How to Test Financial Soundness of Rental

ljj 28.t 333.63 22h

,:"7 ,' HOW TO TEST , I FINANCIAT SOUNDNESS Otr BENTAI HOUSING PBOPERTIES

; i :: r,,r-r e-r ;r i H o'i sittg Administr*tion t tibmry

Federal HousLng Adminlstratlon {j,\ d, !r FllA Fone No. 2lr8lr

I I t,1

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+ '7.7 8' I ; i 4:,, ,'6! r2zL WWHAT AN INVESTOR MUST KNOW TO DEVELOP A SOUND RENTAL HOUSING PBOJECT...

Conceiving and developlng a rental proJect ean be costly and complicated, because of the number of factors rhlch are inherent ln this type of property. On the other hand, there is an orderly economical approach whereby the soundness of a proposal can be ex- arulled and tested at its inceptlon before rnore than the barest nlnl- num of eryenses have been incurred.

Orly a minjmum of information is needed to test the feasibility and soundness of a proposal wlth sufficient accuracy to reach a coD- clrrslon, elther that the proposal has sufficient possibilities to rarrant proceeding with its development, or that likelihood of developj-ng a sound project is too remote to warrant spending further tlme and expense on i-t. Purpose of The Booklet

This booklet has two purposes, flrst, to set forbh the mini:mrm lnformation required to test the soundness of a proposed rental housing project without regard to financing or the ty'pe of financi.ng and, secondlJrr to provide information whereby proponents may estimate the maxjmum insurable mortgage'Iike1y to be obtained. The test of the soundness of an investment, in a rental hou.slng proJect is comparative\y siruple and easily understandable, and appJ-ies equally to the point of vlew of investors and lenders. a The value of rental properties arlses from their ability to return the capital invested as well as pay a return in the for:n of lnterest on the investment at a rate set by the competition of capital seeking investment. The probl.ems of management and reLative risk involved in various tlpes of investments are prlme factors ln establishlng the rate of return the narket demands. If the value of a rental project equals or closely approximates lts cost, it is a sound transaction. ff the costs of producing and operating a property are not properly related to the net income whlch can be obtained from it, the proposal will not be attractive to elther investors or lenders.

Irltrat Makes Value?

Creating a rental project is analagous to setting up a menu- facturing and merchandising operation. The type of information needed to corne to a decision as to whether or not there is an oppor- tunity to enter the rental field with reasonable prospects of estab- lishing a successful, profitable operation is likewlse analagous. z-l-.47ust**-g The first question that arises rel-ates to potential demand for the product. In the case of rental housing, the question is: ltlhat type and size of faniJy unit is in greatest demand? The needs and preferences of loeal markets are usually well known generally and if they are not, the infornation is readily obtainable from reliable sources who are well inforrored on the subJect. Knowing the demand, with respect to tlpe and size, the next question is: 'v'lhat servi-ces must be furni-shed to satisfy the needs and desires of the market for these units? Having ascertained the needs of the market, the vital questlon of the pri.ce bqyers will pay for the product, or the senri-ces m.r,st be answered. In the case of hor.r.singrthe price the market will pay for a given type and size of family unit will vary rith the desirability and popuJ.arity of the location of the proJect. So the ne:rt step is to fi:rd out whlch locations ln the corornunity or city are now and wiJ-l contirnre to be most popular and in greatest demand by fanilles seekj,ng aceornnodations of the tppe and size it is proposed to bui-Id. The price that can be obtained places a definlte llmitatlon on the a:nount that profitably can be spent on producing and dlstri- buting the product. So the ne:cb problem is to estimate the cost of producing the product or propertS as well as the cost of dis- tributing the product or, in this case, operating the project. To drop the anaIory to manufacturlng and revert to rental housing proJects, investors contemplating productj-on of a rental project, being pnrdent and desirous of proceeding soundlye must locow or ascerLain:

1. What ttr1pe and size family unit ls in greatest denand?

2" What serrrices mu,st be furrrished to meet the needs and desires of the market seeklng these units?

3 a tlhat is the maxiruum rental obtainable? lr. llhere are the parLicular locations in whleh these units rr111 corunend and continue to corunand these rna.xirnuxrt rentals?

5, How rmrch will it cost to acquire the land and produce the property?

6. How rmrch lriII it cost to operate the property?

7. Llhat rate of return on capital does the rnarket demand? The i-n.f'omation assembled at this point relates to demand for rental units, cost of produci.ng and opereting a proJect, the lncone it rrlIt

2 produce and an appropriate capitalization rate. Ttris infor:nation is essEntidl to testing the feasibility of a rental proJect since the soundness of a project is almost soJ.e1y dependent upon its value equalling or closely approximating i-ts cost. Value can equal cost providing certain relatlonships e:dst between the cost of the property; the amount and duration of the rents the market rriJ.l pay; the e)penses of operating the property; and the rate of retrrrn demanded by investors to induce them to invest their capital in rental proJects. Investors, archltects and builders should Isrow what thesg relationshi-ps are, and understand them, jn order to design str:uc- trrres which are economicaL to constnrct and maintain, and to seLect sites where the properties wiIL attract and hold the tenants at the conternplated rental.

Graphic Charbs CalcuLations To simplif! determination of the effect of the various rela- tionships of the significant elenrents in developing proJects the vaLue of which wj-IL closely approxlmate or equal costl Federal Housi.ng Adrninlstratj-on has developed an original series of graphic char-Us. Ttrrough the use of these charts, it is possible to readlly determjne the rel-ationships that rnust exist between the cost of produclng the rental project, gross rent obtainable, operating expenses, and net rents. Use of the charts perrnits numerous assur@- tions to be made, and thei^r effect on the end result found with a nintmm of effort and celculation. The income a proJect will produce at the rentals proposed, if it were 10Of occupied and there were no eollection losses, is Gross Income a Since both vacancies and collection losses must be anticipated, rentals actual.ly collected will be less than the estinated Gross Income. ?he allowance for vacancies and collection allowances used in preparing the chart was assumed to bd |fr of the Gross Income. Reducing the Gross Incorne 7% provides an estiruate of the rentals actually collected. This figure i.s referred to as Effective Grose Income.

Operating E4penses are deducted frorn Bffective Gross Income, and the remalnder ls Net Income. F,stfurrates of value of rental properties are derLved through capitffi ome the properties will produce.

Beference to operatlng expenses ln this dlscussion wiJ-} be e>cpressed as percentages of Effective Gross Income. Reference to an operating e4pense ratio of l+Oil Eeans tlut operating expenses are

3 estLnated to be l+O% of the estimated Effective Gross fncome. It is i.nportant to note tiris to avoid miscaffi whicb would occur if the operat,ing ea?ense ratlo were applled to Gross Income and not to Effectlve Gross Income, wirich is |il less rrnder the stated assumption.

BELATIONSHIP OF INCOUB TO EXPENSES

Chart L illustrates the fact that the amount of gross monthJy incomE i@red to provide a glven net incorne wiIL vary with the elpetrse ratio. Higher expenses will require larger gross rentals, whereas lower erpenses will produce the same net return fbom lower gross rentals.

