1007 Rental Analysis: SFR w/ADU

[ZZGAMAZZ]

Assignment: Conventional lending, non-arms-length purchase of renovated SFR wih new ADU in a densely populated, high volume rental market [Inglewood, CA] that requires 1004 and 1007, per Engageement.

Only 1007 options I can think of:
1) Lisings in which Main DU and ADU are included in the same lease [search 3 miles and 700 days: hundreds of existing leases but None that include both units]
2) Hybrid 1007 populated with a few lease dSFR's and a few leased ADU's, with the most probable rental value of each type combined to reflect Opinion of monthly market rent
3) To find existing MLS lease listings of either SFR or ADU [with existence on the same parcel of another unit, a mentioned in the current MLS description] which however isn't included in the listing; then contact each listing agent to request a "favor" by them finding out the lease terms of the other unit, which I would then combine [presumable reflecting the atypical status of two units being included in one lease as it affects marketability]. If it's even possible for me to convince realtors to agree to help...

Hope I was able to describe #2 and #3 above succinctly.

Uncanny that this challenge is faced simultaneous of another current purchase assignment, which requires 1004/1007/216, in a faraway residential market, of a SFR marketed as a "Fixer" that's questionably inhabitable, consequently there being literally no lease comps in such adverse condition, unable to reflect condition in the 1007 grid, requiring "guesstimate" of market rent???? [.... which is the basis of ANOTHER question about form 216 instructions that tell the appraiser not to include vacant units, although the subject is vacant.......]

 

[sputnam]

Do two separate 1007s. One for the property with the main dwelling. One just for the rent the ADU would generate.

 

[ZZGAMAZZ]

Do two separate 1007s. One for the property with the main dwelling. One just for the rent the ADU would generate.

Without data to prove it, seems that the potential income from leasing both together would be less than two separate leases, eh?

 

[sputnam]

Without data to prove it, seems that the potential income from leasing both together would be less than two separate leases, eh?

Maybe. There is no requirement that the appraiser be accurate. It's opinion. The requirement is that the valuation be supported and credible. If there's no good data then, there's no good data. You figure out a way to support your opinions and conclusions... or... you withdraw or decline.

 

[Tom D]

Putting both together on 1 form would seem confusing to a normal reader. How would you know the rental income if one unit was vacant during rental period. Leasing both together does not give you a discount, well maybe a little. Kinda like a long staying tenant below market rent. But you are making an assumption as to both being the same party. I wouldn't.
Bet they didn't pay you for 2 1007 forms.

Your guesstimate on any parts is better than the civilians guestimate.

 

[Tawfik Ahdab]

Be careful with the assignment and research whether the jurisdiction allows both of the main residence and the ADU to both be rented at the same time. Some communities will allow only one or the other to be rented at any given time, but not both.

Find out what’s legally permissible under the zoning first.

 

[ZZGAMAZZ]

Be careful with the assignment and research whether the jurisdiction allows both of the main residence and the ADU to both be rented at the same time. Some communities will allow only one or the other to be rented at any given time, but not both.

Find out what’s legally permissible under the zoning first.

I know that as well as I know my name... but totally overlooked it and do so ASAP. Contemp Cali ADU regs allow both SFR and ADU to be leased although adding a second, Jr ADU requires the owner to occupy 1 of 3 units, but this is a newer market for me. THANKS...

 

[Fernando]

I will be seeing this property this week and I'm afraid I will encounter an ADU. I sense it.
I checked the zoning and fortunately, my subject's lot size although large just missed the minimum requirement to have a duplex.
Thus subject's zoning allows only a legal SFR.
However CA law (SB 9 ) allows an ADU and JADU on most single family lots. Checking the permits, I don't see a legal ADU.
Still the market here accepts "well constructed" illegal ADUs and I will have to give them value based from market.
Personally, I hate to deal with ADUs and would avoid these kinds of assignments.
However if my subject has it, I will have to deal with it. Ugh.