Twenty something building hundreds of aff units. How?
Recently watched a podcast with a mid twenties developer who worked for someone for 3 years and now has hundreds of units in construction in LA (LIHTC) after only a couple years. I've been in development for a long time and know a bit about affordable, but had always thought the barriers to entry were extremely high in affordable tax credit deals. Not just dealing with the tax credits, but all the gap funding sources and bonds, guarantees on loans, tying up the land and then being able to start asap after you get the credits.
This kid is definitely smart and driven but has almost no experience and is building some 100-200 unit projects. I also thought the aff LIHTC game in LA was nearly impossible to do. Not questioning the need for backing/funding, but more so I know tons of large developers who would kill to do these projects in such infill locations in LA but somehow this kid has figured it out? Am I missing something?
Not truly affordable as it is not using LITHC
Taking advantage of property tax exemptions through California Welfare Tax Exemption non profit ownership structure
Won’t end well probably
They are all LIHTC deals
Barriers to entry are not that high for someone that knows how to put a deal together and get the requisite funding to make it all work.
Probably referring to this video.
Yup correct
Actually the opposite is kind of the case. For LIHTC, the barriers to entry are knowledge and not capital, which makes it vastly more likely that a young person could pull a deal off.
They figured out how to use the subsidies. And usually, but not always, people who can go big in their 20s or early 30s have money somewhere. Whether that be a parent, spouse, or rich benefactor (but usually a parent or spouse / in law) provides the seed capital. Even with LIHTC you need cash and ability to put up guarantees. It’s why you see so many people go off on their own around 40-50 in our industry. It’s when you finally have some change in your pocket and relationships for guarantees if you can’t do it yourself.
It is very possible to do this in your late 20s or early 30s without Rich Uncle LLC's backing. The requirements for cash for a LIHTC deal are fairly low.
I’m not tax credit expert and I’ve only looked at a few deals as we are starting to try and do them at the company I work for. Specifically in Florida. But all the deals I’ve seen still need $300-500K of pre dev assuming you don’t need to close on the land too. How much equity, in your experience, is needed to get going for most of these deals?
Your Tax credit investor will want someone with a net worth to sign on the completion guarantees
You definitely need someone backing you at his stage
The biggest issue for someone young is the money. Yes, the LIHTC program has very low equity needs, but if you can find someone with that money, most of the LIHTC program factors can be met by a 20-something developer.
He went to USC. He's either using his (family's) or other people's money.
He’s either using his own money or someone else’s? How did I not think of this?
It really is just that easy sometimes. He says he's partnering with a lot of non-profits so he probably has someone very close to that industry.
Dad is a multimillionaire former state assembly member turned lobbyist.
Company is a way to funnel taxpayer $ back to him under the guise of affordable housing.
This was the obvious answer from the beginning
“Rich dad” is ALWAYS the reason young people find outsized success in this industry.
It's the combo of politically connected Dad and being in a blue state. To those of us in LIHTC in CA, California housing is synonymous with tax fraud and administrate bloat. California's version of Minnesotas Learing Center some would say. Factor in the Dad is best friends with the heads CTCAC this is the result. Rich dad isn't as important since he's politically connected in a blue state.
This kid takes the typical 4% LIHTC program, then layers in additional subsidy from California's supplemental tax credit that his dad literally authored. Pretty incredible stuff.
Not surprised he gets on podcasts to brag about it given his heritage.
Of course this is impressive whether or not this kid has access to capital. But he 10000% percent has a deep pocketed family backer here. A 100% unit project in LA that is, say, $500K/unit or $50M would require a $30M+ construction loan with a repayment guaranty, completion guaranty, op reserve guaranty, interest guaranty, 10% liquidity requirement, 75%+ net worth requirement, all of which require an entity with those assets verified and usually a warm body behind the stickiest guarantys. commercial banks don't do these deals without all of those provisions secured.
Just want to clarify, I get that this requires money and backing but not really what I want to emphasize. It's more that everyone in the development industry in LA (including people on the market rate side) are trying to figure out the affordable path as nothing pencils in the market rate world so they need to fill their pipelines. ED1 was a flop, and even well heeled affordable developers can't make deals pencil here in these prime locations, regardless of whether they can get LIHTC credits or not, because the gap is still so substantial that the dollars to fill the gap are scarce and costs are so high. Also the timeline on how quickly he has turned these around is insane.
I just don't understand how this kid has figured this out when huge affordable groups who have been doing t his for decades have virtually no pipeline in LA (especially in these infill locations). Maybe he's undershooting dev costs and will get crushed on change orders? Not sure.
Disregard my comment in italics below. It was initially removed, so I reposted a similar comment later in this thread
I'm in SoCal but not LA county, and wasn't familiar with Jamison, or what a large family office they are. So the kid seems to have gotten solid experience, plus the huge USC network can go a long way to provide a full ecosystem of end-to-end partners. So to your point, I can see how a relatively inexperienced 20-something could theoretically get all of his ducks in a row.