Through use of Chart 1, where the erqpense ratlo is lcrorm you can determLne the month\y gross rentals requi-red to produce a flrst year net income of either $ or 7%. For exaq>Ie, where the eryense ratio fs l+OS folIow the line upward from the figure lrOS to the point where it crosses the line marked u7% Net Returnrt. Iay a rrrler horl- zontally ecross this polnt and lt rill cross the outer }Lnes of the chart at a polnt sllghtly under $trOlO, whieh represents the nonthly gross rents bn a property costing $10OrOOO. By moving the decimal point three places to the 1efU, the do]lar figures used on the chart can be changed to percentag€so In the, illustration abovel it shows that the monthly gross rent required to produce a 7% net return where the expense ratio is l+0, is 1.05fi of the cost of the property. Conversj-on to decirnals permits the determi-nation of the nonttrJy gross rent required to produce a 6| ot Tf, net return on any cost at variow erq)ense ratios and thus adds flexlbility to the use of the chart. fhe effect of the expense ratio on the gross rent requlred to produce a net of ?fi on a cost of $1OOrOOO is striking!,y lllustrated by this charU. A gross rent of a trifle under $9OO per month riLL return 1fi net on $1OOrO0O nith an oq)ense ratio of 3O/.. A gross ruonttrly rental of a Little less than $1r15O riff be required to produce a |fi neb incone on $lOOrO0O if t,he ercpense ratio ls b|fi, and between $tr55O and S11600 gross will be requlred to produce the same net return on $100roo0 lf the e)q)effres nur 6ol.

The financial lmpact of failing to design a building with an eye to econor5r of operatlon and maintenance ls clearlJ presented by Chart 1. Fbilure to design and build rith operation and maLntenance costs in mfud could result in produclng a project almost certaln to falI ln a given location. Horever, I\r11 r:nderstanding of the effect of these erq)enses, would permit designing a project which could succeed on the same site, since the rentals could be reduced lf operetJ.ng and rnaintenErnce costs were reduced. lr MONTHLY GROSS RENTS REQUIRED TO PRODUCE FIRST YEAR NET RETURNS oF a*x AND T% (AFTER AN ALLowANGE oF T % FOR VACANCIES AND COLLEGTION LOSSES) AT VARIOUS EXrENSE RAT los oN A pRopERTy cosr rNG $ roo,ooo

MONTHLY MONTHLY GROSS RENTS GROSS RENTS $r6oo $ t600

/ I 500 r 500

t400 / 1400

r 300 t300

I 200 r20 0

{ r roo iloo

tooo rooo

900 900

800 I I I I I 800 3070 35% 4O?" 457o 50% s5% 607" EXPENSE RATIO

iEDERAL HOUSING ADMINISI'RAiICN DrvlSlON OF RESEARCH AND SIATTSTICS CHAR T 1 ACTUARIAL AND FINANCIA!, SECTICTI ( RETATIONSHIF BETWEEN COST PEB FAMILY UNIT AND MONTHTT GROSS BENTALS AT VARIOUS EXPENSE BATIOS Chart 2A is more versatlle in lts use than Chart 1 because by assr.rming a cost per family unlt and an e4)ense ratio a trrler can be lald across these two points and where the ruler crosses the colunn headed "Monthly Gross Rental per Family Unitt'e will be found the monthly gross rent required to produce a 7% nel return on the urit cost assumed, at the expense assumed. Chart 28 provides the sa^ne i-nformation on the assulnption of a 5$l retrrrn.

For example, a unit costfng $7rO@ having an expense ratio of 3OS will require a gross monthly rental of $63 to return 7% neb on the cost. Btrt if the e:rpense rati-o was 6ofr a gross monthly rental of a }ltt1e more than $ILO woul

Chart 24 also can be used to deternlne the maxiarum cost per fanrily unlt on which a given monthly gross rental riII net a ?l returrr at various e:(peff,e ratios. By placing a nrler on the $70 gross rental line and across the 30f erq)ense ratio line it will be found that the cost per faniJy rmlt cannot exceed $?rB@ Lt a 1fi net return is to be received.

Uslng the same gross rental and a 6fr expense ratio it w111 be seen that the unit cost cannot exceed a figure of just under $br5OO and provide a net return of Tfi,

A thfud use of Chart 2A can be made by placlng a ruler across the charb flom an assumed monthly gross unlt rental to an assumed cost per family unit and finding the expense ratio at the point the rrrler erosses the E:qpense Ratio line. The exlgense ratio at this potnt ls the maxlmm that can be used to produce a 7% net retr:rn on the assr:med cost at the rental assumed.

We have seen nou why costs, rents and e:penses mrst be consl- dered JolntJy. It ls also evident that if constmction costs are reduced to a polnt uhich undu\y increases the ocpense of operating and maintaining a proJect, rents must be obtained that are beyond those the rnarket 1111 pay for the accormrodations and amerdtles tJre proJect offers. these relatlonships are nathenatical and i-umutable and appJy writ'ersal\y to all rental proJects at aIL tines r:nder the assnrytlong stated. Charbs 2A and 28 setre the practical purpose of definlng certaln lirnitatlons between costs, rents and e:rpenses rlth.J-n rhlch builders and archl-tects must work to produce proJects that yiLL yleld a net return of |fi or Gfr on the total iavestment.

6 I MONTHLY GROSS RENTS REQUIRED TO PRODUCE FIRST YEAR NET RETURNS OF 6Yz% TO 8ys % (AFTER AN ALLOWANCE OF 7% FOR VACANCIES AND COLLECTION wssEs) AT VARTOUS EXPENSE RATTOS ON A PROPERTY COSTTNG $ IOO,OOO MONTHLY GROSS RENTS MONTHLY GROSS RENTS $ 2,200 $ 2,200

2,loo I 2,loo

2iOOO 2,OOO

l,9oo

l,goo l,8oo

rToo l,7oo

I ,poo l,6oo

l,600 l,5oo

l,4oo l,40o

l,3oo l,3oo

1 aritoo l,2oo

t, oo t,loo

l,ooo l,OOO

900 900

800 800 30"/" 35% 40% 45% soy" 55% 60% 65y" EXPENSE RATIO

T FEOERAL HOUSIl{6 CHART AilO REV. MAft. 1955 ACTUARIAL AtID FIilAt{CIAL SECTIOT NECESSARY RELATIONSHIP BETWEEN COSTS PER FAMILY UNIT AND MONTHLY GROSS RENTAL PER FAMILY UNIT MONTHLY RENTALS GROSS' TO PRODUCE A FIRST YEAR NET RETURN $30 OF 7% ON GOST (AFTER AN ALLOWANGE OF 7% FOR VACANCIES AND GOLLECTION LOSSES) AT VARIOUS EXPENSE RATIOS 35

tt COST PER FAMILY UNIT fre,ooo 60

63 I r.ooo

ro,ooo

RATIO 9,OOO Jrt 80 i5 85 8,000 1O tS 90 Co 7,OOO

Ca 95

69 6,O@ roo

to5 3l,o@

4,O00 ll5

+ooo 120

mll a,@o

a€uq&|@reDilEn^nil qvlsjq e @{o Snttltrcs CHART 2A lcT4itt( & aliffit! stFr

7 NECESSARY RELAT]ONSHIP BETWEEN COSTS PER FAMILY UNIT AND MONTHLY GROSS RENTAL PER FAMILY UNIT MONTHLY GROSS RENTALS TO PRODUCE A FIRST YEAR NET RETURN 130 oF 6l% ON @ST (AFTER AN ALLOWANOE OF 7% FOR VACANCIES AND COLLECTION LOSSES) AT VARIOUS EXPENSE RATIOS 35

rlo

55 COST PER FAMILY UNIT tr2.o@ 60

65 il,o@

lo,o@

75 EXPENSE RATIO sr 9,0oo qt so

10 85 g,ooo tS

56 90

7,000 Sg

95 qo

6,O@ 100

ro5 5,0@

4,OOO

rt5

I,OOO r20

t25 2,0@

qvruEffiEryrtrEl6euL&BgrEruu CHART 2B &rtm[oairu&nq o/ BELATIONSHIP BETWEEU ESTIMATES OF VALUE AND CAPITALIZATIOI EATES

