LIHTC, Section 8 and the USDA: An Interview with Hamilton Realty Advisors (HRA)

Having met with Christopher Stefan of HRA at two separate ULI events we decided to meet up so I could learn more about what HRA does for its clients and in the process learn more about the financing behind affordable housing to better serve our multi-family clients at EVstudio.

HRA is a specialist in the sale of low income properties.  Over the last 12 years they have  provided transactional services for owners of  Section 8, LIHTC and Rural Development properties across the US and its territories with tens of thousands of units and nearly a billion dollars in total assets transacted.

Talking with Chris I could tell immediately that he had the expertise and passion needed to help his clients successfully navigate the complex but rewarding investment opportunities available through affordable housing.

HRA’s strength is not just their national data base of Affordable Housing owners but it is more importantly the network of relationships they use to turn that information into partnerships that yield win-win transactions for their clients.

As a little background to what HRA does Christopher explained how when the Federal Government first saw a need for public housing it went into the business of building, managing and financing these projects from construction down to rental assistance.  Many of the failures of this model like Cabrini Green are well known.  In the architectural world they are known as not only failures of management but also as dehumanizing buildings with site planning that ruined many existing neighborhoods.

Given the disappointing results from these well intentioned efforts the government shifted its focus to finance.  Through different avenues and incentives the government has created opportunities for private investors to generate income through management and tax incentives.

One could write a book on all the different vehicles for government incentivized finance but Christopher explained 3 basic types of properties that they focus on at HRA

Low Income Housing Tax Credit(LIHTC)  financed properties:

According to HUD’s website:

The LIHTC Program is an indirect Federal subsidy used to finance the development of affordable rental housing for low-income households…. enacted by Congress in 1986 to provide the private market with an incentive to invest in affordable rental housing. Federal housing tax credits are awarded to developers of qualified projects. Developers then sell these credits to investors to raise capital (or equity) for their projects, which reduces the debt that the developer would otherwise have to borrow. Because the debt is lower, a tax credit property can in turn offer lower, more affordable rents.

Christopher explained that LIHTC credits are usually stacked with other financial tools, incentives and local or state programs and can be complex making an experienced broker essential in these kinds of transactions.


Section 8

This kind of apartment invesment has definite challenges but they offer the benefit of government backed rental income.  The tenant pays up to 30% of their income and the government pays the difference between that and HUD determined Fair Market Rent.

Advantages to Section 8 property ownership and management.
– No shortage of tenants. There’s a long waiting list.
– Better quality of low-income tenant because if the tenant damages the unit or is late paying the rent they can be disqualified for Section 8 assistance.
– Low turnover. Section 8 has had no measurable impact in transitioning people from government-assisted housing to independent living. Once you have found a good Section 8 tenant, you can have them for a long time.

As the production of Section 8 properties effectively stopped almost 30 years ago there are many of these properties in need of a thorough rehabilitation.  This can either be accomplished through additional equity contributions from the ownership or through a LIHTC transaction as the LIHTC and Section 8 programs work well together.

USDA Rural Properties

Properties are typically in locations where there are (or were) fewer than 25 thousand people and usually under 50 units.  Many of these properties have been absorbed by the larger cities they once bordered.

There are more restrictions on distributions of earnings from these properties as the goal is to keep the rent supporting the property.

Prior to founding HRA Sean and Christopher first worked on USDA properties at another firm on behalf of AIMCO .   AIMCO was divesting themselves of the properties which were dependably profitable but did not fit the model of investment class properties that their REIT investors were looking to find on their balance sheets.

Since that time HRA has made USDA properties one of their niche markets.   HRA facilitates partnerships with sellers who are often small local investors (who often have a hard time selling these unique properties)  with larger buyers who have developed efficient ways to run them.  This in turn maximizes the profitability of the project while bringing much needed capital improvements that benefit the residents.


To sum things up: the affordable housing industry has its challenges because it has conditions, additional paperwork and the rent levels are always going to be lower.   While having the full faith and credit of the Federal Government behind your investments can bring a great deal of security the ever shifting policy environment can bring along its own worries.  HRA provides value to its clients by staying abreast of these policy changes and developing and adapting business strategies that are effective in such a dynamic environment.

I would like to thank Christopher Stefan for taking the time to teach me more about affordable housing financing as part EV Studio’s goal to be not only up to date on the latest construction techniques but also the financing that has a direct influence on the kinds of decisions our clients make.

Please feel free to email me if you have any questions about multi-family housing:


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