RAD Component 2 for private owners
RAD's Second Component lets private and nonprofit owners convert expiring or short-term HUD aid (Rent Supplement, RAP, Mod Rehab and SRO, Section 202 PRAC, Section 811 PRAC and Senior PRAC) into a 20-year renewable PBV or PBRA contract. It has no unit cap or deadline, and the contract becomes something lenders can underwrite.
Component 2 is the part of RAD that applies to privately owned properties with older forms of HUD rental aid. Those contracts are short, unrenewable or, in the case of PRAC, structured in a way lenders cannot underwrite. RAD swaps them for a standard Section 8 HAP contract, PBV or PBRA, that runs 20 years and must be renewed. Unlike public housing conversions, Component 2 has no cap and no deadline.
Which properties are eligible
| Program | Where it stands | Contract options |
|---|---|---|
| Rent Supplement (section 101) | Fully converted, per HUD (August 2026) | PBV or PBRA prospectively; PBV only retroactively |
| Rental Assistance Payment (RAP, 236(f)(2)) | Fully converted, per HUD | Same |
| Moderate Rehabilitation and Mod Rehab SRO | About half of units converted, per HUD | Same; Mod Rehab is processed only under Component 2 |
| Section 202 PRAC | Eligible since FY2012; first conversion in 2020 | Owner’s choice of PBV or PBRA |
| Section 811 PRAC | Added to the statute; HUD’s notice has no 811 section yet | Not confirmed |
| Senior PRAC (SPRAC) | Added by the FY2024 appropriations act | Not confirmed |
HUD’s RAD Overview (August 2026) says Rent Supplement and RAP conversions preserved over 27,000 units, and that 202 and 811 properties together total about 155,000 units.
How big the pool is
HUD’s Multifamily Assistance and Section 8 Contracts database (snapshot October 6, 2026, HUD-administered contracts only) shows:
| Program type in HUD’s database | Contracts | Assisted units |
|---|---|---|
| PRAC/202 (not yet converted) | 2,761 | 118,942 |
| PRAC/811 | 2,922 | 32,720 |
| SPRAC | 14 | 1,657 |
| RAD PRAC conversions (PBRA) | 115 | 7,496 |
| RAD Rent Supp/RAP conversions (PBRA) | 90 | 13,148 |
| RAD Mod Rehab conversions (PBRA) | 90 | 7,227 |
RAD PBV conversions are not in that database because voucher agencies administer them. HUD’s separate list of closed Component 2 deals, last posted with data as of June 1, 2024, counts 476 conversions and 44,691 units: 120 Rent Supp, 106 RAP, 88 Mod Rehab, 80 Mod Rehab/SRO and 82 PRAC. HUD has not updated that file since.
What the contract looks like
PBRA. A 20-year HAP contract executed by HUD’s Office of Housing, subject to appropriations, renewable at expiration under section 524 of MAHRAA. Rents adjust only by OCAF each year. The property is governed by 24 CFR part 880 as modified by the RAD notice.
PBV. A HAP contract with a voucher agency willing to administer it. For 202 PRAC the initial term must be 20 years. For Mod Rehab, Rent Supp and RAP, HUD makes a reasonable effort to find a PHA with jurisdiction if the current one declines.
Use agreements. Every conversion records a long-term use restriction. For 202 PRAC, the capital advance documents (agreement, note, regulatory agreement and use agreement) are released and replaced by an Elderly Housing Use Agreement recorded in first position, with a term of 20 years plus whatever remained on the capital advance use agreement.
Rent rules by program
| Program | Initial contract rents |
|---|---|
| Mod Rehab to PBRA | Lesser of market rent from a rent comparability study (RCS) or 110% of FMR less utilities, or 120% in qualifying areas; post-rehab rents allowed with an “as-is” and “post-rehab” schedule |
| Rent Supp / RAP to PBRA | Lesser of RCS market rent or 110% of FMR (120% in qualifying areas); projects in HUD-designated High Cost Areas start at market rent with no FMR cap |
| Mod Rehab, Rent Supp, RAP to PBV | Set by the PHA, not above 110% of FMR (or the exception payment standard) less utilities or reasonable rent |
| 202 PRAC, PBV or PBRA | The approved PRAC rents (operating expense amounts); 120% of FMR applies only if the owner uses the rent increase authority; Small Area FMRs on request |
The qualifying areas for 120% are communities with high rent burden where vouchers are hard to use, areas with poverty below 30%, or neighborhoods with material private revitalization.
