Unit Characteristics

Information by State  Print version   In This Section Rents and Income   Unit Characteristics   Rent Projections   Other Revenue

This portion of the Income and Rents tab asks for you to input some basic descriptive information about the units in the project, breaking out the units by:

• Type of Unit (i.e., high HOME units, low HOME units, market rate units, and other affordable units); and
  
• Number of Bedrooms.

Units in a HOME-assisted project can fall in to four categories: high HOME units, low HOME units, market rate units, and other affordable units.

High HOME Units and Low HOME Units include all units acquired, rehabilitated, constructed, or otherwise assisted with HOME funds. For properties with five or more HOME-assisted units, at least 20 percent of those units must be designated low HOME units. The remainder of HOME units may be considered high HOME units. Rent for high HOME units must be equal to or lower than the high HOME rent limits entered in the HOME and Other Affordable Housing Requirements tab while rent for low HOME units must be equal to or lower than the low HOME rent limits.

Note that, on the Pro-Forma tab of the Template, HOME-assisted units begin to charge market rate rents when their affordability period expires.

Market Rate Units are not assisted with HOME funds. Rent for these units is not restricted by the HOME program and can reflect rents for similar units in the community. A project market analysis should be performed and consulted to obtain the best information about achievable market rents.

A project market analysis is a focused assessment of whether a well-defined housing product, on a specific site, will be able to attract residents with the ability to pay - and how quickly. This type of study will explicitly conclude whether the proposed rents for the specific project are achievable. The study should also estimate the project's absorption rate (how quickly the project will attract tenants once it begins operations), turnover rate, and projected vacancy level because of their impact on profitability.

In contrast, a housing needs assessment and a market-wide analysis focus on needs and market trends within the community at large. While useful as background for developers, these types of studies do not usually contain the detailed information necessary to evaluate achievable market rents for a specific project.

Other Affordable Units are included in the Template for projects that benefit from Federal, State, or local programs, besides the HOME Program (e.g., Low-Income Housing Tax Credits). Often, these units carry modified rents to make them affordable. If the project includes non-market rate units that charge rents other than those specified by the HOME program, this portion of the Rents and Income tab asks you to input such information on those units.

Note that, on the Pro-Forma tab of the Template, other affordable units begin to charge market rate rents when their affordability period expires.

The input columns under Unit Characteristics include:

• Number of Units, which is the number of units in the project according to the number of bedrooms. Remember that for properties with five or more HOME-assisted units, at least 20 percent of those units must be designated low HOME units. The remainder of HOME units may be considered high HOME units. The remaining units can be designated market rate and other affordable units.
  
  
• Square Footage per Unit, which is the average number of square feet in each unit. Note that square footage applicable to common areas, such as hallways or community rooms, should be divided proportionately amongst the units. You may need to consult the architect for this information.
  
  
• Gross Rent should be entered on a per unit, per month basis. For HOME-assisted and other affordable units, the gross rent should be equal to or lower than the rent limits entered in the HOME and Other Affordable Housing Requirements tab. The cells in the Within Rent Limit column will indicate "yes" or "no" depending on whether the Gross Rent is within the relevant HOME rent limit or the other affordable housing rent limit.
  
  Also remember that high and low HOME rents and other affordable unit rents include the cost of utilities, as estimated by the utility allowances entered in the HOME and Other Affordable Housing Requirements tab. Market rate units do not include the cost of utilities.
  
  
• Monthly Utility Allowances were entered on the HOME and Other Affordable Housing Requirements tab. The HOME Program and some other affordable housing programs require projects to include utility allowances in tenants' monthly rent. Market rate units do not have utility allowances.
  
  
• Net Rent After Utilities is calculated on a per unit, per month basis. The Template subtracts utility allowances from HOME and other affordable unit rents. Since market rate units do not include tenants' utilities, the Template does not subtract utility allowances from market rate rents.
  
  
• Monthly Rent After Utilities is calculated by multiplying Net Rent After Utilities by Number of Units for each unit type. The result represents the total rent earned for each type of unit in a single month.
  
  
• Annual Rent After Utilities is simply the Monthly Rent After Utilities multiplied by 12 months. The result represents the total rent earned for each type of unit in one year.
  
  
• Within Rent Limit? is a column that checks whether the Gross Rent is within the rent limits you provided for HOME-assisted and other affordable units. The cells in this column will indicate "yes" or "no" depending on whether the Gross Rent is within the relevant HOME rent limit or the other affordable housing rent limit.