SureStay Motel Conversion to
Vista Ridge Permanent Supportive
Housing
Item M.4
LaTanna Jones, Director of Housing Services
2 Methodology
The appraisals used the Sales Comparison and Income Capitalization approaches to arrive at the value of the site.
Sales Comparison – Estimates value based on what other purchasers and sellers in the market have agreed to as a price for comparableproperties. Income Capitalization – Simulates the reasoning of an investor who views the cash flow that results from the anticipated revenue andexpenses on a property throughout its lifetime. Key steps involve:
(1)estimating the net income applicable to the subject property and (2)choosing appropriate capitalization rates and discounts. 2 3
Use of Property Affects Value
Motel Appraisal Value (2025):
100-unit Motel = $12,000,000
(120,000/unit)
Permanent Supportive Housing(2026)
51-unit value: $7,270,000
($142,549/unit)
3 4
Valuation Differences
100-unit motel 51-unit Permanent
Supportive Housing 51-unit Market rate rental
Annual rent/gross revenue $ 1,763,993.00 $ 1,065,360.00 $ 1,080,000.00 Net Other Income $43,467.00
Vacancy rate/collection loss-
4% $ [53,268.00] $ [54,000.00]
Effective Gross Income $ 1,763,993.00 $1,055,559.00
Operating Expenses $ [1,015,296.00] $ [661,690.00] $ [256,500.00] Annual Net Operating Income $ 748,697.00 $ 393,869.00 $ 769,500.00 Cap Rate 6.5% 5.75% 6.15%
Value (NOI/Cap Rate) $ 11,518,410.00 $ 6,849,904.00 $ 12,512,195.12 Appraiser used value $ 11,831,640.00
Fixture Furniture & Equipment $ 168,360.00
Notes
Note: The appraiser used
additional info. from investors and
an extraordinary assumption
exclusive to the appraiser to add
to calculations and arrive at a value
of $12,000,000.
The appraiser used an escalation
rate of 3% with an effective date of
7/1/27 to arrive at a value
of $7,270,931
4 5
Key Valuation Differences
100- Unit Commercial Motel: 51-Unit Restricted PSH:
5 6
Factors Impacting the Valuation Change:
Unit Count
Reduction
55-year
Affordability
Covenants
Supportive
Services
Expenses
7 Thank you!