HUD Rent Comparability Studies

HUD Rent Comparability Studies

HUD rent comparability studies are used to determine rent for Section 8 apartment units and in conjunction with the HUD “Mark to Market” program.

Requirements for preparing HUD Rent Comparability studies are voluminous and strict.  HUD Rent Comparability Studies require adjustments for a large number of factors including:

• Number of bathrooms;
• Number of bedrooms;
• Square feet; In many cases, a unit 10% larger than another will not obtain a rental rate that is 10% higher.  Size in excess of what is typical for a unit in a market often generates only a modest level of additional rent.
• Year built;
• Condition; Property condition involves many factors.  These include the exterior appearance of the property including landscaping and the condition of the unit interiors.  Residents are often more concerned with the condition of the unit interiors than the condition of the exterior.  The condition of amenities such as the swimming pool and play area for children also impact market rent.
• Appliances;
• Amenities.

HUD Rent Comparability Studies include a detailed spreadsheet for each floor plan in the apartment complex.  When estimating market rent for most apartment complexes the appraiser or market analyst has the benefit of considering both rent comparables and recent arm’s length leases at the subject property.  However, since there are no arm’s length lease transactions at many apartment complexes with HUD residents, the appraiser is limited to considering data for the rent comparables (adjusted to the subject property). Selecting rent comparables is a key element of effectively preparing a rent comparability study.  In some situations, the difficulty of correctly selecting rent comparables is compounded by a dichotomy of Section 8 properties and market rent properties.  The Section 8 properties are often in better condition than the market properties.  This makes it difficult to obtain rental data from true comparables within the immediate vicinity of the subject property.  Having this data available (i.e. no arm’s length leases at the subject property) adds to the challenge of preparing HUD Rent Comparable Studies.  (Appraisers have an idiom that “the best comparable is the subject.”)

O’Connor & Associates has prepared hundreds of HUD Rent Comparability Studies, in addition to hundreds of HUD MAP market studies and appraisals and HUD Mark to Market appraisals.

O’Connor & Associates is the largest independent appraisal firm in the southwestern US and has over 40 full-time staff members engaged full-time in valuation and market study assignments.  Their expertise includes HUD rent comparability studies, HUD MAP market studies and appraisals, HUD Mark to Market appraisals, feasibility studies, valuing real estate, business personal property, business enterprise value, purchase price allocation for businesses, valuation for property tax assignments, partial interest valuation, estate tax valuation, expert witness testimony and valuation for condemnation.  They have performed hundreds of HUD rent comparability studies.

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