Also to your point, I'm intrigued at how said 20-something could find a project that pencils, in a large highly competitive market with no shortage of experienced LIHTC developers. There's so many stipulations with day-to-day affordable housing management after completion, which doesn't seem like he's really done.. but it sounds like another mission-driven partner would come in at that point.
TLDR for anyone who hasn't/ won't listen to the podcast: he's breaking ground at 835 North Hyperion Ave in LA, which was a vacant 3 parcel site, previously entitled for 6 stories and 54 units (large/ luxury 3-4 bedroom units), acquired for $5.3M. It will now be 77,000SF, doubling units to 105 (50% 1bd, 25% 2bd, 25% 3bd), leveraging ED1. Projected hard costs of mid-$200k/ door using non-prevailing wage- he said most affordable projects have to use union labor but he didn't, so I don't know how rare that it is or what tactics could be leveraged. He closed in Q3 '25 then put his cost package together and submitted for tax credit approvals. He got tax credit approvals in December, then had to permit between then and the end of June, and used the CHIP program (city's density bonus program), to expedite the permitting process, then closed when they got the permits end of June. Construction teams mobilized and starting in ~10 days after closing.
He got a really long escrow from the seller, and said he was lucky in that regard. Plus, if his dad was an assemblymen and lobbyist, you would think he had high-level contacts somewhere to help obtain the tax credits or to expedite permitting. Even his former CEO is extremely well connected in LA, being a member of the coastal commission. Obviously relationships are huge in this business, especially development. Based on how he frequently mentioned "partners", I would think he's the face of this project, but is probably a co-GP. I tried making a mid-career change into CRE a few years ago and it never materialized... some combo of verbal offers falling through, losing out to more experienced candidates, and/or general industry downturns. I've explored affordable developments since I have a broad network, where I would co-GP with an experienced and reputable developer, as a way to get experience. I may have meaningful capital incoming, but that's still a TBD. So theoretically, I can see a path for how Shant is able to lead a development. I'm curious about what more experienced developers on this forum would have to say
Projected hard costs of mid-$200k / door?!?! In LA?!?! Are these units just empty shipping containers? lol
I think most of this is spot on. His one large project does have a development partner (Kingdom Development, who are a rare effective nonprofit developer), by the way, and that's without drilling down into the actual structure of his company.
It is unusual but not crazy. Also worth noting he's making use of a policy in ED1 which is pretty new. Sounds like he found an entitled site which no longer penciled, the Seller gave him a lot of leeway or a generously contingent contract which allowed him enough time to get the site upzoned, and that was that. Without details it's hard to say, but the basic premise isn't that crazy. Lots of stronger, more experienced developers may not have wanted the headache, or maybe thought increasing the density was a long shot, or who knows. Maybe this kid is really charming and persuasive and got the Seller to agree to a deal no one else could. If Adam fucking Neumann can raise hundreds of millions of dollars after standing up in front of the whole world and showing himself to be the least competent real estate operator in human history, then is this all that surprising?
Lol these loans require assets to match the guarantee. He, or somebody else involved in the deal, has assets equal to the loan amount that that can be liquidated in the event of default. Unless he’s made millions of dollars already and / or his or his corporations balance sheet has increased to this level of value, there is another sponsor (or likely multiple sponsors) to these deals.
Again: rich daddy
Kid’s Kim Kardashian
Yeah I mean there’s just no way around the guarantee aspect of these deals. Also, state sponsored funding / credit only gets you so far on any deal especially those that are larger. I worked in the industry briefly and saw it first hand.
I posted a comment that was removed for some strange reason. In short, I suspect he's the face of the development but is probably a co-GP while teaming up with an experienced developer. He frequently mentioned "partners" but lacks an extensive track record, and used up his "life savings" but that could only go so far. He previously worked for a strong and well-connected family office, which probably helped to some degree. I tried to pivot in CRE development a few years ago but it never materialized, whether verbal offers fell through, I lost out to more experienced candidates, general market softness, etc. I may have meaningful capital coming, but that's still a TBD- So I've explored affordable developments, where I would co-GP as a way to get experience if/when that capital hits. So theoretically, I can see a path for how a relatively junior associate could pivot so quickly into development, as long as they have a full ecosystem of partners, capital access, and an ideal site.
He estimated hard costs to be ~$250K/ door, and I can't comment on whether that's on par for development in LA, using non-prevailing wage. The original project was supposed to be 54 larger/ luxury 3-4bd units, and he'll create 105 units (50% 1bd, 25% 2bd, 25% 3bd) across 77K SF. He leveraged LA's ED1 program to add density. He acquired the 3-parcel site for ~$5.3M and said he got lucky that the seller was willing to give him an extended escrow while he applied for tax credits. I know little about the previous owner of the site, but know guys at some stronger development shops in SoCal who say that they've had sites tied up for over a few years, continue to pay carry costs, their promotes are wiped out, and think the firm should just move on. Maybe that's what happened with this LA site
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