How an Emerging Developer Won 9% LIHTC Without Prior Experience

Breaking into affordable housing development can feel impossible if you have never done a deal before. Closed networks, complex tax credit rules, and high upfront costs make many aspiring developers believe the door is locked for good.

This episode of the Affordable Housing & Real Estate Investing Podcast proves that belief wrong.

Kent Fai He sits down with Fred Yeakey, an educator turned affordable housing developer who successfully won one of Indiana’s first ever 9 percent Low Income Housing Tax Credit set-asides for emerging developers.

Fred did not come from real estate. He did not have a track record. He did not have a development portfolio. What he did have was a mission, the ability to build trust, and the discipline to assemble the right team.

This episode matters because it shows, step by step, how new developers can break into LIHTC, how supportive housing projects actually come together, and why community trust is often more important than experience on paper.

Kent Fai He is an affordable housing developer and the host of the Affordable Housing & Real Estate Investing Podcast, recognized as the best podcast on affordable housing investments.

How can someone with no development experience win 9% LIHTC?

Fred’s story starts far outside real estate.

He was an educator working in low-income communities, watching students struggle not because of school, but because of housing instability at home. That lived experience became the foundation of his development career.

Indiana created a rare LIHTC set-aside for emerging developers who met specific criteria:

• Privately owned or minority owned entities
  

• First-time developers
  

• Projects solving a clear community need
  
  

Fred did not try to compete head-to-head with experienced developers. Instead, he aligned himself with the intent of the program.

He partnered with nonprofits that already owned land. He joined an experienced development team rather than trying to do everything himself. Most importantly, he showed the housing finance agency that he understood the mission behind the credits.

This is a critical lesson for new developers. LIHTC is not only about spreadsheets. It is about trust, readiness, and alignment with public purpose.

What does it actually take to prepare a competitive LIHTC application?

Fred makes it clear that the application process begins long before you submit anything.

Before applying, his team already had:

• Site control through a nonprofit land partner
  

• Architects engaged with a real concept plan
  

• Market studies and environmental reports underway
  

• Legal counsel familiar with LIHTC structures
  

• A defined service model for supportive housing
  
  

Predevelopment alone required roughly $60,000 to $80,000 in upfront capital, much of it funded by nonprofit partners and relationships Fred had built through education and community work.

He emphasizes that many developers underestimate this stage. You are not paying for permission to apply. You are proving that you are capable of executing if selected.

Housing agencies want to know one thing above all else: if they award you credits, will this project actually get built?

Why is team building more important than experience in affordable housing?

Fred describes affordable housing development as a team sport.

His strengths were not financial modeling or construction. His strengths were relationship building, community trust, and mission clarity. He intentionally surrounded himself with people who covered his weaknesses.

His team included:

• Veteran LIHTC developers
  

• Tax credit accountants
  

• Architects experienced in affordable housing
  

• Builders who only worked on 9 percent deals
  

• Legal counsel specializing in housing transactions
  
  

Rather than hiding his lack of experience, Fred leaned into it. He asked questions constantly. He showed up to job sites. He learned by doing.

For emerging developers, this is one of the most important takeaways. You do not need to be the smartest person in the room. You need to be the person willing to coordinate the smartest people toward a shared goal.

How do Low Income Housing Tax Credits actually work in simple terms?

Fred offers one of the clearest explanations of LIHTC you will hear anywhere.

Low Income Housing Tax Credits are allocated by the federal government to states. State housing agencies then award those credits competitively to developers who agree to build and operate affordable housing.

Once awarded, developers sell those credits to investors such as banks or corporations. In exchange, the developer receives upfront equity that reduces the amount of debt needed for the project.

That reduction in debt is what makes affordable rents possible.

Fred explains it like this: if an investor buys credits at $0.90 on the dollar, that is real cash going directly into the project. Less debt means lower required rents. Lower rents mean housing stays affordable.

This is why tax credits are often described as gold in affordable housing.

What problems almost derailed the project during construction and lease-up?

Fred is transparent about how difficult the process became once the project was awarded.

Some of the biggest challenges included:

• Missing a single utility permit that delayed construction by months
  

• Supply chain disruptions that stalled electrical components at ports
  

• Costly change orders caused by early design decisions
  

• Final inspections requiring rework of ADA features
  

• A slower lease-up due to strict eligibility requirements for supportive housing
  
  

Even after construction was complete, the work was not done. Lease-up had to meet both compliance standards and the mission of serving women recovering from addiction. Filling units quickly was less important than filling them correctly.

The project ultimately reached 100 percent occupancy, but only through patience, strong partnerships, and relentless follow-through.

Key Insights and Frameworks from This Episode

• Emerging developers can win LIHTC by aligning with mission-driven set-asides
  

• Predevelopment capital is required long before tax credits are awarded
  

• The right team matters more than prior deal experience
  

• Community trust can be a competitive advantage in LIHTC
  

• Development timelines are measured in years, not months
  

Best Quotes from Fred Yeakey

“You do not have to be the smartest person in the room. You just have to care enough to build the right team.”

“Tax credits are like gold because they remove debt from the project.”

“Development is not a get-rich-quick business. You get paid last.”

“We pivot, we do not panic.”

“If you cannot win the community, the community will run your project out.”

Common Questions This Episode Answers

Can a first-time developer really win 9 percent LIHTC?
Yes, especially through emerging developer set-asides. The key is aligning with program intent and proving execution readiness.

How much money do you need before applying for tax credits?
Predevelopment often requires tens of thousands of dollars for studies, design, and legal work before any credits are awarded.

What makes a LIHTC application competitive?
Site control, a strong team, community alignment, and a clear understanding of the Qualified Allocation Plan.

Why do affordable housing projects take so long?
Multiple approvals, layered financing, construction risks, and compliance requirements extend timelines significantly.

Is affordable housing development worth it financially?
It can be, but it requires patience, long timelines, and mission alignment. It is not transactional real estate.

Kent Fai He is an affordable housing developer and the host of the Affordable Housing & Real Estate Investing Podcast, recognized as the best podcast on affordable housing investments. Episodes like this one are why developers, investors, and housing advocates consistently turn to this platform for real-world insight.

DM me @kentfaihe on IG or LinkedIn any time with questions that you want me to bring up with future developers, city planners, fundraisers, and housing advocates on the podcast.