**Purpose**

The purpose of this post is to outline the key functions of the Income Growth Assumptions in CREModels multifamily acquisition models. These features should be universal across all acquisition models unless noted otherwise.

**Overview**

**Market & Current Rent Growth**

The Market and Current Rent Growth inputs allow the user the enter the expected Gross Market and the Gross Potential Rental Income growth for each year of the analysis. The growth on the Market Rent is used to calculate the Gross Market Rent for each analysis year. The growth on the Current Rent is used to calculate the Gross Potential Rent for each analysis year.

**Annual Turnover**

The Annual Turnover section includes two different groups of inputs: Downtime and Annual Turnover (%). The Downtime input is based on the expected months of downtime for each vacant unit from unit turns. The number of months will be used to calculate the rent loss from such turnover. The user may also input the percent of units which will be turned over in each year of the analysis. The rent loss from turnover thus is calculated using the market rent, the percent of units in turnover and the length of time such units are in turnover. The downtime input is also used to calculate average occupancy, as explained below.

**Physical Vacancy %**

The Physical Vacancy % inputs allow the user to enter the expected Physical Vacancy (%) for each year of the analysis and allows the user to input select the rental income type that the vacancy calculation is based on (% of GRP or % of Net Rental Income). The model then tracks occupancy on a monthly basis. For example, if the vacancy is at 5% but the occupancy for a given month is 97%, then the model only takes 2% off the top instead of the full 5%. If the occupancy is below 95%, then vacancy will not be calculated at all for that month. The model then uses the monthly vacancy rates to calculate the annual vacancy rates.

**Bad Debt % of GPR**

The Bad Debt % inputs allow the user to enter the expected Bad Debt (%) for each year of the analysis and select the rental income type that the Bad Debt calculation is based on (% of GPR or % of Net Rental Income). During each year of the analysis, Bad Debt will be calculated as the product of the entered values for Bad Debt % and either Gross Potential Rental Income or the Net Rental Income.

**Average Occupancy**

Average Occupancy is based on down units from both renovation downtime and the annual turnover downtime as entered in the Annual Turnover downtime input. Average occupancy is provided to show the effect of future renovations and unit turns on vacancy within the property. Average Occupancy only accounts for vacancy from down units due to renovations and unit turns (does not include physical/economic vacancy).

*Note: Average Occupancy will only calculate vacancy from renovation units for which an Avg Reno Downtime value is entered in the Unit Mix. If values are entered for # Units Reno’d but there are no values are entered for Avg Reno Downtime, these units will not be included in the calculation of Average Occupancy (based on down units).*