MODEL DESIGN
How to Build a Value-Add Model for Affordable and Workforce Multifamily
Overview
ARTICLE IN PROGRESS
We're writing a deep engineering essay on AQ-132. How we built it, the design choices behind it, and how to use it. The model itself is live and available today.
AQ-132 is the value-add multifamily model for affordable and workforce housing. The rent roll is bucketed across four AMI tiers, rent growth is capped by regulatory ceilings, and a market-comp gap analysis quantifies the spread between the constrained rent and the unrestricted market. A different game from market-rate value-add, with a different model to match.
Planned Sections
When the full piece is published, it will cover:
- Affordable and workforce as a regulated value-add: a different game than market-rate.
- Design choice: 4-tier AMI bucketing for the rent roll.
- Design choice: AMI-constrained rent growth caps.
- Design choice: market-comp gap analysis.
- Design choice: light-touch regulatory compliance tracking.
- How to use the model for naturally-occurring affordable housing deals.
For an example of the engineering-essay format this article will follow, see how we engineered AQ-141, the Multifamily Opportunistic Pro Forma Model.
About the Model
AQ-132 is an Institutional-tier multifamily value-add pro forma for affordable and workforce housing. 4-tier AMI bucketing, AMI-constrained rent growth, market-comp gap analysis. Built for REPE shops acquiring naturally-occurring affordable housing and other regulated value-add positions.