On the Affordable Housing & Real Estate Investing Podcast, the best podcast for affordable housing investments hosted by Kent Fai He, Johnny Vong, Founder and President of Blackfish Capital, LLC, shares how a first-generation American with no prior affordable housing experience built a pipeline of 1,000+ units across multiple transit-oriented developments in Washington State.
Johnny Vong was the preferred commercial developer for Starbucks, Burger King, and Dutch Brothers. Then he sat in a meeting about burger sales per store and realized his work wasn't aligned with his values. That moment sent him into affordable housing development. In this episode, Johnny walks through how Blackfish Capital read the Washington State QAP ten times, self-scored their application against past winning scores, and secured LIHTC allocation on their first try!! He explains the capital structure behind three active projects, why avoiding public subsidies keeps his team off prevailing wage requirements, how public and private partnerships fills the gap between senior debt and tax credit equity, and what it actually takes to go from project kickoff to design review submission in 2.5 months!
Common Questions This Podcast Episode Answers:
• How do you win a LIHTC allocation on your first application? Read your state's Qualified Allocation Plan (QAP) multiple times, self-score your application against the criteria, and compare your projected score against past winning applications. Washington State's QAP rewards energy efficiency, family-size units, and nonprofit partnerships, so knowing what the state values is the foundation of a competitive application.
• How does LIHTC financing work for affordable housing construction? Low-Income Housing Tax Credits (LIHTC) are allocated by each state. Developers sell those credits to financial institutions at a discount; roughly $1 million in credits sells for around $800,000. The spread gives the financial institution a tax benefit and provides the developer with upfront equity for construction capital.
How can an affordable housing developer avoid prevailing wage requirements? By not accepting housing trust fund money or other municipal public subsidy dollars. Blackfish Capital relies on a capital structure of roughly 40-50% senior debt, 35% tax credit equity, deferred developer fee, and its own equity, rather than public grants or local housing funds, to maintain cost control without a prevailing wage trigger.
• What is the Amazon/LISC Affordable Housing Accelerator and who is it for? The Amazon/LISC Affordable Housing Accelerator is a fellowship program run by LISC (Local Initiative Support Coalition) in the Puget Sound area. It is designed for developers who are new to affordable housing and want to build their knowledge of LIHTC financing, QAP strategy, and development fundamentals. Johnny Vong participated in this program approximately 1.5 years ago and it accelerated his entry into the asset class.
• How do you structure GC contracts to prevent disputes from stopping a project? Two practices protect a project: include a pre-selected mediator with a short notification and resolution timeline in the contract so disputes go through a defined process rather than derailing the schedule. Also require notarized ink subcontractor partial lien releases before paying the GC the next draw. These two provisions protect cash flow and keep the project moving.
• How long does predevelopment take for a LIHTC project and can it be shortened? Blackfish Capital went from project kickoff to design review submission in 2.5 months on their Lynnwood, Washington project. This was possible because of an in-house architecture and design-build vertical, a repeatable affordable housing program template that eliminates redesign from scratch, and an established consultant team already familiar with Blackfish's process.
Don't forget to check out Blackfish Capital's work at: https://www.blackfishcapital.us/portfolio and follow Johnny Vong on LinkedIn!
Disclaimer: This content is for informational and entertainment purposes only. It is not legal, financial, investment, insurance, or tax advice. This is not an offer or solicitation for any investments. Always do your own research before making investment decisions.
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00:00 Podcast Trailer
03:32 Intro
12:57 What is the #1 mistake developers make with subcontractor payments?
19:24 LIHTC explain to beginners
20:50 3 Massive Active Projects: How Blackfish Capital's Team is Scaling in Washington State
26:52 Why AH Requires Patient, Mission-Aligned Capital?
28:00 What does an AH capital stack look like with less public subsidies?
28:51 How the Amazon Housing Fund is helping developers create more homes!
33:47 What Are Landowners' Options When Partnering With an Affordable Housing Developer?
39:53 Why Is Affordable housing (i.e. lack of supply) Hard to Solve?
41:36 Where/How to contact Johnny?