Author's Note: In the spirit of Halloween, here is a sneak peek at areas that offer more treats than tricks for investors!
SP Group Identifies 4,883 Census Tracts to Maximize ROI Using LIHTC and Opportunity Zones
The Low-Income Housing Tax Credit, often referred to as LIHTC, is a tax incentive to encourage the creation and maintenance of affordable housing for low-income households in “Qualified Census Tracts” (QCTs). Opportunity Zones (OZ) is also a tax incentive program that is meant to spur investment in undercapitalized communities.
The Department of Housing and Urban Development (HUD) recently identified 14,585 census tracts that qualify for LIHTC benefits. The Department of Treasury designated 8,764 census tracts as qualified OZs. SP Group overlaid the two population of census tracts and identified 4,883 tracts that provide investors with the opportunity to “stack” LIHTC and OZ incentives to maximize their return on investment. Figure 1 shows the distribution of 4,883 overlapping census tracts.
The ability to combine or “stack” these LIHTC and OZ incentives may make the difference in achieving feasibility in areas where there is a need to substantially renovate existing multifamily properties. SP Group analyzed each of the 4,883 census tracts to identify those that offered a large inventory of multifamily units* for possible investment opportunities. We found about 450 census tracts located in California, New York, and Texas that offer about 450,000 multifamily units. While most of these census tracts are located in major metropolitan areas, we found some unexpected locations such as Huntsville, Alabama that offer an inventory of about 4,000 multifamily units that could be explored for LIHTC and OZ incentives.
For investors interested in learning more about these target areas, please contact us at firstname.lastname@example.org. SP Group provides analytics to assist with in-depth insights for optimal investment decisions.
Figure 1. The 4,883 Census Tracts with Both Tax Incentives
* SP Group used the Census ACS 5-Year Estimate