim on cash flow, no share of appreciation, nor mechanism to convert their payments into equity stakes.
Renter-wealth vehicles insert renters directly into the capital stack at no incremental cost to them. When subsidized financing substitutes for market-rate capital through public revolving loan funds, affordable housing trusts, philanthropic investments, or mission-driven finance, the resulting spread creates a surplus that funds residents’ share of profits. The building itself operates exactly as it otherwise would, and the market incentives driving construction, acquisition, and renovation remain. The only thing that changes is what—and who—is represented in the capital stack.
Across existing programs today, renter-wealth vehicles provide three common benefits, which work across distinct time horizons. The first is a monthly cash-back rebate, typically ranging from 2 to 5 percent of the tenant’s rent payment. For many low-income households, that extra liquidity provides a buffer for unexpected expenses and a step toward emergency savings. By ensuring distributions are nontaxable, rebates don’t influence means testing for programs such as Supplemental Nutrition Assistance Program (SNAP). The second benefit is resident services, which can range from rent reporting and credit-building to financial counseling—supporting household financial stability in the medium term. The third benefit, profit sharing upon a sale or refinancing, provides qualified renters with a defined share in the proceeds of the transaction: the realized gain on the property’s appreciation, usually scaled by length of tenure.
Importantly, these benefits align renters’ interests with operators’ by incentivizing longer tenures, consistent rent payments, and stronger underlying financial security in the tenant base. That alignment drives revenue quality. Turnover is among the largest reducible cost in multifamily housing operations. Every vacated unit means lost rent, repair expenses, and leasing costs. A resident with an increasing stake in tenure directly contributes to increased net operating income. On-time rent payments reported to credit bureaus strengthen both recurring revenues and credit for residents. For operators, a wealth-building tenant base provides more stability and lowers costs.
Renter-wealth vehicles do come with limitations specific to their focus on renters. A homeowner or member of a CLT has a say in whether the home is sold through equity or governance rights. Just as in a conventional multifamily deal, a participant in a renter-wealth program generally does not influence the decision to sell or refinance—that responsibility still rests with the owner. Yet that limitation is also the feature that allows the vehicle to scale. Renters still gain the financial upside of ownership without the need for a down payment. The worst outcome a renter would face in these models is a sale that yields zero appreciation—financially, the same outcome as conventional renting.
Catherine Toner led the design of the Tenant Equity Vehicle within Proposition 123 for Gary Community Ventures, a philanthropic organization committed to using all its resources by 2035 to transform systems and build wealth for Colorado kids and families. The TEV reflects that mission. Because housing sits on the expense side of a renting family’s ledger, the point of renter-wealth models is to “convert that expense, even partially, into an asset,” Toner says. “The incentivized savings mechanism that comes from the cash-back model and the profit-sharing stake in these properties have the opportunity to compound each other.”
Proof of Concept
The question that separates promising pilots from a scaled national system is whether the compounding that Toner cites can be made routine through the housing market. The Tenant Equity Vehicle leverages public finance to scale wealth-building distributions for renters. The TEV’s capital mechanics drew from a fund led by the Colorado Housing Accelerator Initiative, an impact-investment platform for affordable housing in the state anchored by Gary Community Ventures. The fund accelerated workforce-housing development through low-cost financing: concessionary debt and equity capital, tailored to units’ expected cash flows and levels of affordability. Capped rates of return to investors then allowed the fund to offer renter distributions tailored to the workforce-housing market, representing households earning roughly 60 to 90 percent of AMI.
Creating a market for renter-wealth models also requires sustainable financing. Every renter-wealth model operating today leverages cheaper capital to redirect appreciation proceeds to residents.
With that experience, Gary Community Ventures embedded the renter-wealth vehicle design within Proposition 123, using state housing investments as the TEV’s capital source. Crucially, the proposal raised no new taxes and instead redirected revenue the state already collected, sidestepping complex political dynamics and cost pressures. But the proposition still had to win at the ballot box. Gary Community Ventures spearheaded the campaign for Prop. 123 alongside a coalition of more than 260 groups—including Habitat for Humanity, the state realtors’ and bankers’ associations, and state officials from both parties—under a campaign that prioritized the needs of “hardworking Coloradoans.”26 Voters agreed: The provision won with 52 percent approval.
