After 4 years in the CRE industry, I think affordable housing is where I want to spend the rest of my career. Currently work for a local developer in primary market that does Market Rate and LIHTC development. My role is primarily on the underwriting side. Have solid LIHTC underwriting foundations but by no means am I an expert.
In my next role, I want to get more of a national focus, and concentrate on affordable housing. I hear a lot of the money in affordable housing is on the syndication side, not the development side as much. I feel there will always be demand for affordable housing, and funding is always a challenge.
Curious to hear what different types of positions there are at a national syndicator for someone at my level, what career trajectory is like, work-life balance and comp. Also what do you see as tradeoffs to switching from development to the syndication side? Am I crazy for leaving development/acquisitions?
Bump, interested as well. I work in syndications and am new to the industry. I thought most of the money is on the development side? How much of a difference are you seeing for syndicators vs development at your level vs senior levels? Starting an affordable development shop also sounds easier than starting your own syndication shop.
In market-rate development, the developer has an opportunity to build a strong cash flowing property with income and property appreciation over time (long term) or build a sell property for a strong IRR (short term). Doesn't always work out this way but that's the intention.
These scenarios are not the case in LIHTC Development. There's minimal cash flow earned by property due to AMI restricted rents. These rents need to be restricted for at least 15 years to be in compliance with LIHTC, but a lot of LIHTC developers receive local subsidies that have longer (40 year, 99 year) affordability covenants. Sale prices are not high due to rent restrictions.
LIHTC developers earn development fees (10-15%) which is a much higher fee % than market-rate. My understanding is syndicators earn origination fees, asset management fees, and typically earn a spread over tax credit pricing they provide to developers. And do more deals than your average LIHTC developer. Spoke with someone at Enterprise who told me the development arm does not make a profit, but doesn't need to because syndicator is a cash cow.
To be fair, Enterprise is known as a syndicator and not a developer. Their development arm is tiny and, as noted, is absolutely secondary to the lending and syndication practice.
As you sort of brush on, development is far more lucrative on a deal by deal basis than syndication. But syndicators take very little risk and do a lot of deals, so the overall comp may be higher.
I'd say that for a junior to mid level person, comp is going to be slightly better on the syndication side. For anyone above that level, development is going to blow any other role out of the water.
Do the big syndicators make more than the big lenders? Or more or less the same?
bump
Been in the LIHTC world for about 5 years so I’ll add to this.
The most common jobs at LIHTC syndicators include the following:
-Acquisitions (property level deal closing team)
-Syndications (fund level closing team)
-Underwriting (the property level number crunchers)
-Fund Management (the post closing team that manages fund returns/reporting)
-Asset Management (the team that manages the properties post closing)
-Special Assets (team that manages deals that go sideways)
-Dispositions (team that sells deals)
In terms of comp, the analyst/associate level jobs probably pay a base between $75k-$120k and bonuses between 10%-30%. From what I’ve seen/heard the acquisitions/syndications teams make the most in terms of comp followed by dispositions/Special Assets/AM/Fund Management. The senior level comp is tough to find out on forums but I know there are some large non-profit syndication shops that report senior level comp like NEF. The business is crowded now so fees aren’t as good as they were in the 90s/2000s (based on what the higher ups say). Most shops have good WLB but moving up can be tough as this industry retains senior level staff that aren’t in a rush to retire. Happy to answer any other questions.
Thanks for your insight. I think acquisition/syndications would eb of most interest to me. A few questions for you:
I am LIHTC debt underwriter 3 YOE $120k salary so you’re on the nose!
- I work on the dispositions side
- Yes, I think it would be tough to switch out to a different asset class but not impossible. However, there are so many roles in this business that if you ever felt bored, you would have plenty of skills/experience to transfer to a different side of the business that you could enjoy more.
- Probably a quasi-lobbyist that works to make sure the syndicators interests are represented anytime a policy is updated at the state or federal level.
- The acq/syndication jobs are a mix of excel, due diligence collection and committee meetings. The actual deal making is usually done by senior origination people so most of the work on the analyst/associate level is helping get deals/funds closed and managing relationships during that process.
- Absolutely, your development underwriting experience would be valuable. I have seen many people make the switch from the investor/syndicator side to the dev side and vice versa. With 4 years of dev experience you should be able to switch into an associate/senior associate/ AVP role.
The trade offs are simply the ones intrinsic to both jobs. Syndication is less interesting and less complex, and you get less interface with the actual deal level stuff than you do in development. You sort of sacrifice long term upside - the whole point of development is to get to a stage where you own deals, or meaningful parts of them, and aren't just working for W2 income. To be fair, you can probably transition back fairly easily.
A lot of this depends on your personality. As in most real estate asset classes, development is a lot more hands on, a lot more self-directed, a lot more problem-solving and doing one-off, multidisciplinary tasks. Syndication is likely to be churning through a lot of similar deal processes; you'll probably become more expert and specialized in that, but it's also probably a narrower range of actual day to day work you'll be doing. That suits some people, but not others
You're right about the long-term upside being a major ebenfit to developement, but as I'm getting further along in this business starting to realize that my goal of breaking out on my own and building up a billion dollar portfolio is much harder than anticipated, and may not be worth the sacrifices IMO. I do want to own commercial real estate of my own, but more like 10 unit multifamily properties or 10K sf of neighborhood retail, not massive mixed-use developments I work on day to day. Therefore the long term upside of working at a developer has less value to me than before.
Not sure which I prefer yet, a semi-repeitive task I can master, or the jack of all trades development is. To clarify, i'm more on the financial modeling side, so a little less all over the place than a Dev Manager. More trying to get a stable W2 where I have the ability to earn a high salary/bonus to be able to fund personal investments, and also have the time outside of work to build a personal real estate portfolio and live a life otuside of work.
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