As seen in
As Seen in ForbesAs Seen in HousingWireAs Seen in MarketWatchAs Seen in Business InsiderAs Seen in Yahoo FinanceAs Seen in Yahoo Finance, Forbes, HousingWire, MarketWatch, BusinessInsider

HUD 223(f) Market Studies

If you're an investor looking to use HUD 223(f) financing in order to purchase or refinance a multifamily property, a Market Study is one of the most important third-party reports that you'll need to have complete before submitting your application to HUD. Market Studies take a close look at many components of a multifamily development in order to estimate its current and future profitability.

In most cases, a Market Study must be no more than 120 days old when submitting to HUD at loan application. Market Studies have two major components:

  • HUD Valuation Analysis: This looks specifically at the target property in order to determine current and potential profitability.

  • HUD Market Condition Analysis: This examines the general condition of the multifamily real estate market in the target property's area. 

HUD VALUATION ANALYSIS 

A HUD Valuation Analysis carefully examines a property in order to:  

  • Estimate the project's market value

  • Assess the property's viability as mortgage collateral

  • Analyze market needs

  • Project potential expenses/estimated income

  • Record current rents (both residential and commercial)

  • Determine whether rents are sufficient to cover:

    • Mortgage payments, including MIP

    • Monthly escrows/replacement reserves

    • Other expenses (including management, maintenance, and utilities)

HUD MARKET CONDITION ANALYSIS 

The other major segment of the Market Study, a Market Condition Analysis, looks more at the general health of the multifamily real estate market in the project's area. This helps HUD determine the property's short and long-term economic viability. The Market Condition Analysis looks at factors including: 

  • Specific market conditions that could affect the project's profitability

  • Geographic boundaries/characteristics of the market area

  • Estimated absorption time for the project's units

  • Supply and demand for multifamily real estate units in the area