Proposition 123 created a permanent, self-renewing pool of capital. Instead of a single appropriation or grants reauthorized each budget cycle, the state lends to affordable housing developers at below-market rates and routes the interest savings and equity upside back to tenants. “Unlike policies which rely exclusively on redistribution or consistent programmatic funding,” Toner says, profit sharing “is sustained, while the state is able to recycle the principal, alongside its annual funding, to create more workforce housing.” Public institutions, she argues, can accept a below-market return “at a scale private or philanthropic actors cannot.” At the same time, that public capital also serves an important purpose in the broader market by making the TEV legible to developers already familiar with conventional deal structures. Because the financing model is compatible with existing multifamily workforce-housing transactions, “private actors [don’t] have to change their underwriting behavior.”
For tenants, the TEV offers a program called Colorado Renter Rewards, managed by the Colorado Office of Economic Development and International Trade (OEDIT) and administered by the Colorado Housing and Finance Authority (CHFA). Participants paying rent on time receive each month a 2 percent rent rebate, deposited into a renter-controlled account. Leaving those rebates untouched for a year triggers a state-provided match up to another 2 percent. Renter households with tenures greater than a year receive shares in annual equity distributions drawn from the returns on housing backed by Prop. 123, including properties across the entire state. On-time payments are reported to credit bureaus at no cost. For example, a household in Estes Park paying $1,500 a month in rent would expect roughly $360 per year in rebates, doubling to $720 with the savings match. These are modest sums now, but they include the promise of continued savings and compounding growth. Fall River Village, the 66-unit development in Estes Park, is one of the program’s first properties—demonstrating how renter-wealth vehicles can improve lives, one rent check at a time.
Colorado’s TEV experiment, while pioneering, is not unique. In 2022, the year that Proposition 123 passed, Enterprise Community Partners—a national nonprofit that has created more than 1.1 million homes since its founding in 1982—launched the Renter Wealth Creation Fund (RWCF), a $112 million impact vehicle that acquires and rehabilitates apartment buildings, preserves affordable rents, and gives residents wealth-building tools beyond a traditional lease. RWCF investors earn a targeted return of 4 percent, which falls below what workforce- and affordable-housing deals typically require. That lower required return creates room for Enterprise to finance wealth-building distributions for residents.
The concessionary sleeve of the capital stack also ensures the RWCF can provide conventional return profiles for every other party in the capital stack, making RWCF deals as straightforward as other affordable and workforce multifamily transactions. “One misconception we have taken pains to work through is the assumption by operators that this model must eat into their economics,” says Rob Bachmann, who leads capital origination at Enterprise. “We have structured [the RWCF] so that’s not the case.” The resident share is paid out of the surplus generated from philanthropic capital, not the operator’s margin, ensuring that development and operating incentives are maintained. This financing model works today, but philanthropic capital alone cannot meet national market demand. That’s where public policy can step in by creating the regulatory and financing conditions for private and government capital to join in and scale these models, all while generating a market rate of return.
RWCF residents receive monthly cash-back payments ranging from 2.5 to 5 percent of monthly rent and, after four years of tenure, a share in up to 80 percent of net appreciation. For the operator, the model does more than maintain existing returns—it incentivizes residents to stay, which lowers turnover and lifts net operating income. “We hope that housing operators and investors come to see that the juice is worth the squeeze,” Bachmann says, “when they see greater loyalty, a happier tenant base, and an overall more stable property.”
Initial data bears out the power of Enterprise’s model. As of publication, the fund has invested $53 million in fund equity at $222 million in total asset value, covering eight properties including more than 2,100 residents. Retention is the standout, according to data collected by Enterprise: Properties have a 75-month average length of stay with 81 percent retention, 23 percent higher than typical multifamily housing rates. That spread translates directly into avoided vacancy loss and turnover cost. Residents gained access to services through the fund’s partnership with the New York Life Foundation, representing $685,000 in cash value. As of the end of 2025, the RWCF has returned $327,000 in monthly cash-back rewards, with $17.3 million in projected resident profit-sharing distributions based on today’s assets.
Residents who have yet to clear the four-year tenure threshold cannot access those distributions. But once they do—joining the 610 households who have already—those projections could reach up to $45,000 per household. For families who want to buy, renter-wealth models can repair the on-ramp to ownership that rising costs have damaged, while creating a secure financial foundation for renters who once viewed their housing as a source of insecurity.
The program is too early in its lifetime to claim definitive proof, and the RWCF has further deployment and expansion plans underway. But Enterprise is running a formal impact analysis to build the case and inform best practices for future models. “The current lack of an evidence base showing the material value of wealth-building features for residents is one of the obstacles to scaling, which is, of course, what we’re trying to overcome through our evaluation effort,” Bachmann says.
