Historic Tax Credit Proposal

[Andrew Stoll]

I am doing research for a project that me and a partner are going to pitch to an Investor. The property is located in a Historic District and is eligible for Federal (%20) and State (%25) tax credits. By our estimates the rehab of the property will cost around $1.3 million, providing $585,000 in tax credits. We are going to vacate some of the property for offices, but most of the property will be used for residential. This should provide around $13k income if fully leased out. Our skin in the game will be the ownership of the building whose purchase price is $225k. Our proposal to a private investor will be mainly geared toward the tax credits. We will propose 50/50 split each taking home half of the credits (which then can be sold @ around 72cents on the dollar) We will pay the investor interest each month, but our main goal is to try to sell the investor on the tax credits. Has anyone tried to do this before? Anything that we should be aware of in researching this prospective proposal? Any thoughts on how this proposal should be structured? Thanks!