Panel Discussion: The Rent Comparability Study (RCS) process
How HUD’s review of Rent Studies is evolving, and how owners should respond.
Laura Burns (The Signal Group), Cash Gill (Gill Group), and John Doyle, MAI (left to right)
John Doyle presented in a panel discussion with Laura Burns and Cash Gill at NLHA’s 2018 Annual Membership Meeting in Washington, DC. In this post, we break down the RCS process, key risks, and appeal strategies from industry experts.
Discussion Points
HUD has taken an increasingly active role in reviewing Rent Studies, a shift driven in part by the 140% of Zip Code Median Rent test.
There is a more specific process developed by HUD for reviewers- this may have helped eliminate some reviewers that were not following the process but may have also introduced more detailed review…
This process has introduced a new twist to how to resolve disagreements—can we still appeal?
Owners need to advocate for themselves and pay attention to the review process.
Appraisal companies like the ones on the panel- Gill Group & Doyle Advisors (and The Signal Group too)- may play different roles- work for owners, work for HUD, act as a reviewer—these experts understand all sides of what the job is and how to make sure you are getting what you need.
What are items that an owner should be aware of when obtaining an Rent Comp Study, that may affect its usefulness?
Qualifications of appraiser
How long the report is acceptable without an update
Steps to update
Aside from just the rents themselves for a HAP contract, what other things can an RCS affect? These include how the rents don’t just affect the bottom line but how they can affect the overall value, the ability to sell properties with lower rents (but maybe lower cap rates), the effects concluded rents have on other affordable projects in the area, and more.
How should Rent Study Appeals be handled?
Not all disagreements require formal appeals — sometimes negotiation or correction without an appeal yields a better outcome.
A contentious Comparables selection, poorly substantiated methodology, or weak narrative are common points that a contract administrator or HUD reviewer will challenge. For an appraiser, best practices are to document methodologies and sources and communicate these when applicable to a client.