southeast mortgagee advisory council
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Southeast Mortgagee Advisory Council. FHA Multifamily Underwriter Training May 29, 2013. Valuation. Distinctive "must know" Differences. Effective Date of Value Market Rents Vacancy - Retail or Commercial Space Operating Expenses Replacement Reserves Critical and Non-Critical Repairs - PowerPoint PPT PresentationTRANSCRIPT
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• FHA Multifamily Underwriter Training• May 29, 2013
Southeast Mortgagee Advisory Council
Valuation
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Distinctive "must know" Differences
• Effective Date of Value• Market Rents• Vacancy - Retail or Commercial Space• Operating Expenses• Replacement Reserves• Critical and Non-Critical Repairs• Land Value• Forms• Discounted Cash Flow• Other Differences
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Effective Date of Value
HUD MAP GuidelinesHUD MAP Guidelines Traditional Bank Traditional Bank FinancingFinancing
Hypothetical Condition:
Construction is complete and development is stabilized as of the
effective date of value.
Prospective date of completion and
stabilized occupancy.
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Market Rents
HUD MAP GuidelinesHUD MAP Guidelines Traditional Bank Traditional Bank FinancingFinancing
HUD Form 92273 Rent Adjustment Grid:
Very detailed
Rent grids are typically less detailed.
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Vacancy - Retail or Commercial Space
HUD MAP GuidelinesHUD MAP Guidelines Traditional Bank Traditional Bank FinancingFinancing
Limited to:
10% for 223(f)20% for 221(d)(4)
Market derived.
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Operating Expenses
HUD MAP GuidelinesHUD MAP Guidelines Traditional Bank Traditional Bank FinancingFinancing
HUD Form 92274:
Operating expenses are trended from the beginning of the
expense comparable fiscal/calendar year to the effective date of
value.
Subject's operating expenses are not
trended from expense comparable properties.
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Replacement Reserves
HUD MAP GuidelinesHUD MAP Guidelines Traditional Bank Traditional Bank FinancingFinancing
Market derived. Market derived.
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Critical and Non-Critical Repairs
HUD MAP GuidelinesHUD MAP Guidelines Traditional Bank Traditional Bank FinancingFinancing
Hypothetical Condition for 223(f):
Repairs are completed as of the effective date
of value.
Critical repairs (deferred maintenance) are
deducted to derive an As Is Market Value
estimate.
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Land Value
HUD MAP GuidelinesHUD MAP Guidelines Traditional Bank Traditional Bank FinancingFinancing
Based on the existing or proposed multi-family
use.
Based on the highest and best use of the site,
as if vacant.
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Forms
HUD MAP GuidelinesHUD MAP Guidelines Traditional Bank Traditional Bank FinancingFinancing
Form 92273 (Rent Adjustment
Grid)
Form 92274 (Expense Analysis)
Form 92264 (Appraisal Summary)
Specific forms are not typically required.
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Discounted Cash Flow
HUD MAP GuidelinesHUD MAP Guidelines Traditional Bank Traditional Bank FinancingFinancing
Not permitted. May be applicable.
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Other Differences
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Remaining Economic Life
Remaining Useful Life
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Remaining Economic Life
The estimated period during which improvements will continue to represent the highest and best use of the property; an estimate of the number of years remaining in the economic life of the structure or structural components as of the date of the appraisal; used in the economic age-life method of estimating depreciation.
Source: The Dictionary of Real Estate Appraisal, Fifth Edition, Appraisal Institute, Chicago, Illinois, 2010
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Remaining Useful Life
The estimated period during which improvements will continue to provide utility; an estimate of the number of years remaining in the useful life of the structure or structural components as of the date of the appraisal; used in the breakdown method of estimating depreciation.
Source: The Dictionary of Real Estate Appraisal, Fifth Edition, Appraisal Institute, Chicago, Illinois, 2010
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Vacancy/Collection Loss
It's more than just vacant units!
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Questions?
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Contact Information
Michelle Alexander, MAI, MRICSIntegra Realty Resources - Memphis901.866.4934 ext. [email protected]
Lauren GreenIntegra Realty Resources - Tampa Bay813.287.1000 ext. [email protected]