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ProCash, an Economic Model for Income Properties

Special Inputs for Housing

Financial analysis of low and moderate income housing has several important differences from commercial or market based financial analysis.

1) While in commercial projects rent is determined by market conditions, rent for low and moderate income housing is developed from an assessment of costs involved in developing and operating housing and appropriate assumptions or regulations about acceptable levels of profit, return on investment, or debt service coverage. Basic rent in ProCash© is normally input with AVI[40]. If AVI[40] is left at zero and development costs, operating costs, financing terms, and acceptable profit and debt service coverage levels are entered, then ProCash© will determine rent needed. If unit mix is entered, then ProCash© will determine rent for each unit type.

2) Similarly, the mortgage amount is often determined as a function of cost rather than as a function of capitalized value. Mortgage amounts may be specified as decimals of cost (or value). ProCash© will then determine the mortgage amount.

3) It is important to consider different family sizes, different unit sizes, and household income limitations. Household income limitations involve matching family size to unit size, the cost of tenant paid utilities, the expected percent of household income to apply to housing costs, and median income in the area. ProCash© includes inputs and calculations for these purposes. Each row of UNITMIX represents a different unit type or market segment.

The inputs shown below are all the inputs necessary to produce a complete syndication analysis of a project financed by means of the Low Income Housing Tax Credit.

This is even a somewhat complicated financial structure with land retained by the non-profit developer and leased to the project. It includes a conventional first mortgage, a low interest second mortgage, credit enhancement, and points.

With a small amount of additional input it could include analysis by type of unit and comparison with household income (use of the input UNITMIX).

AVI[101]Square feet/unit (affects AVI[13]) 339  3
AVI[102]Utilities allowance (for rent formula, AVI[3] periods) 339  3
UNITMIX[;1]Apartment mix: Bedrooms per unit 339  3
UNITMIX[;2]Apartment mix: Number of units 339  3
UNITMIX[;3]Apartment mix: Square feet 339  3
UNITMIX[;4]Apartment mix: Rent per month 339  3
UNITMIX[;5]Apartment mix: Tenant utilities estimated monthly cost 339  3
UNITMIX[;6]Apartment mix: Income limit 339  3
UNITMIX[;7]Apartment mix: Persons per family 339  3
AVI[57]Financing subsidy or sales (see AVI[124]) 339  2
AVI[124]Who Provides Financing Subsidy (see AVI[ 57]) 339  2
AVI[103]Mortgage Limit per Unit $ (0 Means Don't Use) 339  
AVI[107]Portion of Household Income for Rent 339  
AVI[109]Mortgage Interest Rate After Subsidy 339  
AVI[139]Credits Against Vacancy Loss (HAP) 339  
AVI[140]Period to Start Credits Against Vacancy Loss (HAP) 339  

viewtypecase studyviewfile sizecomplexityhelp#comment
InputsShelter School Renovation (L&H)(unit mix) 3377 38 339 
Turnkey Syndication : LIHTC(unit mix) 3689 53 339 
Brandon Villas of Tampa (market housing)(unit mix) 3917 82 339 
Windsong Housing Associates : LIHTC(unit mix) 4286 92 339 
BHP II Limited Partnership : LIHTC(unit mix) 5609 197 339 
Tower Point Apartments (demo)(unit mix) 5611 240 339 
Tower Point Apartments (detail)(unit mix) 5613 240 339 
Conv. 9% FAHP 3% 25 Years: 13 Areas (housing)(unit mix) 6928 343 339 

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