Another relationship that has a most fupoztant bearing on producing a proJect having a value equal to, or cLose\y approxl- natingrcost ls the capitalizatlon rate e4pressing the rate of return on capital demanded by the market. Chart 3 illustrates the fact that the same net lncome (?tr on coEf,IFfirst year of lnvestnent) produces dlfferent araonntg of capitalized value when different capitallzation rates are used and rhen the perlod for whieh the income is capitalized yerles. Assuare a capftalization rate of, 6\fr, totJow up Chart 3 aLong the Ilne marked 6*/ lo the point where it crosses the Ilne narked il50 Jrearstt. Place a nrler horizontally across the line at thls poi-nt, and lt will cross the colunns headed rrCapitalized Valuerr at a point sllghtly in excess of $toorOOo. This indicates'that the capi.tali.zed value of the returrns from a property costing S1OOTOOO ls slightly ln excess of the cost under the condltlons assuned. If, however, because of greater risk, a net return of 8/ would be demanled by investors, the capitalized value of the re- tnrns would be between B0 and 85 thousand dollars, or 15 to 20 thor:sand dollars less than the cost of $1OOTOOO nnder the assrued conditions. By moving the decinal point 3 places to the lefU in the columr headed trGapitalized Yaluerr they become percentages. In the two ilIustrations above, the capitalized values are slightly jJl excess of LOOl of replacement cost in the first instance, and ln the second instance somethlng between B0l and 85fi of replacernent cost. The appropriate capitalization rate to be used in appraising j-s the rate at whj-ch capital in the market seeks investments ln rental houslng proJects of the $pe conterplated.

10 MONTHLY GROSS RENTAL PER FAMiLY UNIT S2s NEGESSARY RELATIONSHIP BETWEEN COSTS PER FAMILY UNIT AND MONTHLY GROSS RENTALS TO PRODUGE A FIRST YEAR NET RETURN 30 OF 7Y4 % ON GOST (AFTER AN ALLOWANCE OF 7% FOR VACANCIES AND 35 COLLECTION LOSSES) AT VARIOUS EXPENSE RATIOS 40 cosr RANGE; $J,ooo - $ t1,ooo 45 RENTALRANGE: $ZS- $ZqS 50 COST PER FAMILY UNIT 55 $ r3,ooo 60

r2,@o 73

il,000 90

EXPENSE RATIO 95

,ot ro0 Jg ro, ro5 9q ilo

99 il5

Sp t20 9 r25 Sg r30

6p r35 8,OOO t40

65 r45

150

7,OOO r55

t60

r65

6, r70

t75

r80

5,OOO r05 r90

r95

200 4,OOO 205

2ro

215 3,OOO 220

225 zto

235 HOUSING AOUIXISTBATION 'EDERALOIVISION Of RESEARCH Af,D STATISTICS ACTUARIAL ATO FINANCIAL SEATION CHART 2C 240

246 MONTHLY GROSS RENTAL PER FAMILY UNIT NECESSARY RELATIONSHIP BETWEEN COSTS PER FAMILY UNIT AND - $ilo TO PRODUCE FIRST YEAR NET RETURN MONTHLY GROSS RENTALS A l il5 OF 7h % ON COST (AFTER AN ALLOWANCE OF 7% FOR VAGANCIES AND : r20 COLLEGTION LOSSES) AT VARIOUS EXPENSE RATIOS j r25 cosr RANGE, gtz,ooo - $tg,ooo : RENTAL 335 r30 RAN6E, $ ttO' $ : r35 GOST PER - FAMILY UNIT j r40 $ t8,0oo : : t45 . : t50 : ;- 155 EXPENSE RATIO . -i t60 3oz . r65 rzooo : 3O a t70 : : t75 :: 4o r80 : t85 : - 190 45 r6,000 r95

200

5o 205

2ro

?t5 55 ?20 r5,ooo 225

230

6o 235 240

245 r4,000 250

65 255 260

265

270

r3,ooo 2?5

280

285

290

?s5

300 r2,ooo 505

3ro

515

320

325

350 CHART 2O Ato FriAtcraL $c10t 335 MONTHLY GROSS RENTAL NECESSARY RELATIONSHIP BETWEEN COSTS PER FAMILY UNIT AND PER FAMILY UNIT MONTHLY GROSS RENTALS TO PRODUCE A F]RST YEAR NET RETURN $ 25

OF 63/C % ON COST (AFTER AN ALLOWANCE OF 7% FOR VACANCIESAND 50 RATIOS COLLECTION LOSSES) AT VARIOUS EXPENSE 35 cosr RANGE. 9 3,@O - 6 /3,OOO RENTAL RAN6E,. $ zs - $ zzs 40 COST PER 45 FAMILY UNIT $ t3,ooo 50 55

65 r2,ooo 70

80 il,ooo 85 EXPENSE RATIO 90 ,Ot 95 Jg ro,ooo roo 7g r05 eC ilo 59 9,OOO il5

C6 r20

r25 69 8,OOO r30

6g r35 r40

t45 7,OOO r50

r55

r6u 6,00O .65

t70

r75

5poo r80

r85

r90

4,OOO r95

200

205

3,OOO 2to 2t5

220 225

FEOERAL HOUSING AOMIft ISTRATION OIVISION OF RESEAROH AtrD STATISTICS CHART 2 D MONTHLY GROSS RENTAL FAMILY FAMILY PER UNIT NEGESSARY RELATIONSHIP BETWEEN COSTS PER UNIT AND $ too MONTHLY GROSS RENTALS TO PRODUCE A F]RST YEAR NET RETURN ro5 OF 63/A % ON COST (AFTER AN ALLOWANCE OF 7% FOR VACANCIESAND il0 COLLECTION LOSSES) AT VARIOUS EXPENSE RATIOS ll5 coST RAN6E, $|?,OOO - $\?,OOO RENTAL RA\V6E: $ tOO - $.ltS r20 COST PER FAMILY UNIT t27

