Similar to the Sales Valuation, Blooma will summarize the system-returned rent comps within the table in the "Rent Comparables" section of the summary page. That table includes unit mix data for the component, which the average rent comp values are applied to. The unit mix data is parsed from the deal Offering Memorandum/Executive Summary, or from Blooma's valuation APIs. Users are able to edit this unit mix data at any time.
Potential Comp Revenue - Rent comp data is summarized and displayed in a $/SF and $/Unit (if residential) format. Blooma will summarize the rent comps and determine an average $/SF for each unit type within the component unit mix. If the component is residential, then Blooma will apply the average $/SF to the average SF/Unit to determine the average $/Unit. The summarized $/SF will then be applied to the component square footage to determine the market revenue per unit per month.
Example: A new financing request is received, which is secured by a 100-unit apartment complex. The complex consists of multiple unit types including: studios, 1 bed/ 1 bath, and 2 bed / 2 bath units. Let's assume the average square footage for the three unit types is 500SF, 750SF, and 1,000SF. Let's finally assume there are 25 studio units, 25 1bd/1ba units, and 50 2bd/2ba units.
In determining an income valuation, Blooma will calculate the total potential rental revenue each of those three unit types could make per month, based on nearby apartment buildings with similar offerings. Blooma will pull nearby rental comparables for each of those three unit types. Blooma will then calculate the average rental rate per square foot of those rent comparables. That average $/SF will then be applied to the average square footage of each of the unit types in the subject property.
Using the example data above, Blooma would look at what studios are renting for in the immediate area. Blooma would summarize the average rental rate per square foot of comparable studios. Blooma would then take that average, let's assume $2.00/SF, and would apply it to the subject studios which are 500 square feet in size on average. Blooma has determined that based on market rental data, the subject studios could each rent for $1,000/mo. Blooma then multiplies that average across the total number of studios within the subject property to determine how much monthly revenue could be made. Our example assumed there are 25 studios, and we previously determined that the market rate for each of the subject studios would be $1,000/mo, so the combined sum of studios within the subject property would generate $25,000/mo in revenue based on market rates.
This same process would occur with the 1 bedroom and 2 bedroom units from our example as well. Blooma would then sum the total rental revenue for all units within the subject property to determine the total amount of revenue the property could generate on a monthly basis, based on market rates.
Net Operating Income - The final revenue total for the component will then flow through the proforma profit and loss statement. Users have the option to use the revenue pulled from the rent comps, the total rent roll revenue, or any alternative gross revenue of their choosing.
Blooma populates market data to complete the Vacancy & Concessions and Operating Expenses sections of the proforma P&L, to calculate the Net Operating Income for the Component.
Final Income Valuation - The Net Operating Income determined by the proforma profit and loss statement is then divided by a cap rate (either set by market cap rate data, client default, or the user) to determine a final Income Valuation for the component.
The final Income Valuation will be displayed at the top of the Summary page or on the Property Valuations page along with the full calculation breakdown.
