Anyone have experience in commercial properties on LIHTC programs

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Hey all,

Wanted to ask if anyone here has any experience in dealing with LIHTC programs when investing in apartment buildings? Tenant protection last for another two years and they have the property priced at a 4% cap and the market value is 7%. My thought process would to run numbers with current NOI and market cap and go from there. I don't want to over pay for a property, especially when using investors money, just to wait for the property to cashflow in the next two years. Any advice on negotiations here?

The most likely reason this property would trade at a 4% cap in a 7% market is due to the LIHTC being eligible to come off in two years. Buyers would evaluate this deal for the upside as rents would be expected to rise substantially over the subsequent few years as LIHTC tenants move out and units are re-rented to market rate. That would result in substantially higher income and thus higher property value. Typical business plans would call for a sale at that point. This is much less of a cash flow play than an appreciation play. They aren't simple to execute, you really need experience in the qualified contract process to facilitate the market rate conversion.