$ r8,ooo - 130

r33

t40

EXPENSE RATIO r45

3ou r50

r7,ooo -- t55 3s r60

t65 4o t7.o

175 45 t80 r6po0 - 185

5O 190

r95

200

'50 eo5

r5,ooo - ?to

2t5

220 60 225

230

r4,ooo - 235 65 240

245

250

255 - 260 r3poo I 265 270

?75 l l 280 l 285 ,l 2,OOO 290

295

500

505

3ro FEOERAL HOUSITG AOTITISTRATIOX olvlsDn * nEgRcH ilo slTrSTB CHART 2D rcTmr[ 0D frurcr[ scIril 315 CAPITALIZED VALUE OF NET INGOME FROM A PROPERTY GOSTING $ IOO,OOO ASSUMPTIONS: (I) AVAILABLE MARKET PRICE OF SITE EQUAL TO IO% OF COST OF PROPERTY (2) REMAINING ECONOMIC LIFE OF BUILDING AT INDICATED PERIOOS (3) NET RETURN ON GOST FOR FIRST YEAR OF INVESTMENT AT 7% (4) NET INCOME DEGLINING IN AGCORDANCE WITH TABLE TI PREMISE,FHA UNDERWRITING MANI.JAL cAPlrAuLlzED (s) NET rNcoME GAprrALrzED AT TNDToATED RATES CAPITALIZED VALUE $ t2o,ooo $ r20,ooo

EOONOMIC L ilo,ooo 50 I lo,ooo

e) 45 \ \ loo,ooo 40 too,ooo \ -.1 qt I 9O,OOO 9O,OOO

8O,OOO I 8O,OOO

sEe -ioQ Ee3 7O,OOO 7O,OOO Dor -i!Dao 6frE aDZ =ro 2-o aEa ?62 6O,OOO 6O,OOO fr"s3 5% s.25% s.so% 5.8% 6% 6.25% 6.sO% 6.7s% 7% 7.50 % 8% 8.50% 9% 9.50% ro% ;:l E CAP ITA LIZATION RATE BELATIONSI{IP BETWEEN FIBST YEAB NET BETURNS, VALUE AND c0sT OF PBOPERTY

Cfart l+ ts used to determine the flrst yeer net l-ncome requSred to proffi value equal to cost at capitaUzation rates tlom 5l to 1fi. For exaraple, assume a capltallzation rate of 6.2rfr. FoILor the U-ne upwarri flom 6,25 +,o uhere it crosses the line |tEconomlc Llfe !0 Yearstr. LaJr a rrrl,er horizontally across this potnt, and lt rILl cross the lines at the edge of the cbert at Just under 71. Thls shows that a flrst Srear net return of Jnst under ?fi of the cost of the property is requSred if value is to equal cost where the capltallzatlon rate ls 6.25fr and the econonic Ilfe of the property is estl-- rnated to be lO years. Converse\r, where the flrst year net return ls horn, capltalt- zation rates necessarJr to produce a capitalized value equal to cost can be detemined. For example, assume a first year net return of 6,75fi. Lay a rrrler across the chart at 6.75fr at the poiat rhere lt crosses the line trEconomic tj-fe 50 Yearsrt, follow the llng dorn and tt ls forrnd that a capitalization rate of 6l nould be reqtrlred to produce a capitalized value equal to cost. Obviously, if the narket nere not satisfled with a return of 6fr a hlgher capitaLizatLon rate rould have to be used, and a value less than cost would be obtalned when the flrst year net returzrs are on\y 6.75fi. It ls evldent lbom Chart L ttrat rhere the first year net returrr ls |fi the property mst be so desi-rable in all respects that a capl- taLlzation rate of not more than 6.25fr is varranted ln order for value to equal cost. A rate this l-ow for residential income property is not ltkely to be found acceptable to capital seeking thls t3pe of invesfunent unless the rentals obtalnable give promise of contlnuing over a long period. Excellence of location is highly lupoztant towarrl nalntalning long term demand.

t2 GAPITALIZED VALUE OF NET INCOME FROM A PROPERTY GOSTING $ IOO,OOO

ASSUMPTIONS: (I)AVAILABLE MARKET PRIOE OF SITE EQUAL TO IOTO OF COST OF PROPERTY (2) REMAINING ECONOMIC LIFE OF BUILDING AT INDICATEO PERIODS (3)NET RETURN ON COST FOR EIRST YEAR OF INVESTMENT A1 7h% (4)NET INGOME DEOLINING IN AOCORDANCE WITH TABLE II PREMISE, FHA UNDERWRITING MANUAL CAPITALIZED (5)NET INcoME oAPITALIzEo AT INoIcATED RATES CAPITALIZEO VALUE VALUE $ r3o,ooo $ t3O,OOO

r2o,ooo t20,ooo

ECONOMIC LIFE 50 YEARS e) ilopoo ilorooo L\ \ -{ 40 (rl \ roo,ooo too,ooo

9O,OOO 90,ooo

I 8O,OOO 8 0, B=;{oo ooo c:6 DYI tO' ia- >ro zfrc oaa i= 7O,OOO a>; 70,ooo

3:E=A"

=3=6.27 85: 6O pOO 60,ooo _ia; 51o 5.257o5.5oyo5.75yo 61" 6.257" 6.fi% 6.757" 77" 7.25%7.50%775% 8y" 8.25%8.507"8.75% 97" 9.25%9.tu%9.75'.t"1o?o o-riZo a CAPITALIZATION RATE NET RETURNS REQUIRED ON GOST OF PROPERTY DURING FIRST YEAR OF INVESTMENT IN ORDER FOR VALUE TO EQUAL GOST TO OWNER ASSUMPTIONS: (I) AVAILABLE MARKET PRICE OFSITE EQUAL TO IO% OF COST OF PROPERTY (2) REMAINING ECONOMIC LIFE OF EUILOING AT INOICATED PERIODS (3) NET IN@ME DECLINING IN ACIORDANCE WITH TABLE II PREMISE,FHA UNDERWRITING MANUAL (4} NET INGOME CAPITALIZED AT INOICATED RATES

NET RETURN NET RETURN to% lo%

9 9

C) * \ I I -l Y E f { YE o I F

7 F 7

5 P ts, OAPITALIZAT!ON RATE QUALTTY OF LOCATION I'{OBE IMP0nTANT THAN COST OF STTE Iuvestors frequently seek low prlced land ln orrler to reduce tbe untt cost of projects, Horrcver, land :s ordS-narlly such a snall p€trcentege of the total cost of residentlal llcome prrcpeztles thet its coet hss ltttIe effect on the g:noss rentals needed to etpport a proJect. Contraririse, the better leatlons whicb ane usually hlgher pr.Jced have a narked effect on the renta-le obtafuable and oa the dura- tton of those rents. Chart 5 ittwtrates thts princlple. Cbart 5 anafyzes two properti,es. One property ts LLlnstrated by A.ffither prqrerty ls ILlwtrated rrnder tro dlJferent assunp- tions by B and C. The buildtng l-ryrotrements are considered tp be ldentlcal ln constrrrction and cost $10or0OO in each lrretsnceo Hm- erer, the locations are dlffereato fn {r'lustratLon A, tho locatlon ie exeellent and the cost of the stte l.g $12,OOO' Illustretions B and C'relate to a redlocre locatLon rrhere the alte cost fu $6r@0, or one half ae rnrch as at locatlon Ao In A erd B, montlrJg gross rents ere based lryon e ?6 flret year net neturn on cost. In Cr rhich ts the sana property as Br an altemate assurytton ls made tbat the gnoss rental ls on the basis of e 4 ftrst year aet return because thls probebly ronld be ths h-lghest rent obtalnable Ln th€ npdiocre locatl.ono It rlIL be noted that the gDoss rent of $Ir15L requtred to pno- duce a flrst yeat Tfi net retur:n i.n Ar where the slte nas trlce as costly, ls only about hE trigtrer tban tbe gross rent of $1r1OB n@os- sartrr to produce a flrst ye-el Tfr net retr:rn Jn B bav{ng a medioere locatlon. tr\uther, it yitl be noted thet the gross rent of, $1r0O9 obtaiaeble t.n the narket in case C Lg abort lS less th8n the amount obtalnable l.u Bo

tlhen these seeningl;r mlaor cbengee ln rcnte-1,s are caplteltzedp r naJor change in capttellzed value ls found. Irr tb follodrg lllustratlons lt Ls asgr&ed that the net tacome rrtLl d€c1lne wer a 5O year econmlc Ilfe of the buildlng ln accorrlance nlth Table fI prernlse, I'HA Underrr:lt{ ng f,enualo

