Viking Village Case Study
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$3,775,000
87 + Land Acreage
This is a project-based section 8 property, which was operating on an annual renewal HAP contract, meaning it was at risk of losing the affordability aspect of the property if this was not renewed every year. The seller had owned it for over 20 years and self-managed the property and was uncertain if they would continue to renew the HAP contract. This was put together off market and the seller had a broker they worked with, who Hugh has a great relationship with, which was critical in making this come together. The seller had tried to sell the property a few years prior but was unsuccessful due to condition, market timing, and appraisal issues. There was a significant amount of deferred maintenance at the property that would need to be addressed by the buyer who was trying to put a single 20-year HAP contract on the property. This was set to close right after President Trump announced his new tax laws, which had a negative effect on the tax credit market.
The transaction required an extension, but the buyer was successful in putting the tax credit purchase together due to their deep relationships with their lender and tax credit investors, even though they had to swap out their initial tax credit investor due to re-pricing of the tax credits. They were also successful in obtaining a new 20-year HAP contract on the property, thus continuing the affordability of the property for the tenants for years to come. In addition, the buyer performed significant improvements to the property, adding community amenities and services to the tenants, including a new community building and community garden. The seller walked away with a significantly improved value from just a few short years prior.
Section 8 and other affordable property transactions have a lot of moving parts and can be extremely cumbersome dealing with the state and federal governments who do not care about investor agreements and timelines. It is important to have knowledgeable people (buyers, brokers, lenders, & escrow) handling the transaction who know what pitfalls to look out for and how to push the transaction along amicably.
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