The 2025 PRAC Preservation Rent Increase
Housing Notice H-2025-04 (September 19, 2025), funded from $12 million in FY2022 and FY2023 appropriations, supersedes part of Supplemental 4B and offers 202 PRAC owners converting to PBRA with new third-party debt a rent increase:
| Scope | Increase |
|---|---|
| New construction or substantial rehab (hard costs above 60% of HCC) | Up to $300 per unit per month |
| Rehab between 30% and 60% of HCC | Up to $200 per unit per month |
| Broadband infrastructure | Up to an additional $50 |
| Projects of 20 units or fewer | Alternatively, rents up to 120% of FMR |
The scope must include aging-in-place or broadband work, and funds are reserved first come, first served through the RAD Resource Desk. Supplemental 4B had offered $250 and $100.
Eligibility and process for 202 PRAC
- The PRAC should be in its renewal term (an initial-term PRAC depends on funding timing) and the owner must be in good standing with HUD.
- PBRA conversions need a REAC score of 60 or higher unless the plan cures the deficiencies. PBV conversions must qualify as existing housing.
- Owners submit interest through the RAD Resource Desk, which assigns a Transaction Manager. HUD may prioritize projects with immediate capital needs, third-party funding or PBRA conversions.
Resident protections
The 2018 amendment to the statute bars re-screening, termination of assistance or eviction because of a Second Component conversion. Davis-Bacon generally does not apply to the conversion itself; see Davis-Bacon and RAD. Since July 11, 2026, Public Law 119-101 also lets HUD impose civil money penalties for material violations of Second Component requirements, and its savings clause keeps tenant rights enforceable by tenants.
Why Component 2 matters for financing
A PRAC pays only operating costs and was never meant to carry debt. A Mod Rehab contract renews year to year. Converting to a 20-year Section 8 contract changes what a lender sees:
- Freddie Mac’s Section 8 financing treats a new 20-year contract as long-term rental assistance.
- FHA’s MAP Guide allows a mortgageable developer fee for Section 202 refinancing and RAD transactions where BSPRA or SPRA is not also used.
- The RAD statute allows PRAC capital advance notes to be subordinated or restructured.
- The 2026 appropriations act (P.L. 119-75, Sec. 241) lets HUD fund due diligence, underwriting and technical assistance for small properties and owners converting under either RAD component.
The RAD for PRAC financing guide covers loan structures and the FHA 223(f) guide covers refinancing. Owners exploring a conversion can send the property to Janover Capital LLC’s desk at get financing.
Related: what is RAD, PBV vs PBRA, RAD rents and OCAF.
Sources
- HUD, RAD Notice Revision 4 as amended by Supplementals 4B and 4C: Section II (Mod Rehab), Section III (Rent Supp and RAP), Section IV (202 PRAC).
- HUD, Housing Notice H-2025-04, PRAC Preservation Rent Increase, September 19, 2025.
- HUD, RAD for 202 PRAC program page.
- HUD, RAD Overview, August 2026.
- HUD, Multifamily Assistance and Section 8 Contracts database, current as of October 6, 2026; tabulated by program type.
- HUD, RAD Multifamily closed transactions (RAD_MF_Closed_Web_20240601.xlsx), data as of June 1, 2024, via RAD program details.
- HUD OGC, RAD statute compilation, March 19, 2024.
- Public Law 119-101, §212; Public Law 119-75, Div. D Sec. 241.
- Freddie Mac, Optigo HUD Section 8 Financing; HUD, MAP Guide (2020, rev. March 19, 2021), §3.1.29.
This guide is general information, not legal advice. Eligibility and rents are set by HUD on each conversion request.
Short answers
What is RAD Component 2?
The Second Component of the Rental Assistance Demonstration. It converts older HUD rental assistance on privately owned properties, including Mod Rehab, Rent Supplement, RAP and Section 202 PRAC, into long-term Section 8 PBV or PBRA contracts. It has had standing authority since fiscal year 2012 and no unit cap.
Is there a deadline or cap for RAD for PRAC?
No. The RAD statute authorizes Second Component conversions for fiscal year 2012 and thereafter with no unit cap. The 555,000-unit cap applies only to public housing under the First Component.
What rents does a 202 PRAC get after a RAD conversion?
Initial rents equal the approved PRAC rents (operating expense amounts). Owners converting to PBRA with new third-party debt can apply for a Preservation Rent Increase under Notice H-2025-04 of up to $300 per unit per month for heavy rehab or new construction, $200 for moderate rehab, plus up to $50 for broadband.
How long is a Component 2 HAP contract?
Twenty years for PBRA conversions, renewable under section 524 of MAHRAA, and twenty years for 202 PRAC conversions to PBV. Mod Rehab, Rent Supp and RAP conversions to PBV follow PBV term rules, generally up to 20 years.
Can a Mod Rehab owner convert after the contract has expired?
Yes, as a retroactive conversion to PBV only, if the contract expired and tenant protection or enhanced vouchers were issued on or after October 1, 2006, and the administering PHA consents. Prospective conversions, before expiration, may choose PBV or PBRA.