In case A, because of the ercelJ.eut locatlon, it ls assrrted. that duration of the lncome ls more aagured and less rigk lE present, ttran ir B end C. TbLs case therefore essureo condltiops rarranting the use of a capitallzation rate of 6.25frt rhlch resr:J.ts la a eapltellzed value sltghtly ln ercegs of coet. I ll+ I a I m NET RETURNS REQUIRED ON GOST OF PROPERTY DURING FIRST YEAR = ? OF INVESTMENT IN ORDER FOR VALUE TO EQUAL GOST TO OWNER 6(, o ASSUMPTIONS, ( I ) AVAILABLE MARKET PRICE OF SITE EQUAL TO IO% OF @ST OF PROPERTY (2) REMAINING ECONOMIG LIFE OF BUILDING AT INDICATED PERIODS (3) NET INCOME DECLINING IN ACCORDANCE WITH TABLE II PREMISE, FHA UNDERWRITING MANUAL (4) NET INGOME OAPITALIZED AT INDICATEO RATES NET RETURN NET RETURN l5'1"

l4 l4

t3 l3

e) t2 l2 * \ -t lt lt {

ro ro

9 9

I I I B3;{o0 c:6 D:, FgI 7 7 rf,8 =66 :3oii5 6 6 :I= ho= 'r ao. a>, 5 5 ca:{o 9t'= 5% 5t/e St/z 5?q 6% 6t/q 6t/z 63/q 7% 7Vq 7 /2 8%8 I I 9% 9t/+ 9t/z lo7" r?3054 CAPITALIZATION RATE ILLUSTRATION OF PROBABLE EFFECT OF VARIAT]ONS IN QUALITY OF LOOATION ON RENTS AND VALUAT]ONS

MONTHLY MONTHLY GROSS RENTS MONTHLY GROSS RENTS GROSS RENTS $ r4oo $r400

r 200 GRoss RENT $t,t54 r200 GROSS RENT $ I,tO8 GRoss RENT $t,oog rooo tooo

FIRST YEAR 800 NET INCOME 800 71" COST NET INCOME 7r. cosT NET INCOME cosT 600 600

400 400

200 200

o o

@ST AND COST VALUE COST AND VALUE AND VALUE $rzopoo $r2qooo

ffi ffi COST:.:.d oosT..j.i.l oq,ooo Ii.i.lLAND l::l::LAND roopoo %iidGK^

sOpOO W#;;yM sqooo

BLDG. i,PvTs. 6OpOO c6T VALUE 6qooo $I msT VAL UE ALIZ e7 RATE 4qooo COST 4qooo

RATE 7 2qooo

A B c EXOELLENT LOCATION MEDIOCRE LOOATION MEDIOCRE LOOATION

OHART 5

L5 Case B strqg that cren though thc rents present\r obtalaable wonld prnoduce a first Szear rcturzr of Ifi on coete a oepitallzatton retc of at least 1flt rhlg}l lt ts assuned rould be requtred because of the additlonal r{sk lntrodrced by the greeter lack of essur&nce of eontlnutty of net lncome tn the nediocre locatlon, resuJ.ts Ln a capltallzed velue of W less than eost. In thts lnstarce tho sarLog of $61000 ln cost of the slte bag prcdrrced e loss of nearly $18rO0O ln valuo as c@ar'Bd rrl.th A. In case Cp nhere lt ts assum€d that becauge of tbe nedLocre Ieatloa tbe rents obtafuable ln the narlot rrILL produce a flnt year mturn on cost of 6$, and a 7l capltallzatlon rate 1s used, a capttallzed veluc Zlfr Lcss tban replacerent cost Lc produced. Ia thls case, elthough sav{ng $6,OOO on the cost of tbe sltc, a Iuss ln value of nearly $3OrOOO conpared rith cese A hae reeulted. It rfLI be noted that operatJng e4pena6s vetlr ht ellghtly tn the cxarples shtrn on Chart 5. Ibs lncrease ln gross nents requlred to srrypozt the htgber land cost ls sllgbte because lncreashg l^rnd aost lrrreese! experures approrlnately ooly to the ortent of addl- ttonal t,axes.' Slnce better loatioas produce and sugtaln hlgher, more steble nentals, the uet lacone ls nost favorably effected by the addttlonal investtrent tn the land.

The dlffenenco in erpensee between eeseB A end Be results fromr an lncrease in nanagernent axpense becawe of larger cffectlve gross lncome and an lrrsreage in ta:ces becauec of the hlgher assegged value of the slte h case A. The dlfference ln eryenses between cas6s B 8nd C nesr:It frcm a decreaee fur managenent expense because of tbe loer effective gross t-ncome in case C.

t6 HOl{ INVESTORS MAY ESTIMATE POSSTBLE rr AMOUNT OF MAXTMUM INSUBED MORTGAGE The amount of the ma:rlmum mortgago whlch rItL be iasured ln arlf case ls detemined W tho Federal Housing Adnlnlstration, ard ls based on lts estlmateg of va1ue, cost, rentals, erperues, arul other fectorg. Horever, irrvestors cen, l:f they rrlshl apply the FIIA criterla to tbelr estlmates, as set forth ou their ap,pllcation, and in that nanner estfuate the nsxr.Eum tnnurablc nortgage loan obtainable based on thelr mn estlmateso fhe flrst determLnation to be made ts to fiad rhether or not tha estLmate of net irpome fnonr the property &rtng the frrst yeer exceeds ?% on the eost of the prcperty. If it doeee the proJect Ls not lnsurable by the Federul lloulrlng Adrrlnlstretlon, ard tt rorld be necessary to r€duce the rentals to an enount rhlch rould pr.odtrce a ftrst year net return on the ectfura,ted cost of ?fi or lesso The second polat to be checked Ls the apprrcprlateness of the capltallzatloa rate selected ln capltellzJ.ag net income, ,1r1s6 sr]I be not lese than 6tr.

