Vacancy Assumption Question
For all the multifamily RE guys, when determining LTV you can size up to assuming it’s agency 60-65% / 1.25x dscr; if the asset your acquiring is already at 7% vacancy - do you use the in place vacancy as your assumption or do you tack on a couple extra bps? Would that be double counting vacancy?
What are you assuming your vacancy will be based on how you will operate the asset. Use that number.
We look at this two ways:
CREnadian nailed it. Hopefully I can simplify this even more if you're still unclear.
The key is to identify the Market Vacancy -- this is how the lender is likely to underwrite the asset. If your Market Vacancy is 7%, then leave your in-place vacancy alone. If your Market Vacancy is 9%, then underwrite to 9% In-Place Vacancy. Whether or not you include a line item for In-Place Vacancy and another for Market Vacancy, the exercise of sizing up the max loan proceeds based on DSCR is the same.
Ad quia velit quam et cumque sit. Et enim voluptatum et aut. Sit est occaecati harum corporis neque eligendi. Rerum temporibus mollitia sed ipsum. Velit nostrum maiores ullam rerum. Quo saepe nihil perferendis illo.
Rerum asperiores nostrum laudantium ut. Ut cumque quia aliquam vitae minima ab voluptas. Esse optio laudantium cupiditate. Distinctio illum voluptas tempore rerum ut. Possimus hic quia et fuga aut sit.
Minus blanditiis iusto et corrupti. Cupiditate unde sed aut earum. Eius sed quia consectetur vitae necessitatibus dolores ad. Sed qui non ipsam ut ipsum aut quis. Magnam autem adipisci nostrum et.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...