Identifying the Right Investor
Few grantees are well-versed in the world of private equity and may need assistance finding investors; conversely, not all investors will seek out affordable housing projects that may be more challenging than other investment opportunities.
When seeking investors, grantees will want to understand their motivations. This is challenging because there is a wide range both as to the type of project (commercial, industrial, housing, etc.), as well as the period of the investment. Equity investors in OZs have many choices to consider, and grantees and their development partners may have to search out the right investor that is comfortable with an investment in a project that includes affordable housing, with its regulatory constraints. It is possible that rental housing projects in OZs that have LIHTCs may have a different equity investor for the LIHTC and OZ interests.
If possible, the grantee may want to seek developers with experience in HOME or HTF or other affordable housing development, who also understand private equity real estate investment and thus, may be able to help serve as a bridge between a grantee and the investor.
For guidance on identifying the right investor, see the earlier section of this Guidebook, How Can a Grantee Find Potential OZ Investors Who Might Be Motivated to Invest in HOME or HTF Projects?