LIHTC MODELING
I have a an internship coming up in May and I can not find anything on how to model lihtc properties as a lender. Can anyone point me in the right direction?
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Based on the highest ranked content on WSO, here's a bit of guidance for modeling LIHTC properties as a lender:
Understand the Basics: Before diving into modeling, ensure you have a solid understanding of how the LIHTC program works. This includes the application process, the role of tax credits, and the typical structure of deals.
Key Metrics: Familiarize yourself with the key metrics used in affordable housing finance, such as debt yield, debt service coverage ratio (DSCR), and loan-to-value (LTV). These will be crucial in your modeling.
Financial Modeling Resources: WSO offers a wealth of financial modeling resources that can be adapted for LIHTC properties. While these resources may not be LIHTC-specific, they provide a strong foundation in financial modeling principles that you can apply.
Templates: Look for financial modeling templates provided by WSO, which can serve as a starting point. You may need to adjust these templates to fit the specifics of LIHTC deals.
Learning from Professionals: If possible, seek out professionals who have experience with LIHTC financing. They can provide insights and potentially share examples of models they've used in the past.
Internship Preparation: As you're preparing for your internship, consider reaching out to your future employer to ask if they have any recommended resources or if they can provide you with a sample model to study.
For more detailed guidance, you might want to check out the WSO Elite Package, which includes extensive financial modeling training that could be relevant to your needs.
If you're interested in learning more about the key metrics used in affordable housing finance, here is a question that you might be interested in and I can help you with: What are the key financial metrics to understand when modeling LIHTC properties as a lender?
Sources: Resources for Learning How to Finance Affordable Housing - LIHTC Course, Q&A: Affordable Housing Acquisitions, How do LIHTC developers make money?, Analyst Interview - Common Questions, Lender/Debt Fund Modeling vs Broker Modeling
You would model it the same way, but underwriting guidelines may be a little loser to support Affordable Housing, e.g. DSCR Ratio as low as 1.10x
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