HUD 221(d)(4) Developer Fees
When it comes to developer fees for HUD 221(d)(4) projects, eligibility can vary significantly from project to project. Affordable developments, as well as those using the LIHTC program, can often qualify for a developer fee. Typically, these developer fees can be anywhere between 10% to 15% of the eligible project costs, or $12,000- $15,000 per unit. However, this varies upon the authority issuing the tax credit. Developer's fees are more commonly available to non-for-profit borrowers, though this can also vary. Because of this, it's essential to consult a HUD loan expert to learn more.
Developer's Fees for Rental Assistance Demonstration (RAD) Conversion Projects
Developers interested in Rental Assistance Demonstration (RAD) conversion projects, which convert older, housing subsidy/voucher projects into more modernized, updated housing, can qualify for:
A 10% developer's fee with tax credits
An an up to 15% developer's fee without tax credits
HUD issued approximately $5 billion in loans for RAD conversion projects last year, making this an incredibly popular option for developers and investors.
Developer's Fees for Market Rate HUD 221(d)(4) Projects
Technically, there are no developer fees for market-rate HUD loan projects. However, developers can use BSPRA in order to cut the amount of equity needed for the project (and to reduce cash at closing.) BSPRA can be calculated as 10% of the project's "hard costs" (usually counting direct construction costs, but not counting land).