LIHTC Development - Finding Sites

Navigating site selection in LIHTC development can indeed be a daunting task, especially when transitioning from syndication to the development side. Based on the most helpful WSO content, here are some insights and best practices to help streamline your process and improve your pipeline:

1. Leverage Local Knowledge and Relationships

• Understand Local Dynamics: Knowing the "mental map" of renters and local market dynamics is crucial. This includes understanding zoning quirks, entitlement processes, and what truly drives demand in specific areas.
• Build Relationships: Engage with smaller brokerage groups or local brokers who are hungry and well-connected. They can help you identify off-market opportunities and navigate local nuances.

2. Focus on Targeted Areas

• Create a Tight Map: Outline a specific area or neighborhood where you want to focus. This allows you to concentrate your efforts and build a deeper understanding of the market.
• Path of Progress: Look for areas on the edge of growth or redevelopment zones. While institutional LPs may be hesitant, these areas often present the best opportunities for LIHTC projects.

3. Efficient Site Vetting

• Run Preliminary Feasibility Checks: Before diving deep into due diligence, conduct quick "back of the napkin" analyses to filter out sites that won't pencil out. This includes checking zoning, density, and setback requirements early on.
• Engage Consultants Early: If you're new to entitlement and construction, consider partnering with or hiring consultants who specialize in these areas. They can help you avoid spinning your wheels on unfeasible sites.

4. Maximize Scoring Potential

• Understand Application Scoring: Familiarize yourself with the scoring criteria for LIHTC applications in your target states. This will help you prioritize sites that are more likely to score well.
• Layer Gap Funding: Explore additional funding sources like local grants, tax abatements, or other incentives to make deals financially feasible.

5. Build a Strong Network

• Collaborate with Syndicators: Your background in syndication can be an asset. Leverage your existing relationships to gain insights into credit pricing, terms, and structuring.
• Engage with Local Officials: Build relationships with city councils, planners, and other officials. Being "BFFs" with these stakeholders can help you navigate entitlement processes and secure approvals more efficiently.

6. Learn from Others

• Join Forums and Networks: Platforms like WSO and other real estate forums are great for exchanging ideas and learning from experienced developers.
• Partner with Experienced Developers: If you're still building your track record, consider partnering with developers who have a strong history in LIHTC projects. This can help you gain experience while reducing risk.

7. Stay Active in the Market

• Monitor Market Trends: Stay up-to-date on comps, market trends, and construction costs. This knowledge will help you quickly assess whether a site is worth pursuing.
• Be Persistent: The LIHTC space is competitive, and finding the right site often requires evaluating dozens (or even hundreds) of options. Persistence and a systematic approach are key.

By implementing these strategies, you can build a more efficient pipeline and increase your chances of success in the LIHTC development space. Good luck heading into next year's cycle!

Sources: Life at Mega Developers, Q&A: Affordable Housing Acquisitions, Life in Development - Expectations vs Reality, From Real Estate Finance to Founder of Development Company - Q&A, Life in Acquisitions (Analyst/Associate)