LIHTC Lender (bank) Underwriter?
Does anyone have color on what it would be like to work at a top 5 lender of affordable housing as an underwriter? (BofA, Wells, Citi)
I would be coming over from an origination role, so it would definitely be a different dynamic. It seems like LIHTC deals are interesting/complex - I'm not sure how alike or not alike each deal is?
If anyone had any insight as to lifestyle/pay that would be great. It seems like this would be a role where you would really learn LIHTC and real estate and could go to a developer eventually if that was your prerogative.
You'll see a lot of inbound deal flow volume from an initial screening to closing stage. A lot of your time would be spent on putting together credit memos, due diligence, and working on closings. You'll learn just by seeing a lot of deals, but structuring would be more cookie cutter for banks. You'll definitely work with a lot of developers, so a transition to equity/development is possible.
I can't speak on comp, but there's a couple threads that you can find on this forum.
Generally, I would say the lifestyle and pay for a LIHTC underwriter is pretty good. 40-50 hours a week and $120k-$200k compensation, depending on experience. All deals are unique (because each piece of real estate is unique) but are similar in that they are financed at least partially with tax credit equity. The LIHTC component also adds additional complexity when it comes to underwriting due to rent restrictions, governmental involvement, unique financing structures, more paperwork to review, etc.
In my opinion, underwriting is a stable but extremely tedious job. After doing this for a number of years, I am a bit bored. It is very process focused and there is little to no room for creativity, because underwriters are generally not the ones structuring deals or negotiating partnership agreements. If you like micromanaging all aspects of a transaction, updating models, enjoy tracking due diligence and keeping extensive to-do lists, underwriting may be for you. You will learn a lot about how LIHTC deals are done and how they are structured. I think overall it's a good job. I don't mean to sound particularly negative, I am just a little bit burnt out on underwriting and trying to figure out what's next for me.
I’m enjoying it. Seems like 40 hours is average work week, but goes to 60 or 70 during certain times of the year (lots of deals must close at a similar time because of regulations with the state). Overall, low stress.
I really enjoy the high deal flow, job security, and working on deals all over the country. I stumbled into LIHTC but it seems to be working out well since it’s becoming more and more popular…and by underwriting you definitely learn about LIHTC. You’ll have to read lots of government documents, understand LIHTC rents and equity, etc. I think you’d be a valuable player in the market after a year or two.
I also enjoy knowing I’m helping families out there. Lots of projects have resident services that support underrepresented communities, too, and it feels good to know I’m part of that.
I can’t see myself staying in Underwriting for too long because, like others have said, it can become pretty boring. Good pay for not much work though. Probably a great job if you’re a parent.
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It’s a super boring job. Did it for almost year and ran l back to development the first chance I got. Way happier doing development. Underwriting is for people that don’t seek creativity in their work. It’s literally the same process on every deal. You do learn a lot closing deals, but in my opinion that’s a very narrow part of the LIHTC process. Also if you get a green developer that doesn’t understand the banks closing process it can be a nightmare to close. The 120- 200k salary number is probably with 3 -6 years of experience at a bank. 1- 3 years is 70-110k depending on where you live in the country. I say this having worked at of the one top syndicators in the country.
Right on all counts. I've realized over time that I need some room for creativity in my work, and that this career path is not it for me. In some respects, you have to learn to be a professional nuisance to be a good underwriter.
With every credit memo that I distribute, I lose a piece of my soul.
It sounds like it's a pretty common consensus that this is kind of a boring job. If you were to try underwriting for a year or two, learn a lot - where would other places be in LIHTC that would be more engaging? Development? What would some other options be? Also, what could one expect comp wise for LIHTC development?
Yeah development. LIHTC leads to interesting capital stacks, so you’d be pretty engaged trying to figure out how to pencil a deal.
For 9% deals, you want to earn as many points as possible to win the TC’s…you need to get creative on how to earn more points.
You also have to communicate a lot with a lot of government officials for zoning, receiving grants, etc.
So if you started in underwriting, a developer would feel comfortable hiring you because you have experience of looking at tons of developers pro formas, government programs, etc etc which market rate underwriters would never see.
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