From Pilots to Policy
The renter-wealth models we have reviewed face criticism for not going far enough to provide residents near-term liquidity, especially given the scale of the renter wealth gap. But early results from existing models suggest potential payouts of up to tens of thousands of dollars—which, especially for working-class families, could prove to be life-changing sums. The TEV and Enterprise succeed by layering wealth-building into existing affordable and workforce housing, ensuring that rent price and lease conditions support renters in meeting their tenure requirements for profit-sharing distributions on realized gains. Paired with additional tools like a savings match and credit-building, these models begin to do for renting what a mortgage payment does for homeownership: cover housing costs while building wealth.
Expanding wealth-building nationwide will require a generation of policy makers, investors, and operators to choose to make renting a source of secure housing and of a stake in future appreciation.
Renter-wealth models face three barriers to scale that are distinct but related, Enterprise’s Rob Bachmann says: the absence of a sufficient evidence base, the lack of enabling policy frameworks, and persistent operator misconceptions about the economics of the model. It’s not surprising that the evidence base is thin today. After all, the RWCF is only a few years old, and Prop. 123 just passed in 2022. Enterprise’s upcoming evaluation will be among the first to measure how wealth-building materializes through these models. But enabling policy frameworks are missing for a deeper reason. Federal policy lacks sufficient codification of the tools and structures that build renter wealth—ranging from existing programs like CLTs, MINTs, shared-equity models, ROCs, and FSS to the profit sharing, cash-back rebates, and credit reporting in transactions supported by the TEV. Without standard instruments and available financing, operators lack clear pathways to adopt wealth-building mechanisms.
Removing those obstacles is a prerequisite for scaling. For example, the Employee Stock Ownership Plan (ESOP)—a legal framework that enables workers to participate in the ownership of their firm—was originally codified in the 1974 Employee Retirement Income Security Act (ERISA). ERISA created a formal structure for ESOPs that enabled adoption nationwide and allowed for subsequent tax advantages. Renter-wealth models similarly need a standard legal form that regulators, investors, and operators can recognize. With a regulatory structure in place, investment can follow.
Creating a market for renter-wealth models also requires sustainable financing. Though they’re different in scope and scale, every renter-wealth model operating today leverages cheaper capital to redirect appreciation proceeds to residents. Enterprise drew on that cheaper capital from philanthropy. Colorado allocated it from a dedicated portion of state revenue. It could as easily come from a housing trust fund, a state finance agency’s bond issuance, or a Community Reinvestment Act-motivated investor. For example, Giv, an innovative nonprofit developer in Salt Lake City, used municipal redevelopment funds to back its Perpetual Housing Fund, which routes the majority of cash flow and sale proceeds back to tenants.27 Any city council or statehouse that already finances affordable housing can attach wealth-building to those efforts.
Washington should not sit on the sidelines while that happens. The federal government built the homeowner’s wealth engine by financing supply, insuring mortgages, chartering a secondary market, and changing the tax code to reward homeownership. Tenants need a regulatory framework and protections that fit renter-wealth models into today’s housing market. These should include standardized instruments or regulatory guidance that ensures sharing proceeds with residents will not trigger legal obstacles; clear eligibility within existing agency financing channels; and tax treatment that rewards renter wealth the way the code has long rewarded homeownership. With that framework codified, the federal government can extend policy tools once used for homeowners to support working-class renters.
Systemic change to the rental housing market requires coordination and dedication. The National Renter Wealth Coalition (NRWC)—a collective of advocates, lawmakers, investors, operators, researchers, and philanthropies—is dedicated to building that policy and investment infrastructure. By forming partnerships across affordable- and workforce-housing organizations, tenant support groups, economic-mobility practitioners, and government actors—federal, state, and local—the NRWC is building the market mechanisms and policy vehicles for millions more renters to access wealth-building where they live.
Ultimately, adoption comes down to trust. None of these programs work without continuous consultation with and feedback from stakeholders—most importantly, renters—and rigorous evidence of real, transformative benefits delivered. “Five years in, the most important success condition is that significant levels of trust are built around how and why the program works—and that implementation has remained true to the original intent of supporting renters,” Toner says. “Embedding the program in statute makes it easier to maintain that integrity over time by ensuring that a program designed to share wealth with residents actually does so.” That discipline and integrity drives outcomes. To work, federal enabling statutes, policy-backed financing structures, and operating decisions must remain accountable to the renters for whom these models were created.
Expanding wealth-building nationwide will require a generation of policy makers, investors, and operators to choose—just like their predecessors did for homeownership—to make renting a source of secure housing and of a stake in future appreciation. And if they do, the promise of the American dream will finally reach renters, too.
Read more stories by Katie Deal.