Raymond James LIHTC Rep
Currently was approached by a colleague about an opportunity for an "Associate" level role at RJ. I have never worked in LIHTC directly, but have some general knowledge on the topic. Would this be a good opportunity? I currently work at a $3B fund and have been pretty idle so looking for new opportunities.
Based on the most helpful WSO content, transitioning into a role focused on Low-Income Housing Tax Credits (LIHTC) at Raymond James could be a promising opportunity, especially if you're currently seeking more active engagement and challenges in your career. While you mentioned not having direct experience in LIHTC, your general knowledge on the topic and experience at a $3B fund could provide a solid foundation to build upon.
LIHTC projects involve a unique blend of real estate development, finance, and public policy, making them complex but rewarding. Given your background, you might find the learning curve manageable and the work impactful. The role of an Associate in this context likely involves financial analysis, market research, and possibly deal structuring, all skills that can be transferable from your current position.
Moreover, working in LIHTC can open doors to specialized areas of real estate and finance, enhancing your career trajectory. It's also worth considering the broader impact of your work in affordable housing, contributing to community development and support for lower-income households.
Before making a decision, it might be beneficial to research more about Raymond James' specific involvement in LIHTC projects, the team you would be working with, and the potential career path within the firm. Networking with professionals currently in the LIHTC space or those who have worked in similar roles at Raymond James could provide valuable insights.
In summary, if you're looking for a role that offers both a challenge and a chance to contribute to meaningful projects, the Associate position at Raymond James focusing on LIHTC could be a good fit, especially with your background and current desire for more engaging opportunities.
Sources: Q&A: Affordable Housing Acquisitions, Q&A: Affordable Housing Acquisitions, Q&A: REIT Acquisitions Associate, Life in Acquisitions (Analyst/Associate), The Real Estate Job Hunt - Mid Level
Bump
It depends, will you be working with the originations/underwriting, asset management team, or syndications team? What’s the opportunity cost of you leaving your current job? Will you lose out on carry in the future? Are you looking to jump ship because of a slump in deal flow or are there other factors?
In a vacuum, I’d say it’s a good opportunity as it would expose you to a different investment strategy/process where there is more of a focus on compliance and regulations. Also, the social impact affordable housing creates can be pretty rewarding (if that means something to you).
However, it can get very bureaucratic as there are many players involved, including governments (federal, state, municipal), so originations to closing could easily take several months. That said, deal flow itself shouldn’t be a problem as affordable housing is popular and undersupplied- and the demand (and need) for it is only growing.
I would be on the acquisitions side. Not much opportunity cost from my job either, super dry job market and expecting my carry to be negligible. I was asking more to know if getting into affordable housing is worth it, as I heard it can be niche and may be difficult to move out. Also, I don't know which one could potentially be more lucrative.
Makes sense. Yes, people that get into LIHTC generally stay within the industry (whether it be at a GP/developer, housing authority, or syndicator, etc.). However, its definitely possible to transition to market rate. I'd say it could be easier for you as you have experience with market rate in your current role. Could be worth to get deal experience and underwriting reps with the RJ opportunity and then transition back.
To your second question- market rate definitely has more potential to be lucrative. You have to keep in mind that tax credit LP funds (i.e. Raymond James) don't invest in affordable housing for the returns/IRR. Their returns are in the form of tax credits, depreciable losses, and CRA. Firms on the GP/developer side make their money through developer fees, management fees, and the sale of tax credits- as opposed to cash flow and value appreciation.
Obviously, you could make tons of money as a VP/MD in an affordable housing group. But I'm a strong believer in that generating real wealth from real estate is earned through taking your own risks (i.e. personal RE portfolio, fund). Starting your own venture in affordable housing is extremely difficult, as barriers to entry are higher. Personally, I think the way to get to that wealth is through market rate.
I actually think this is the exact opposite of the truth, as I've said on many other threads.
The barrier to entry in LIHTC and affordable in general is knowledge and experience. It's a much much much more complex and difficult job than traditional multifamily acquisitions/development. However, once you're inside that moat and understand the industry, it is extremely easy to start your own venture. It doesn't require nearly as much capital as basically any other form of housing, and despite what WSO would have people believe, it's extremely difficult to raise money as a new operator, especially if you're on the younger side.
Affordable housing is a slower but surer route to wealth. No, you won't be like Michael Stern and make like $50mm on one single project that you time perfectly. But you also won't be like Michael Stern and completely shit the bed on most of your subsequent deals, either.
For what it's worth, and this is purely anecdotal and completely restricted to the NY Metro area, I see a lot of people come to the affordable housing side from the market rate side of things, but exceptionally few people move in the other direction. Others may have different experiences, of course, but affordable housing is more challenging, more rewarding, and personally I think more lucrative from a risk/reward standpoint than market rate housing.
It's also worth noting that there is a lot of appetite to deal with new entrants into the space from pretty much all quarters. Which is worth considering if your end goal is to start your own firm. If you want to go buy vacant land in NYC and develop a 100,000 sf rental building, you're competing against a bunch of extremely well capitalized firms whose cost of capital is lower than yours and who need to keep building to feed their team, so they'll overpay and accept lower returns just to keep the fee train rolling. How do you compete with Extell for a property? It is exceptionally difficult unless you want to get in at a crazy basis, which more or less precludes hitting a promote.
By contrast, developing affordable housing is essentially free. Yes, there will be more hair on the deals, maybe a rezoning involved or an RFP process, but the land is basically free, comparatively, and being a newcomer (not inexperienced, just a new firm with a familiar principal) can actually be a huge plus when engaging with the city
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