Ilnder the fiatlonal Houstag Act, as anended, $5TOOOTOOO ls the narLmn permlsstble nortgage loan rhlch can be irrsuled for a pr{vate corporatJ,on on aqy rentel proJect. Thereforee lf appllcatlon ls nade for a higher amount, the appllcatlon rrIIL not be ellgtb.Lco 96 thir cane polnt of the anoud applled fore tbe Fecleral Eouslng AdnlnlatntLon rr![1 not tnsure a nortgage for npre therr the anormt aplted for, even though lt wonld be ellgtble for e Iarger aroount under 8IL th€ other linitetlonao The Natlonal llonalrrg Act, ac amehded, Umits thc naxLmm anonnt of an tnsnreb.Le nortgagc to $8rtm per farni\y unit, or $7r2OO per faml11, unit, depending upon the anerage nr:mber of rooms in each fanily unit.

The Act also limits the naxirmrm lnsurable nortgage to a gunr not in excess of frfi of the first $?rOOO of value per fami\y unlt, plrrs 6Of of the value ln excess of $7rOOO per fanily unit. Credlt controls (as of April 1951) Illnit the ma:rlmm lrrcurab1e nortgage to a sum not in excess of 83fr of the first $?,OOO of value per family unlt, pJ:vs 53/ of the value in excess of $?,OOO per famiJy unit. The lorest flgtrrs found tbroueh the appltcetloa of the or{ter{r etated rrlrl be the maxiurm lasurab"Le nortgage obtelnablc beced on the lnvestorts estLnates as set forbh in the appllcatLo" Tbc crt- t"l! steted spply on\y to transectlons l-trolvr.ng ree afupre tltres and to proJets rhere lacome le solely from dn€rf,ing unlti. A locel FUA tasurlng offlce Ebould be corurrlted rhene nental lncorp other ttun tb.t obtalnable fnm reeldenttar use ic lnvolved, or nhere the nortgage nltl be on e leesehold or rrlLl be subJet to- f apec{e't etaeganentg. 17 CCUPLETING AN APPLICATION FOB INSUBANCE OF A MORTGAGE UNDEB SECTION 207 OF THE NAT,TONAL J HOUSING ACT, AS AI"lENDED An appllcatLon for mortgage lnsrrrance under Sectton 20? of the NatloneJ. Housing Act is a formal presentatlon of thc peztlnent facts relatlve to a pro,poscd transaction on uhich it is desfircd to obteln an lnsnred mortgage loan.

The appllcatlon presents detalls, whlch ere essentlel to be presented to mortgagees and in turn to the Federal Houslng Adninlstration, relatlve to the locatlon of the proposed project; the nur]ber, t5pe, and size of the units to be built; descriptlon of the serslces to be furnlshed; and detailed cstLnates of lncore and ercpenses. Sponsors have tbe lnfomation and estlmates called for ln tbe appllcation on hand prlor to cotryletJng an appllcatlon, slnce these ttens rere used by then in testtng the sor:ndness of thetr prorposal trr th6 menner descrlbed ln this booklet. ttllth this lofomatlon at hand, 1t ls a reletlvcly si-rple natter to prepare a fomal appll- catton.

Various estLmates of incorne, aq)ensres, cost end ao forth ere ccrered ln detaIl in the appllcatlon, rhich thus provides a useful and dcsirable check llst which may brlng arry irpodant onisstom to the aponsorts attentlon. Ag a netter of fact, ner5r sponson use copies of the appllcatlon form 1n naktng estluates for the pur?oses of thetr own lnltra'! andyses of the proposal, and thts nse of the appltcatlon fotm ls recomrended. The lllustrated FIIA Applleatlon Fom 2013 includes conupnts on certaln porttons of lt. General\y speaklng, arurrers sought to queetions on the appllcatlon form are self-evldent. Honever, questJ-ons thet may artse in completing the form can be dlscussed uttb Fcdera1 Houslng Administratlon insuring offlcs personnel, rho ar.e resqf at eIL ttmes to lend whatever esslstence may be needed or deslred.

1B I Eh[o. mU (&r. Julu) FEDEFIAL HOUSING ADMINISTRATION BudreaAu6u No.&Ra76.1. b APPIJICATION FOR MORTGAGE INSURANCE Undu Soction 20? of the Notionol Housing Act

(To Bc SrbEtttod h DuDllcrto) Dit MORTGAGEE'S APPLICATION

of the Nstionsl Rul6 snd nsgulstiod rpplicsblo theEto, opDli- Applichtion below. After esarninstlon of the appliotion snd coDsideE th€ end ie int€Mtod in mskiDg the losn ln ihe pilqcl- p.l EoEt of which Fill b€s iotcE.t Ll, ------Vo Fr oqud Eonthly installmcDts of .!d lbdgrpc rl11 cop plcte thla !6otloD iDltallments ol eMh ol plu ol rppllcrtloa c prwide lrfo[!8tl@ Thi! oppli@tlon by the uDdesigned PrcpGed Mortgsgee is Bubrect to you @EEltoeDt, lt8 owD fDal actioD, ed paymeot o, lh ch.rg6 u lqplrred. &t lolth udd "FiDecing ErpoEe" at th6 rrte of ------% iD tho sEount of $------HoErith ir oheck ror S------whicb ir ln psymeEt of the f@ requiEd by SectioD I ol AdEiDistt8uvo Rul6, oow eEeottE, to b€ paid rt th! tiEe of subEittiDg appliqtioD. T\ro t@ ol FHA mmmitment NG rvsilable. (s) Commltment for In- (8icn6d) --- ruruo. uider which FHA iuur6 advanee of moitgaie pro@ds during the GbB{Md8F) ooure ol @nltrustioo, and (b) Commitmetrt to Insure Upon Completion, under whloh FIIA iBures tot6l noftgage prcceods ot the time of campletion of tho By Dmioct. ChecL b6low tho tvB of commitment desirod. (N@ sd illb ol dw, ' '(r) n Cammitment foi Insurene. (bi CoonitmeDt to Iasure Upoo Completiotr. U (Ad@olUdte)

MORTGAGOR'S APPLICATION n, To rrl trtouer Housrro Covurasrorrnr lte uademl8rcd hercby spptie lgt lhsursn@ of a flEt Eortgago lD the pliDcipsl rmount ol $------,- uDder tbe pbvirions ot gcctloD m7 ot the NrtloDol EoulDg Act. 8rcx&E: l. Nu6 of prcpoed Dortgagot (r) Nu6 Nd rddw of spoEoE ------

