"Rooming house"

[KJLhoxtrot]

Does anyone know how to appraise a "rooming house?" Subject has 11 rooms, 3 full baths, 1 kitchen, and a free-flowing layout. The highest and best use appears to be the current use, as an income producing property.

I don't know where to begin. What form this would be. Etc. etc. Any advice or assistance would be great?

 

[Tom D]

This would be considered a commercial loan, does your state allow you to do it.

 

[sputnam]

Does anyone know how to appraise a "rooming house?" Subject has 11 rooms, 3 full baths, 1 kitchen, and a free-flowing layout. The highest and best use appears to be the current use, as an income producing property.

I don't know where to begin. What form this would be. Etc. etc. Any advice or assistance would be great?

It depends on what your Client asked you to do and on the results of your Highest and Best Use Analysis. There are varieties of 'income producing property'. Using it as a single family rental is also income producing. Since you think that the HABU is it's current use, the question becomes, what value does the Client want. Fee simple market value of the real estate? Value of the going concern? To the best of my knowledge, no state requires a license to appraise a business. However, you certainly better be or become competent if you take on that assignment.

 

[J Grant]

Does anyone know how to appraise a "rooming house?" Subject has 11 rooms, 3 full baths, 1 kitchen, and a free-flowing layout. The highest and best use appears to be the current use, as an income producing property.

I don't know where to begin. What form this would be. Etc. etc. Any advice or assistance would be great?

Since you have no idea how to appraise it, the first step is to give it back. Lack of competence and no experience with it leaves you open to the complaint- plus it might be seen as a commerical hotel type assignment which is beyond a res license-

PS_ if subject is a SFR that someone is renting out a bunch of rooms in the current hotel like HBU might not be legal -

 

[Jerry Bone Jr]

Does anyone know how to appraise a "rooming house?" Subject has 11 rooms, 3 full baths, 1 kitchen, and a free-flowing layout. The highest and best use appears to be the current use, as an income producing property.

I don't know where to begin. What form this would be. Etc. etc. Any advice or assistance would be great?

Have you considered using comparable sales?

 

[jay trotta]

IMO-it in some part comes down to zoning compliance, and the issue's surrounding that.

 

[Surf Cat]

I'm assuming this is a converted SFR..... probably located close to a college...

Does the client know this is a boarding house with 11 rooms as opposed to what's on public records? If you've inspected, this is your first step to let the client know before proceeding.

Do each of the bedrooms have the proper Ingress / egress for safety purposes? Heating?

I've done a couple of these. Never for a conventional loan though. They've been for hard money lenders because they don't conform.

 

[BRCJR]

post 7 covered my questions....other than, does each room have a contract in place?

 

[Surf Cat]

Have you considered using comparable sales?

Amazingly enough, in the couple that I've done, there "are" comparables available. You have to decode the realtor lingo in the MLS and make phone calls.

There's definitely not a shortage of slumlords here in Los Angeles whom throw caution to the wind in regards to health and safety concerns.

On one of the boarding houses that I did, I had to stop at McDonald's on the way home. As some of the residents were partaking instead of studying. I don't think Fernando could have made it through the entire inspection....

 

[George Hatch]

There's more than one type of group living usage. Frat/Sorority, student housing, sober living or halfway house, board/care for the old or infirm, etc. I've even seen a couple that were used as worker housing where they were renting to their own employees. Many of the operators have effectively purchased a job for themselves so there is often little or no passive investor activity among the market participants.

Depending on the floorplan the typical buyer for one of these can often be different from the current operation. It's not uncommon for these to go vacant when they're not bringing in enough net income to debt service, so the lenders usually don't get the business.

Unless there's an established lease I generally appraise these properties in fee simple off the SC.