Bob FraserCFO & Macro Strategist | Data-Driven Investing Expert | Speaker & Author

"$1,000,000 a year...for 99 years" Mark Khuri #shorts

Name: "$1,000,000 a year...for 99 years" Mark Khuri #shorts
Uploaded: 2023-01-22T15:00:36+00:00
Duration: 32 s
Channel: Bob Fraser
Description: In this YouTube short, Bob Fraser interviews a speaker (identified as Mark Khuri) about a recent Texas affordable‑housing transaction. The deal required…

22 Jan 2023 · 1 min

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0:32

In this YouTube short, Bob Fraser interviews a speaker (identified as Mark Khuri) about a recent Texas affordable‑housing transaction. The deal required 50% of the units to be income‑restricted: 40% of the total units must be rented to households earning at most 80% of the Area Median Income (AMI) and the remaining 10% to households earning at most 60% of AMI. To meet these requirements the developer incurs an estimated rent concession of about $250,000 per year. In exchange, the property receives a property‑tax exemption valued at roughly $1 million per year. The exemption is granted for 99 years and is transferable to subsequent owners, providing a long‑term cash‑flow advantage that outweighs the rent‑loss cost.

That's no small potatoes.
So then, you know, what did you get in return? Property tax exemption, which was, you know, near $1 million a year. One of our latest deals in Texas, you know, to qualify for the property tax exemption, Bob, 50% of the units were rent and income restricted based on the area median income. 40% of the units were rented to residents that earned 80% or lower than the area median income. Okay. And the remaining 10% at 60%.
And so how much did that cost you in terms of rent?
Around $250K a year. That's no small potatoes. So then what did you get in return? Property tax exemption, which was, uh, you know, near a million dollars a year.
So how long do you get the property tax exemption and how long do you have— do you— are you required to keep it in the affordability constraints?
The property tax exemption is for 99 years, Bob, and it's transferable to future buyers. 99? Correct. Wow.