(b) Nue ud sddlw to whioh mreBpoDdeoce .hould b€ addres$d

,. Nu6udrddrcol- (r) Architeot (b) AttorD.y

EXPLANATORY NOTES_NEW CONSTBUCTION (For lehEbllitrtioD prcjocts, see explsrtory DoteB at top ot p6g€ 2) UL (l) sd&!t &d (o! tD. proEilotr d e rmnb olt 6rl@a.. IElomtbn 6DmlU tE Eqlq ed cE44a or q@ odlbtE rd .ppu6& F. quhnrmE blvuol. r! d AU ]idq Ofts e qqlq.lagr rHoE (|ry 2 ud .). 8ddul.! A, B, C, D, ed E mur b @m- pLtd Ior d appu6rhu. h dq0 sd accuidy. I rid dUE-(r) Sb ha@b e blop! tuu b sDEltd h dupll6b: a. Eblelt ol luffi rDd dbkd qrl@Gnu (m l): (.) r.Coutrudb!,,. In (1.... (l) by *Hch tb dh ol Lb m h l&Dffid. !b.Grh.& o4, htuld 6!L orsud ol all tn&d sbltte) hclud. thd t4l d..Eber rF6d Nl4 6ErB&r'rpubXobblllty, rmhE'!@Futb! ard oth Mtu6. ud loboveMd. 1oc..1 lf,A. (,-' Ortdl.-l lbtut d b lh oEdD ol th. DmNd Drclel db Eu* .em. (bl !'ID@t." lDout dhild b 6E htd o! dhbo@rE hE Edre Colrrlt Ny rE.aDDU6h. It tbo laEd b b h sqdEd by ahs rF@u4 Fup, @pls ol ddug oElMbD oDIy, . vdd oDtu .N b 0Dd!8. olficc lor dubtt (c) !rTm." oDbad, chd ud bulldbEr, dd4odEdtoaodt. 6) hhbdboldtuttubilad.lerL*!o(tbeDmF$dt.rEdl!! r.qolrd. lrtildbrdlibM. ThGlNdbMchDtdelDrl€E.rErtrrduFn (d) "ID&EG" An u{Et sG4ot oDIyb 6v6r DFEIUE tor hlrd.tud olh d plo@DD. b @ tt.ndEt hE ebt Fb! sdE rhidclioD rhy sN {., sd otk M lI|ltlIM dod[ odrucilon odi. (e),,Tltl..nd erdlnsolFd.', IDclud.!h.mludostotilbxoch.rd (rbhEDo. nqufrea .rhlbtt (0 Ot D rld b @l.d b hde @Ed sth, sbmla church, lbpnlos 6d e?oF, mfuS 66 old Ha&, ed @dtnr hs. rltb buih&M lDdetul,EEmtil.6d ffitloml6E!.F. hgM wilb hrh (O$rl6tu! lry rr:7 tlsa tdc ffiNd.vdbu. EeEot tdt b iDd hE NF$d !l@ b suoh @bE. (0 6@." Ilclud. ody MuibL.@ et oab.rut$ cbtld. &d .nd FoFrly lmdd dslq th6 uFladoE o( lb pFlo4 ot DloJact lltc (o x In L blEd.uEl ffi!u.b@n. (D& D: (i) CoEtub &dil E sodttlo!!. oom1. Thbmu*hsEduuy&Mbturrh@EDdthndhdUyudb6rdrb"Iamm." uFd FnE b, @ly udi tyF. m. rud @il &pd or l@l mdi@ ht EU d b tbo ?%. G) loE lE-rl. (D*tru! d LM Eo@) Bqud lor &Etuftr ol redlE3 ls (c) "o@Uq.!@a." kswd btudoD ah.UdhlGd.6sd gu. n@ Indud.M dlo?M6 loFohEnrol{dD@t ruchudy b.rbdtild !b (!) M tudd ed Cdl F@ri. Igl FoE ol q.h .&rs vbo ! tsn rh€ slEciM lberlru. C@pb!. 8cHU. D d W 2. bidry . Etud ffib! d th d q dh qdry to 66pleh Lh6 proh.t. (d) .Tail.,' tubsbb r.EoD lhcoEpMmdy&orld hdlordbmMtat (d) ldbd duu-Tbb .DDUotloD E@ b .NmE*d b, i tou!6Dhl6l BXh ld Bhr sEd ffi@t Dtulo. or b, dErhildo rlb dElle DEmild oo ! E e{ d h dq Nnhln.T fuEbr! md outUD. lBl06tlons DEEnd oD F! t form mm or oitu bsE Dod @tu& tudd &oL sd r e@Dt &EEr tfu tuI eiild No. B. Th ru b FNd b duoU6E md Ul Drcvldo t$cleot hlorltloD to [email protected] &r lb bUoilDa: (t) A@FMr..{l6n^!dtEpl.d&Bpbdry,mffi,Md6!@ctbDi

0D CqClEo d6 d.pDbDb ,EA q&@E ed &vdDbg brA tuc, dUffi;

FHA Applicotion Form 20l3 Poge I I L9 E XP LAN AT O BY N O T ES-RE E AB I LI T A? I ON [email protected]. shorD in ttaliG rof€6 to rebabilit.tioD prcj€ctE sDd shsll Dot spply to new (2) uiln aA nppt@& lM tryhiltu .Dd (l) J

,. R EeU RE D E X H I B lTA.-{t b tu b fr r^U n dq@ aoatutb d h ptd..t ?. AUPPLEII ENTANY SCHEDULES |fr.'Ad I\. Wdq A, B. C. D.rud ENd Ul@b alw. NU i...&|h alcitu.- tu @ptu J6 oa oprt@toB, ir bl od .dtody. Ol I4t @hr h dd U e ol e Frd Ffla ar tr &dltd. Coneult 1ocaI IHA

IY. SUPPLEMENTARY SCIIEDULES SCIIEDULE A Sources ol Equity

CA6E OTEEB EqcrrY Neu uo Aooues LdD TOTAL rdlbr opibl) Ahount N.tuF

t-___-_-__.-.--_ 3--_--___----.-. s------.,._--_ .fdz-.et.-...... 5.-.-...---....-.-..-.--

Accu.ate lafotlstion on these questtons LB essenttaL. Torrl which nut "Total set forth uder "Remurces" on SCEEDULE B Inlormrdon Concernlng LurFOr Propqtv, Il

Totrl Uopaid Amsd Eort- Itrt€Mt duo t x6 vrlurtio! P@l hetrt omor DOW a Cumnt 6 lot 8t86 aDd unpaid edm6s Enh lioD 6eDh dat6 ------

fhese ltems havc Lu- portent beerlng on fucone obtal.nable, coets ald operathg SCEEDULE C erq)enaet. EquipDcnt rnd Services Inclqded in Rent Use of Schedule C Servires Included in Rent r€[email protected] Dak- (hot for Wet€r and cold)------1ng e8tLnat€a lJr early stage of pro- smco-_____-._---- J€ct develoF€nt. Attic veDt fu----- Gmmda [email protected]. Iaudry fmilitie Other (epocify)------,-, Yenetian Other SCIIEDULE D Estimate of .LnEd Operrting Etpenre Accuset€ pr@aretloa A.lminiitmtiye expens : Gu------of detsiled elttrlat. Advctising---.------.----- $...--- Garbage and aah re- nay lrodlry eeratLDg Maaagoment------moval------e:Perue latlo u!€d Paymll for ------em- Othor opmting exponm- -- La tost{ng ploporal. Opentirg expem: (N@h) TotaJ.------Elevator power (if any)------ploym--.------Roploement rueme------Elevatormaintsm@------Maintemnm oxpeue: Total opemtirg u- Fuel (heating md do- Dmrating------,--- pem--__--_-___-__-_ metic hot woter) Repain------.------Total operaCing u- Jmitort aupplie- Extemiaatirg------penBo per room LightiDg md nis@Us- Immce------psr amum--_----_- . n6ou8 pows------Grcuds (mo- Wrter------torialg

