Multi-Family Acquisition: Unit Mix

Purpose

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

Management Summary Override

Directly above the Unit Mix table is the Management Summary – a condensed version of the Unit Mix which allows the user to enter general assumptions about the units of a property. In order to use the Management Summary, the user must select “Y” from the dropdown to the right of “Override?”. Once “Y” is selected, the user can simply enter the number of Units, # of Occupied units, total Square Feet, Occupied SF, and total Gross Potential rent (monthly). By default, the model uses T-12 Actual data to calculate the monthly Actual Rent. This can be altered using the dropdown in the rightmost column of the Management Summary Override. The user can select periods of data as recent as T-1 up to T-12, or alternatively, select “BROKER OM” which will use the Gross Rental Income that has been entered by the user in the BROKER OM column of the Pro Forma Assumptions section.

Note: The user can toggle back and forth between the Unit Mix table and the Management Summary Override using the “Override?” dropdown without the inputs of either table being altered/deleted.

Unit Type

The first column of the Unit Mix table is used for categorizing the property’s Floorplans by Unit Type. By default, the model includes the following Unit Types: 1 Bdrm, 2 Bdrm, 3 Bdrm, 4 Bdrm, and Studio. The user has the option to alter the names of these types within the Unit Types table (to the right of the Unit Mix table). Up to 20 total Unit Types can be entered into this table. The names of any Unit Types entered in the Unit Types table will become selectable options within the dropdowns of the Unit Type column of the Unit Mix table.

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Existing Rent Roll

Within the Existing Rent Roll section, the user must enter the Current Rent/Unit for each floorplan of the property. The Current Rent/Unit values will be used to calculate the rent PSF/Month, the total Rent/Month, and the total Rent/Year. The calculated current Rent/Year will be used (subject to the Organic Rate Growth input entered for Year 1 in the Income table below the Unit Mix) in the calculation of the Gross Rental Income for the Year 1 Pro Forma statement.

Post Renovation Rent & Reno Downtime

The Post Renovation Rent section of the Unit Mix table allows the user to enter the expected rent premiums to be achieved after renovations, as well as disburse renovation of the units across the first 3 years of the analysis. If any units are entered in the # of Units Reno’d columns, the user must enter the number of months that the renovation of a unit is expected to take in the Avg Reno Downtime column. The inputs will be used in the calculation of Average Occupancy (based on down units) in the Income table and Down Units (For Renovations) loss in the pro forma statement.

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Note: The user may enter 0 for # Units Reno’d or model renovations for any number of units which is less than the total units of that floorplan, however, If the user enters values for # of Units Reno’d that, in total, equal more than the total number of units for that floorplan, the model will show an error message to the right of the Avg Reno Downtime column which states: “TOO MANY RENOVATED UNITS”.

If the Avg Reno Downtime for all Floorplans is expected to be the same, the user can select “Y” from the “Use Reno DT Override?” dropdown (above the Post Renovation Rent columns) and simply enter the expected renovation downtime for each of the units.