How Does HelloData Calculate Multifamily Income and Expense Benchmarks?

How Does HelloData Calculate Multifamily Income and Expense Benchmarks?

HelloData calculates expense benchmarks for properties through a detailed, automated process that emphasizes accuracy and relevance:

1. Identifying Comparable Properties: The process begins by selecting properties that are most similar to the subject property based on criteria like physical proximity, construction year, number of units, and Gross Potential Rent (GPR) per unit within the same Metropolitan Statistical Area (MSA). This ensures that the benchmarks are based on comparable data.
2. Calculating Average Rent: We compute the average rent per unit by analyzing the last listed prices from recently closed listings over the past 90 days. These prices are closely aligned with actual rents, verified against clients' rent rolls. The average rent per unit is then multiplied by the number of units to estimate the building's total GPR.
3. Benchmarking Income Line Items: Using the 10 properties most similar in year built, unit count, location, and GPR per unit, we benchmark each income line item as a percentage of the GPR.
4. Estimating Income Values: The estimated GPR is multiplied by the percentage benchmarks of GPR to derive values for other income line items.
5. Calculating Estimated Gross Income (EGI): With the income line items established, we calculate the EGI for the property.
6. Benchmarking Expenses: The same set of similar properties is used again to benchmark each expense line item as a percentage of EGI.
7. Estimating Expenses: The estimated EGI is then multiplied by these benchmarked percentages to determine the expense amounts for each line item.

This entire sequence is executed automatically within seconds when a property address is entered into our system, eliminating the need for manual calculations.