FHA Applicotion Form 2Ol3 Poge 2

20 v. PROPOSED SET.UP F^"ic eLehents of Number of family proposal units ------Number of rooms the wed i;r Average number of rooms per fmily mit sour:dness at testlng Averrge monthly rent: Pcr family unit, $---..-----; per room,6_----_---- hception of ploject Type of building are detalJ.ed on thls (lFEEeDt, debcled, leDldc@hed or rcr botM, NuE&. ot stortd, lyF ol conltetion, r.E-sD or *!dd,.E.) Page. RESOUBCES ESTIMATED ANNUAL OPEBATING STATEMENT Land---.------.---- $..----.------,--- INCOME: €eDoh No.6, olDhshry rob) (.rcudr6 C&$h or 'orrhr oDital) ..--.---- Dwelling rent GoB&Mor.E)------$---,------p€r alnum. Other equity----- Garage reut (troE*hduhB)--- per omum. Totel equity------$. - --- -,-,- -- Store rent (ftoE!cbd&E)------per emu. Mortgage-loau proceds,,--,------Ol,her inmme (tuEeHubE)------pGr &mum. Tmrl RrSOrrnCpa (erclusht orpsrhr6pt6D...-.----,- E:::- Torel ngtrumnD GRo6s INcoME ppn Cmh working opital-----.---.-,-- $------.- ANNUU------,---- ,--__- 8__-_----_-__-- Iros vamcie asumed; (------7o ot dwollings)-----.--.- $--"-.. - .--..-- (------lp on gamgc)------. --- (------7o ot other iaomo)-- Torel vrceNcr DEDUc"roN,---- $- BEQUIREMENTS Gnos rwcoxr ExpEcrANcy-,-,,,--,-,------$-- ESTIMATED (Etdl'. sd bom) Lenn IxpnovpxnNT: (,r!hrn rgry thd dr) Toral Oppnarrxo Exprxsn: (*laoun) Now utilitios------$-----,------Number of moms ------,----- @ Imdeope work------,---- 8------por &rmum---,----- $----.----,----- RreuEsrrrr Trxps: Estinatod assed volue: $--______.__ @ $.....-._-- _._. PER t1,000------...- Cosult l.ocal IIIA Socrrl srconrrv AND orEEB offlco lf gusrtions APECIAL TAXEA..-- arLse 1n co@lotlng Salmge'

i;;;;;;;;;;;il;;;;";**,.* 3_...... __... Torer ugrtu.trlD nDquIRDuENro, Ex- cLurtvtr or !.AND------t: Lrro: !q.ft. @ pd !q. ft-.-- L- Toul lgrucltro BDeETBETENTo-.-- $:

'Eslinnt d4raiatd, rcprdudim wh ot .alwbL exidiq it nhabilita- +in h ianlaed,----- t.----.------.

Torel s,tr,veor--- $: EEthft4rrd ad ol fumolinim whbh it mt lo h imlrfitd, in Ettinakd, Bcqvircmmle obow------.------" $------.------rH!-t

F H A Applicotion Form 20l3 Poge 3 rl' ?a i vI. SCEEDULE E Estimate of Rentels

Number ol Por@Dt RooEs CommsitioD cf uDib .E6cho Estimtad uDit Totsl monthly Totd rnDu.l @ch frDily of totsl r€r LU ody ED1 tor each lsElly [email protected]. dadudh &E. EDt per EoDth reat lor e&h uDit typs uDlta uDit (Sedodlo bE Coui Noe) unit tyF uoit typo ,2 I,R-DS $-_____----.--_-_-.___-_ $----.....--_,_--.----_.- 2k r3 LR-DS Comb. r*3 LR-K-BR-_____- ,--- ,.3y I,R-K-DA-BR-.-

4 LR-K-2BR_____.-._,-. 4y LR-K-DA-2BR____-_-_-.-. 5 [;R-K-DR-2BR.. _--,-_. --- 6

?orrl rguurno RENTAL8 rcR aLL FAxILy uMTa------8..--.-__--_-_.__.-._-_- t-.---*---_.--____--_ Garcgo etalls-,----- t,--.__--_.--_-_-___..._--. Storm------l:...: Torel tgrturrro rNcoxp s----.------_--._ Total nubor oI fmily uits ------.------@ evorago rental of $------per uit per nonth. Total nuber of dwelliag rcoru ------@ average rontal of $------.-- per room per month. Nfr.-trEBdbhdl@h@@,6cchalbthEN,t@,oE6,adeymotkthtomdr&F.ddt0EutdtEbdiillltdrd b@u d&Fld,16@GpLd'rhlmrcotedda.b*l0Fm!flmi&odlddbrc&ctrudaumE. Etr!@houu&FdhE!b.ubffita{&Hrr, E, dd abDh dd, tud d h&r .qdDEst, urd Ed di klq !k- .ilI Ed b hdud h DroJ..! md 6tht6. ALLOWABLE ROOM COUNT oEe llEltetlo! oa anoutt of narlsun ID.susBbIs Eortg.€a rolates to a"cr!€o ror.uber of rooog por faDlly urlt. lh18 llfo:'[atloa ls thereforc lEportajrt.

.NGr.-Thb oEE s , r6d ONLY rh oth lctm h tU a o Ftr b ADDITION b t!.6 fuE bbreyletioa ucd in thir totu: iR-Uvin8 Rem; LU:Uving UEit; DR-DIDI!g Roo; D8:Dlolrg Spe; DA:Diutag Alove; N: XltoheD; BR: BedM6; Comb. : Coabluod. Nonrevenue-ProducinE Drellhg Sp.ce TYID ol oEploy$ Nuhber of mtr Compositlou of uDlt Lcrtioa of uDlt iE prcJGct

@veEd by this

ruol lmpoao upoD @Dtrln

lnsurm@ @rtify there childEa tho f.muy,

they @ truty dEcilptive d@ not vlohto eristitrg prcpoH to furEilh uuan@ ot @mpletloD of the prcjoct @utruotioE lD tho toE of ------..

Nm.-(r) dnd (r, bclou, to fh. lnalasin d @lifia: (1) agiuwn lq ilt piFchat iraL.t ------i in cfcd) @lwcb! lil,. @ (n oiil b.) q4uird lron ---'ii;;;.-:ii; !;tt;;;;' 1;;;;;ii' i; i; ;';;Pttuly;i'y;sw' applicalion. (r't ?hal ,h. .nlir. @iat rdl;ot @ aad Mrtbra@, il

Drta

!. r. snr.rr arrm qq lHl*! Oo bebalf ol ----- ,--.--.-...,-

FHA Applicotion Form 2Ol3 -,Poge 4

22 I FHA RENTAL HOUSING, PUBTICATIONS

Tbe follol-ng publlcattons lssued bJr trUA, avaL}eblc to bullderc, invectors end mortgagees rryon ruquect,, have becn prcpared to acsLst in thc developnent of nental hotulng propertles of hlgh loan-value'ratlo:

FHA FOM{ NO. TIIT,E

2l$7 Space and Equlpncnt for Rantal Houg{n8 2W Plarmt.ng Rental Houtng hoJecta

2538 Nelghborboods BUILt for Rsnte,l Houl

63 tzzu ?28.1 :333'

- . . . s oun d - f,;i""r. i#"ii;.j*,a, .j"":"l';ilJ ' l+?9 Irtv Ic B I

i. i ':,7 cfit .tr f1l'*o<-t- '

f, E FA- FE .

ri -l l:.i ,i : v' ."'rTiir.fl,'lrTiliffi,,

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