Offer math

What is a Section 8 property worth, at contract rents and at market?

Put in the property's assisted and unassisted units and their rents. You get net operating income and value twice, at today's contract rents and with contract rents at the market level you enter, plus the purchase loan each one supports.

Units and rents

Total units

Assisted units under the contract

Market rent per unit, per month ($)From comparable unassisted buildings, or the area's Fair Market Rent as a rough stand-in.

Contract rent as % of marketHUD's rent-to-FMR ratio for the contract is a first estimate.

Rent on unassisted units, per month ($)

Vacancy and loss (%)

Costs and price

Operating expenses per unit per year ($)Include management, taxes, insurance, payroll, utilities.

Replacement reserves per unit per year ($)

Cap rate you'd buy at (%)

Asking or offer price ($)

New purchase loan

Rate you are being quoted (%)

Amortization (years)

Max loan-to-value (%)

Min debt service coverage (x)

The filled-in numbers are a made-up property, and the loan terms are examples, not quotes. Replace them with yours.

Two ways to read the rent roll

	Contract rents today	Contract at market
Collected income	-	-
Net operating income	-	-
Value at your cap rate	-	-
Cap rate at your price	-	-
Max loan at your price	-	-
Limited by	-	-
Cash you bring	-	-
DSCR on that loan	-	-

Turn on JavaScript to run the numbers, or work them by hand with the method below.

How the numbers are worked

Contract rent per assisted unit is market rent times the percentage you enter. Collected income is assisted units at that rent plus unassisted units at their rent, times 12, less vacancy. Net operating income takes off operating expenses and reserves per unit.

The second column sets contract rent equal to market rent and changes nothing else. Value is net operating income divided by your cap rate.

The loan is the smaller of your price times the loan-to-value and the amount whose annual payment, at the rate and amortization you enter, the income covers by your minimum coverage ratio. Cash you bring is price minus loan, before closing costs.

What the second column assumes

That contract rents get reset to market. That happens only at renewal, only if the property qualifies, and only to the rents a rent comparability study supports. HUD's renewal options are covered in what an expiring contract tells a buyer.

If you underwrite to the second column, you are paying today for something HUD decides later. The safer way to price is off the first column, with the gap as upside you may or may not get.

Find contracts paying under Fair Market Rent on the deal screen.

Next step

Send this deal to the desk

Janover Capital arranges acquisition financing for apartment buildings, including properties with project-based Section 8 contracts: agency, HUD, bank and bridge debt. Send the deal and a person at the desk replies. Your calculator inputs go with it.

Commercial loans for 5+ unit properties only. Not a commitment to lend.

The property

City

State

Units

Price or expected price ($)

Existing debt

Where the deal stands

What financing are you looking for?

You

Name

Phone (optional)

Apartment buildings you own or have owned

Anything else the desk should know (optional)

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Questions people ask

How do you value a Section 8 property?

Like any apartment building, on net operating income, but with two incomes to test: the contract rents HUD pays today, and the rents the property might earn if contract rents were reset or it left the program. The calculator values both and shows the gap.

What does the rent-to-FMR ratio tell me?

HUD's file shows each contract's rent as a percentage of the area's Fair Market Rent. A contract at 80% pays about four-fifths of FMR. It is a rough first read; HUD sets new contract rents from a rent comparability study at renewal, not from this ratio.

Can a buyer count on market rents?

No. Contract rents change only at renewal and only under the option the property qualifies for, and tenants keep protections if an owner leaves the program. Treat the market-rent column as the upside case, not the base case.