Use HCVP (Sec. 8) Sub Market Rents to analyze deals (DC area)

[Antwoine McCoy]

This post is for my DC area (DC, PG, MoCo, Alexandria, etc.) investors and interested investors. I have been using the HCVP Small Area Fair Market Rents as a basis to running my numbers when analyzing possible investment property deals. In short, for the expense side I identify my assumptions outside of Principle, Interest, Taxes & Insurance (PITI) to determine the bills or payments due. For the revenue, I basically use the HCVP Payment standards, specifically the small area fair market rents to determine the potential rent revenues for a property. I use a multiple to either add or subtract the established rent amounts based on the neighborhood, specifics and circumstances of the property I am analyzing. For instance, in the Old City II neighborhood of DC I know that below are the rents for each unit bedroom type:

Now depending on the property I either add or subtract an identified multiple to get a gauge for what rents potentially are in the community.  For example here is a quick analysis of a property for sale in the neighborhood using the rents above as a gauge.

https://www.realtor.com/reales...

The property is a 3BDR/2.5BA home selling for $827K and I am assuming that the prospective tenant pays all utilities.  Below is the snapshot of my monthly rent analysis that tells me the property isn't cash flow sustainable using a 20% down mortgage at 3.5% investor interest rate.  I confirmed the current Real Estate taxes and Maintenance and Replacement Reserves are 5% of the rent.  I have 0% for vacancy rate due to the fact that it is a single family and I have to assume the my HCVP tenant will stay for at least the 1st year (I have had shorter but for the purpose of the convo...).  Basically the property would lose about $408 per month.  Below is my monthly snapshot and I welcome peoples thoughts on the perspective revenue (and expense) numbers they use to analyze a deal.  I hope this helps someone out there and at least initiates dialogue.