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HUD Form 92264: Multifamily Summary Appraisal Report
HUD Form 92264, also known as the Multifamily Summary Appraisal Report, is one of the essential forms that an appraiser will need to complete and submit to HUD before a property can be approved for HUD multifamily financing.
- What Is the Multifamily Summary Appraisal Report?
- Section A: Location, Description of Property
- Section B: Additional Information Concerning Land or Property
- Section C: Estimate of Income
- Section D: Amenities, Services Included in Rent
- Section E: Estimate of Annual Expenses
- Section F: Income Computations
- Section G: Estimated Replacement Cost
- Section H: Remarks
- Section I: Estimate of Operating Deficit
- Section J: Project Site Analysis, Appraisal
- Section K: Income Approach to Value
- Section L: Comparison Approach to Value
- Section M: Construction Cost Analysis
- Section N: Signature, Appraiser Certification
- Section O: Remarks, Conclusions
- Related Questions
- Get Financing
What Is the Multifamily Summary Appraisal Report?
For investors and developers looking to take advantage of HUD financing for a multifamily asset, it is essential to clearly understand the role that appraisals play in qualifying for a loan. At the center of these appraisals is HUD’s Multifamily Summary Appraisal Report, or Form 92264.
At its core, Form 92264 is a tool for an appraiser to analyze a project’s location, expenses, potential earnings, taxes, and so forth. This assessment also includes an analysis of the site’s surrounding areas to determine the need for a HUD-backed project.
The form’s most recent iteration (at the time of this post, it was last updated April 30, 2020) includes eight pages comprising multiple sections, which this article will explore in detail.
Section A: Location, Description of Property
The first part of the report describes the property’s location and neighborhood. The appraiser will list a property’s address, project type (e.g. high-rise, townhouse, etc.), number of units, recreation facilities, building count and so on. Other characteristics listed include when a building was completed, what exterior finishes the property has, and a brief description of the asset’s HVAC systems.
In terms of neighborhood, the appraiser will list some relatively straightforward details — whether the location is urban, suburban, or rural, for example — as well as analyze and describe neighborhood characteristics, including how property values are changing, whether or not the supply of existing housing meets the area’s needs, and if the site is in compliance with zoning restrictions.
Section B: Additional Information Concerning Land or Property
This section includes extra details about the property. The date and price of the previous sale may be included here, as would information about existing ground leases and utility-related details, including whether the water and sewage systems are operated publicly or by the community.
Finally, this section includes an area for unusual site features, giving an appraiser space to note other relevant concerns about the land. Examples here could be a notation of poor drainage or erosion or if the land has a high water table.
Section C: Estimate of Income
In this section, an appraiser will forecast income for the project. This includes a property’s gross potential rental income but doesn’t stop there. Parking spaces — and their gross potential income — are also noted, as is income related to a building’s commercial space.
The form also requires specific information about the amount of rentable space, both for multifamily units and any commercial space — even those that will not generate revenue. For example, if one multifamily unit is set aside for property management, there’s a field for that.
Section D: Amenities, Services Included in Rent
The fourth section is largely a list of in-unit features and community amenities, marked with a series of checkboxes. Although there is a field for additional items to be added, the form asks specifically about 14 in-unit finishings, including:
Kitchen appliances
Balconies or patios
In-unit laundry hookups
Window treatments
Vaulted ceilings
Security systems
Administrative costs like advertising and management
Operating expenses including utilities and payroll
Maintenance costs, from pest control to general repairs
Taxes, which includes real estate, personal property, payroll and any other related taxes.
Is the project viable based on its proposed rents, given the area’s market conditions?
Is the site large enough for the project?
Are utilities already available on-site? This section also provides a valuation of the project, anchored to comparable sales in the neighborhood. From this basis, the appraiser estimates the total cost of sponsoring the property, adding in factors like zoning costs, recording and title fees, and acquisition costs.
What is the purpose of HUD Form 92264?
The purpose of HUD Form 92264 is to provide an appraiser with a tool to analyze a project’s location, expenses, potential earnings, taxes, and other relevant details. This assessment also includes an analysis of the site’s surrounding areas to determine the need for a HUD-backed project. The form includes eight pages comprising multiple sections, which provide additional information concerning the land or property, such as the date and price of the previous sale, existing ground leases, utility-related details, and unusual site features. For more information, please see HUD Form 92264: Multifamily Summary Appraisal Report.
What information is included in a HUD Form 92264?
HUD Form 92264 is a tool for an appraiser to analyze a project’s location, expenses, potential earnings, taxes, and so forth. This assessment also includes an analysis of the site’s surrounding areas to determine the need for a HUD-backed project. The form’s most recent iteration includes eight pages comprising multiple sections, which include:
- Section A: Property Description
- Section B: Additional Information Concerning Land or Property
- Section C: Building Description
- Section D: Building Characteristics
- Section E: Building Condition
- Section F: Market Analysis
- Section G: Summary of Appraisal
- Section H: Appraiser’s Certification
For more information, please refer to the HUD Form 92264.
How is a HUD Form 92264 used in the commercial real estate financing process?
HUD Form 92264 is used to analyze a project’s location, expenses, potential earnings, taxes, and so forth. This assessment also includes an analysis of the site’s surrounding areas to determine the need for a HUD-backed project. The form is used by an appraiser to assess the project and provide an opinion of value. This information is then used by lenders to determine the loan amount and terms for HUD-backed financing. For more information, see HUD Form 92264: Multifamily Summary Appraisal Report.
The HUD 221(d)(4) Loan is a loan product used for market rate property applications. It follows a two-step process: first the pre-application, then the firm application. Affordable and rental assistance properties may use MAP one-stage processing. For more information, see HUD 221(d)(4) Loans.
