1007 question - Short term rentals

[Lee Lansford]

How do you fill in this form when the subject property is a SFR being utilized as a AIRBNB/VRBO?
Many of my associates do not have this knowledge.

Any help would be greatly appreciated.

BC

The 1007 is NOT intended for STRs. SFR STRs are much like a 1-unit hotel as there is a business operation and personalty involved. The fact that your subject is a STR does not change what you typically do in developing an opinion of the monthly rent.

 

[RustyTapeMeasure]

And this is exactly why I turned down the appraisal order offer on this STR for a cash out refi.

 

[Sadie]

A 1007 is simply to determine what the market rent of the subject would be as a traditional rental. There is no determination of HBU or usage, just what would it rent for in a typical rental market. Don't read anything into it. This is not unusual. They probably have the financials. How the lender underwrites the loan is not your business.

 

[BRCJR]

The subject information on the 1007 is just that.. information. If you are doing a market value appraisal AND you have determined that the Highest and Best Use of the property is a single family dwelling.... then how the subject is being used not very relevant to your valuation analysis. The form does not drive your appraisal. Use the form in any way you want to.. as long as you are careful to not be misleading. I can think of several approaches.... 1- annualize the subject's gross income then convert to average monthly rent. 2- Just write in 'See Comments'... and then explain.

If you determine that the HABU is for short term rentals... then you are appraising a tiny motel and the 1007 (and the 1004) are probably not appropriate forms.

As stated above... an AirBNB/VRBO is a business... if you are appraising the business.. fine. But then, you shouldn't be using the 1004 or 1007.

Converting gross to a monthly rent does not take into account the additional expenses the operation incurs. Cleaning costs is one that comes to mind. Continual advertising is another.

 

[Charles West]

My wife wants to rent her place as an Airbnb type deal and wants me to handle it so something I have to look into.

 

[Airstream]

I lived in Door County for 10 years. The last few years I lived there a significant number of properties were being purchased for arbnb. Banks wanted me to use 1007. I say, no way. 1007 is a MTM. Try getting MTM rental information on a million dollar lake home! And then find similar rentals to determine market rent. And trying to get reliable income data on a arbnb is next to impossible. Way too many variables. I just refuse the assignment from the get go.

 

[redfish]

They just use the income statements from the owner in short term rental situations when qualifying a borrower with a income producing property that is genrateing a short term rental income and not ask the appraiser for a 1007.

 

[Cob]

Short Term Rentals | Fannie Mae Multifamily Guide

Requirements You must ensure that:

mfguide.fanniemae.com

 

[Airstream]

Short Term Rentals | Fannie Mae Multifamily Guide

Requirements You must ensure that:

mfguide.fanniemae.com

Interesting. I just don’t do them if they ask for more than a 1004.

 

[J Grant]

Appraisers should NOT confuse the fact that Fannie will accept air bnb INCOME for borrower qualification,

Not confuse it appraiser should use Air Bnb short term rents for a 1007 on the appraisal for the property. (imo a terrible idea, been posted frequently why )