All Forum Posts by: Jim Groves

Welcome Jack.  Perhaps you can start it off by mentioning some of the key takeaways you've seen, platforms that you think work well, and more importantly any deals that have not performed as promised.

 Nick, per @Tom Ayd's suggestion you can check out our site and click under "Available LIHTCs" for the state of Minnesota.  On there you will find the developers that have been awarded credits in the state.

I also agree with his other comments regarding size/experience.  It's not likely to be an option for this particular project, but there may be some smaller community grant programs that can help you get it off the ground.

Lamont-

I admire your goals to make a difference in the Newark community.  There are a number of strategies that I've seen work.  The most effective I've seen (particularly in Chicago) come from those that find creative ways to add value in underutilized commercial properties.

The low income housing tax credit (LIHTC) remains the most used source of financing for rent subsidized properties.  It typically only is awarded to the most experienced developers, so you're too early in the game to take advantage of it.  However, if you go on my site and look up "available LIHTCs" search for those that have been awarded in New Jersey.  You will likely find organizations that have experience in Jersey City/Newark and reach out to them to express interest in getting involved.  They may share some tips or seek your assistance in finding suitable projects to renovate.

Good luck

 Fort Myers WAS driven by leverage.  It was a huge subprime market during the housing bubble.

 And for the record, I don't believe there will be a crash either.  Correction, slowdown yes.  But not an outright crash.  The market didn't crash in 2000/2001.  NYC didn't crash in 2008.  Both of those economic bubbles were worse than what we are seeing now and the impact on real estate was somewhat muted.  As long as the market isn't driven by excessive leverage (such Ft Myers) it's hard to have a crash.

Very timely: http://www.bloomberg.com/politics/articles/2016-06-29/san-francisco-landlords-gird-for-slowdown-as-startup-frenzy-ebbs

It's definitely a lot harder to raise VC money if you're a crowdfunding startup, but it's hard to tell if it's related to the industry, a slowdown in Fintech funding or just a slowdown in VC funding in general.  Peerstreet did raise a decent amount of cash but it's a lot smaller in comparison to what RealtyMogul did about 1-2 years ago.  

There was an article in Vanity Fair a couple years ago that debated whether this was Bubble 2.0, and those on the side of bubble argued that the companies are living off of this VC game of musical chairs.  The good news is that most people don't have this investments in their 401K like they did back in 2000, but there will be a day of reckoning for companies with high cash burn.  I think we'll see some mergers in verticals that cannot support more than one dominant player (i.e. Draft Kings/Fan Duel).

In my experience you almost never make the money on the grocer.  If you have a lease with them, the rent is fairly low and barely covers your debt service or capex costs.  The in-line is where you make your money.  You pack in as much inline space as the anchor lease and co-tenancy provisions allow.

I echo @Tom Ayd's comments.  I've been involved in developing 4 LIHTC projects with a non-profit developer that has a long history and relationship with the State Housing Authority.  In Illinois for example, none of the 9% credits were allocated to developers without prior LIHTC experience.  There simply is too much demand for these credits to go to newbie developers.

I also agree with the idea of partnering with another developer.  Non-profit developers tend to make better partners as they have a preference in the QAP process.  My suggestion would be to contribute your site or building to the non-profit in exchange for a donation or an interest in the GP.

We don't cover PR, but that's only because of the size of the program there.  They only have about $8MM/year to work with, which isn't a lot to go through a formal process.  The only QAP I was able to find was from 2013, which is quite old.  It's likely they haven't updated the procedures, but in any event this document will contain everything you would need to know about the process.  The housing authority's job is to help you navigate this, so I would reach out to one of their contacts after you've reviewed: http://www.gdb-pur.com/principalsubsidiaries/docum...

I have seen awards given to projects of this size, so it can be done.  But as others have said, it's extremely complicated and probably best for organizations that have gone through the process before.