What are the requirements for completing a HUD Form 92264?
HUD Form 92264, the Multifamily Summary Appraisal Report, is a form that must be completed by all Lender third party analysts. It must include a technical analysis and standard certifications. The form must be submitted as part of the Application for Firm Commitment for Sections 220 and 221(d) of HUD 221(d)(4) Loans. For more information, please refer to this page on our website.
What are the benefits of using a HUD Form 92264?
The HUD Form 92264, or Multifamily Summary Appraisal Report, is a tool used by appraisers to analyze a project’s location, expenses, potential earnings, taxes, and other factors. This assessment also includes an analysis of the site’s surrounding areas to determine the need for a HUD-backed project. The benefits of using this form include:
- A comprehensive analysis of the project’s location, expenses, potential earnings, taxes, and other factors.
- An analysis of the site’s surrounding areas to determine the need for a HUD-backed project.
- The ability to qualify for HUD financing for a multifamily asset.
For more information on HUD 221(d)(4) loans, please click here.
How can a HUD Form 92264 help a borrower secure financing for a commercial real estate project?
HUD Form 92264 is a form used to document the borrower's financial capacity to repay the loan. It is used to provide evidence of the borrower's ability to repay the loan, and is typically required for HUD 223(a)(7) and HUD 221(d)(4) loans. The form requires the borrower to provide information about their income, assets, liabilities, and other financial information. This information is then used to calculate the borrower's debt-to-income ratio, which is used to determine the borrower's ability to repay the loan.
For HUD 223(a)(7) loans, the borrower must have a debt-to-income ratio of no more than 45%, and must have a minimum of two years of documented income. The loan terms for HUD 223(a)(7) loans include mortgage insurance premiums (MIPs), an FHA application fee of 0.30% of the entire loan amount, and a project capital needs assessment (PCNA).
For HUD 221(d)(4) loans, the borrower must have a debt-to-income ratio of no more than 50%, and must have a minimum of two years of documented income. The loan terms for HUD 221(d)(4) loans include a loan request, a brief narrative describing the project, details of commercial spaces (if any), an estimate construction timeline through stabilization, the purchase price of the existing property and the settlement date (if property has not yet been purchased), photos, any completed third party reports such as market studies, HUD appraisals, environmental assessments, etc., the value of the site (if different from the purchase price), offering memorandum (for purchases only, if available), breakdown of types of units, and as-is value (for rehabilitations only).
Amenities for the property are itemized in a similar manner. In addition to a detailed list of potential features, from fitness centers to laundry facilities, there is a large space to indicate other amenities not previously mentioned.
The appraiser also must rate units and the overall project on a number of characteristics. The form requests an overall assessment of good, average, fair, or poor for 10 unit-specific and 11 project-specific factors. These include room sizes and layouts, adequacy of insulation, project location, market appeal, quality of construction, among many others.
Finally, at the very end of this section, information about a property’s gas and electric service is added.
Section E: Estimate of Annual Expenses
In this section, an appraiser will project a property’s annual expenses, taking into account a variety of factors. This will include:
Section F: Income Computations
This section utilizes calculations done earlier in Section C to consolidate all income information at an annual level in one place. Then, subtracting those costs accounted for in Section E and factoring in estimations of occupancy, overall residential and commercial net income is calculated, as are a number of measures including commercial expense ratios, project expense ratios, etc.
Section G: Estimated Replacement Cost
This section is used to analyze and forecast the cost of replacing a multifamily property. Factors considered in this analysis include costs associated with land improvements, all structures, construction fees (and timelines), financing, legal fees, and others.
Section H: Remarks
This very short section includes space to calculate the estimated value of land without improvements for projects involving rehabilitation.
Section I: Estimate of Operating Deficit
In this section, an appraiser forecasts gross income and expenses for defined periods (usually a number of months) when a project will operate at a loss. This is typical for newly opened multifamily assets during construction and the initial lease-up stage.
Section J: Project Site Analysis, Appraisal
This area of the appraisal form looks at the project within the context of its neighborhood to determine a number of factors to assess whether or not the site is acceptable for the project. For example:
Section K: Income Approach to Value
This section calls for an estimation of a project’s economic life, cap rate, and capitalized value. Some of these calculations are based on entries completed earlier in the form.
Section L: Comparison Approach to Value
In this section, three comparable sales are analyzed to determine the value of the project. Assets are compared on the bases of total sale price, prices per unit and room, gross annual rents, and other factors. The form allows for certain factors requiring adjustments to the comparable properties. For example, a sales comp that involves a multifamily asset built in 1970 may necessitate an increase in that community’s value to account for the property’s loss in value compared to a brand new multifamily project. Similarly, property characteristics and amenities can also be the basis for further adjustment: For example, if a comparable property includes two swimming pools — but the project will have zero — the estimated value of those two pools will be subtracted from the sale comp.
Section M: Construction Cost Analysis
This section is meant to be completed by a certified construction cost analyst. The analyst will assess costs not directly related to the project’s residential use. For example, costs associated with parking and commercial space will be broken out here. Additionally, there is a space for the estimated costs of off-site construction requirements. Extending roads or water lines could fall into this category.
Section N: Signature, Appraiser Certification
This part is, as the section’s name implies, where all people involved in the appraisal sign and list their relevant certifications. The section asks about any potential conflicts of interest, including a disclosure of who is paying for the appraisal, to ensure an objective and accurate assessment of the report.
Section O: Remarks, Conclusions
This final section is where the appraiser writes an overall conclusion about the project, highlighting key elements of the report and indicating anything that may not otherwise be captured in the appraisal.
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