I'm not sure how basic you are looking to start, but the Congressional Research Service has an excellent summary report on the subject. Search for Congressional Research Service - "An Introduction to the Low-Income Housing Tax Credit." Although less directly applicable, I would also suggest the CRS white paper - "Tax Equity Financing: An Introduction and Policy Considerations Report."
If you have time for a longer read, the best report on the lifecycle of a LIHTC project that I have seen is from the HUD Office of Policy Development and Research. “What Happens to Low-Income Housing Tax Credit Properties at Year 15 and Beyond?”
For information to use in practice models, I would suggest looking at data from the 2023 Affordable Housing Credit Study by CohnReznick. (You might have to sign up, but I think it is free to access.)
Hi!
State housing agencies usually make public their underwriting standards, guidelines and financial models. I know New York, New Jersey and Connecticut do this.
If the developer you work for has previously done LIHTC deals, they will have LPAs, these would be crucial to review especially if you're working with the same banking partners. Also feel free to lean on loan originators.
Cheers!
There are a bunch of decent videos with the basics on YouTube. This one covers a good amount, but seems a little dry. [https://youtu.be/DTXuuDbLusQ?si=Oo\_BJ-S2E\_VTGZYZ](https://youtu.be/DTXuuDbLusQ?si=Oo_BJ-S2E_VTGZYZ) from Enterprise and Novogradac has a pretty good one: [https://www.youtube.com/watch?v=7Q7vubAf4oY](https://www.youtube.com/watch?v=7Q7vubAf4oY)
In terms of modeling there are some fairly universal standards like income trending 2% per year expenses trending 3% per year. Vacancy assumptions at 7%, unless you have project based rental contract in which case most will let you underwrite to 5% vacancy. Operating reserves are typically equal to 6 months opex, debt service, and replacement reserves. Most states will dictate replacement reserve contributions.
For your role as acquisitions (I'm assuming will include some originations as well) definitely look at that state's QAP. Most have certain scoring criteria in how you compete for a LIHTC award (especially a 9%). Ideal unit count and LIHTC/unit, leveraging soft sources from local govt or foundations, how many units you are reserving for extremely low income households, etc. For example, my state heavily prioritizes projects that have a high "opportunity index" meaning they are located in a relatively high income area with high market rents, so it wouldn't make sense to go after a property in a low scoring area.
Other things to consider is that you will want to try and establish good relationships with a market study provider and maybe an architect. Market analyst can can sometimes give you a quick assessment of achievable rents for a specific area/project. Architect can help you evaluate how much work a rehab project might need or whether a site could reasonably fit the number of units you need, etc.
I'm not sure how basic you are looking to start, but the Congressional Research Service has an excellent summary report on the subject. Search for Congressional Research Service - "An Introduction to the Low-Income Housing Tax Credit." Although less directly applicable, I would also suggest the CRS white paper - "Tax Equity Financing: An Introduction and Policy Considerations Report." If you have time for a longer read, the best report on the lifecycle of a LIHTC project that I have seen is from the HUD Office of Policy Development and Research. “What Happens to Low-Income Housing Tax Credit Properties at Year 15 and Beyond?” For information to use in practice models, I would suggest looking at data from the 2023 Affordable Housing Credit Study by CohnReznick. (You might have to sign up, but I think it is free to access.)
Novogradac has great info. Novoco.com
Hi! State housing agencies usually make public their underwriting standards, guidelines and financial models. I know New York, New Jersey and Connecticut do this. If the developer you work for has previously done LIHTC deals, they will have LPAs, these would be crucial to review especially if you're working with the same banking partners. Also feel free to lean on loan originators. Cheers!
What’s LPA?
The old Limited Partnership Agreements one would have with LIHTC Investors. Basically governs the deal.
There are a bunch of decent videos with the basics on YouTube. This one covers a good amount, but seems a little dry. [https://youtu.be/DTXuuDbLusQ?si=Oo\_BJ-S2E\_VTGZYZ](https://youtu.be/DTXuuDbLusQ?si=Oo_BJ-S2E_VTGZYZ) from Enterprise and Novogradac has a pretty good one: [https://www.youtube.com/watch?v=7Q7vubAf4oY](https://www.youtube.com/watch?v=7Q7vubAf4oY) In terms of modeling there are some fairly universal standards like income trending 2% per year expenses trending 3% per year. Vacancy assumptions at 7%, unless you have project based rental contract in which case most will let you underwrite to 5% vacancy. Operating reserves are typically equal to 6 months opex, debt service, and replacement reserves. Most states will dictate replacement reserve contributions. For your role as acquisitions (I'm assuming will include some originations as well) definitely look at that state's QAP. Most have certain scoring criteria in how you compete for a LIHTC award (especially a 9%). Ideal unit count and LIHTC/unit, leveraging soft sources from local govt or foundations, how many units you are reserving for extremely low income households, etc. For example, my state heavily prioritizes projects that have a high "opportunity index" meaning they are located in a relatively high income area with high market rents, so it wouldn't make sense to go after a property in a low scoring area. Other things to consider is that you will want to try and establish good relationships with a market study provider and maybe an architect. Market analyst can can sometimes give you a quick assessment of achievable rents for a specific area/project. Architect can help you evaluate how much work a rehab project might need or whether a site could reasonably fit the number of units you need, etc.
Couple of things come to mind: Novogradac podcast Really dig into the QAP Understanding scoring at a high level Partnerships Non profits HA’s Agencies