I need to get a handle on building such a model from scratch for an upcoming meeting and do not have one in my arsenal.
I would obviously be happy to share any models in return that I have. Thanks.
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Affordable is a very niche market. Chances are slim someone will have on here. Slimmer still are them sharing it. Google will be you best chance here.
Ok - will see what I can find. Thanks.
Not to mention the proffer/contribution structure will be very specific to the local jurisdiction in which you are operating.
so I am looking at one right now - cant share because I am a lowly analyst and no need to put that in jeopardy.
but looking at the 'development model', It seems that it is pretty straightforward as with other RE developments.
Below are the line items
Land
Existing Improvements
Acq Costs (Demo, Legal)
Total Acquisition
Site Work
Structures
GC Fee - Gen Req (x%)
GC Fee - Overhead (x%)
GC Fee - Profit (x%)
Builder's Bond Premium
Off-Site Improvements
Cost Contingency (10.21%)
Other Hard Costs
Total Hard Costs
Architectural
Engineering & Survey Costs
Appraisal & Market Study
Environ & Soils Report
Accounting
Permits
Marketing Costs
Furnishings
Broker/Consulting Fee
Cost Contingency (0.80%)
RE Taxes and Insurance
Hunt Third Party Costs
Tax Credit Fees
Legal Fees
State HTC Investor Conduit
Misc
Soft Costs #3
Total Soft Costs
Constr Loan Interest
Constr Loan Orig Fees
Constr Loan Closing costs
Constr Title and Recording
Pre Dev Loan Fee
Bond Costs
Freddie Commitment Fee Refund
Perm Loan Title and Record
Total Financing Costs
Rent-Up Reserves
Oper Reserves
Replacement Reserves
Other Reserves
Transition Reserve
Total Reserves
Developer Fee
Total Development Costs
where LIHTC gets different is the capital structure and benefit schedules (load, federal partner, state partner, debt can be hard and soft, who will get the residual)
if you are looking to learn more about the above I would heavily suggest Novogradac - they have great primer classes for a reasonable cost..
pm me if you would like to talk more..
Are you more interested in affordable housing modeling from the development side of things or more as a syndicator of the LIHTC?
Pickle, From the perspective of a developer creating multifamily projects with ground floor retail and some community space.
I will be likely called to create/demonstrate that I can build and understand one of these UW models. Perhaps an interim solution is to tighten my residential development modeling skills and concurrently work to obtain a model that figures in the LIHTC aspects into cap stac/benefit tabs like investREanalyst points out.
some other considerations will be to make sure to model for LIHTC rents and market rents ( a lot of projects are 80/20 lihtc/market and other combos). the developer may also be looking for you to properly set LIHTC rents to something below the max lihtc for the area/project so that you have some room to raise rents without being dependent on area income rising...
the first google linke when searching "how lihtc rents are set" is a good summary - cant post the link on the site yet.
Use Novogradics rent calculator on their site.. I think its called Low Income Rent Calculator, or something. There you will find the rents you can charge for whatever unit mix you intend on having... rents are dependent on the area its in, and then you have an entire budgeting process where each piece of the budget is valued to come up with an amount of equity an investor would contribute... I don't think you would have to go that deep if you only need to show modeling competence/understanding .. the tutorials online are a good start, but it gets very, very granular when actually working on a deal because there are a shit load of accounting and legal hoops you have to jump through to ensure you, as an equity partner or developer, don't get screwed by having your incentives taken away (ie you fell out of compliance with the IRS or housing agency).
Excellent. Thanks! Searching under that now; and will use Nova as a resource to fill in the blanks.
Not to belabor this as you guys have been very helpful. Going through my models I cannot find a Multi-Family (w/ mixed use components) Ground-Up Development Pro-Forma Template to use as my foundation.
If anyone has one to trade, I would be happy to give what I have in return.
The model that you need to underwrite LIHTC projects will vary substantially from state to state. I'm aware that these are all federal credits, but the 'rules to the game' vary state by state b/c they are actually administered at the state level (with its own set of rules).
What you really need to understand if you want to build one of these is 'good costs vs. bad costs,' your 'eligible basis,' your allowable rents as respect to % of AMI, and the sources and uses will vary substantially for a 9% credit vs. a 4% bond financing structure. Understanding the syndication process, the credits valued as a % of par, and the timing as it pertains to the release of funds/developer fees is essential. good luck
REV, excellent; and thank you for the specific detail.
Did you ever end up figuring this out/securing credits to develop a LIHTC deal?
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