• Welcome to AppraisersForum.com, the premier online  community for the discussion of real estate appraisal. Register a free account to be able to post and unlock additional forums and features.

2 Unit Multi-Family Question

Status
Not open for further replies.

Parham93

Freshman Member
Joined
Nov 19, 2008
Professional Status
Certified Residential Appraiser
State
Maryland
I received an order for a Multi-Family (1025). At the inspection I found that the subject property had a very large addition (2nd unit/house) built which was connected to the original by an enclosed breezeway. In my area since the addition (new house) was connected to the old it is considered an addition and not a 2nd dwelling on the property.

During the inspection I found the original house was fully functional with typical kitchen, bedrooms, bathrooms and other typical living areas. Total area is 2899 square feet above grade with a 1881 sf basement. (4780 sf gross building area.)

The new addition has typical bedrooms, bathrooms and living areas but the kitchen DOES NOT have a stove/range (or any cooking appliances) installed or included in the layout of the "kitchen". Per the homeowner, they own a restaurant and never did any cooking at home so they did not include a fully functional kitchen in the new addition/house. Due to the size of the "kitchen" area there does not appear to be any simple way of installing a stove/range that would fit into the floor plan of that room. Total area is 3,712 sf above grade with a 2196 sf basement. (5908 sf gross building area.)

Now typically I base my determination of a properties Mutil-Family status on 3 things:

1) Is the property income producing? (Yes - the homeowner resides in the New Addition/House and rents the original house)
2) Are the Units separately metered? (Yes - the new addition had its own electrical service installed. The subjects 2 units share a Private Septic System and are attached to Public Water System.)
3) Do the units have private entrances? (Yes – both units are individual dwellings attached by an enclosed breezeway, they do not share any finished areas.)

My question concerning this property is fairly basic.

Should the property be considered a multi-family unit considering it does not have a fully functional kitchen in the homeowners unit? I would have to consider the property as a 2 unit: 1 with 4,780 sf gba and 1 with 5,908 sf gba and a cost to cure to add a stove/range to the kitchen to make it a functional unit.

Or Should I consider it a Single Family with a very large in-law suite (since it doesn’t have a functional kitchen) and complete on a 1004 with a ton of commentary?

I have the order on hold while I try to figure out the best way of handling this property so any and all help would be greatly appreciated.

Thanks.

Paul

The zoning for the property includes Single Family Useage, single family with accessory and multi-family with county exception. So it could be any of the 3 and be considered legal. I have a call into the County Zoning to verify what the property status is with them but no return calls yet.
 
Last edited:
What is the area zoning?
 
Am sure this post will get lots of replies, I dont' have time right now to address in detail, but imo, I would not let the lack of a stove determine whether or not this should be appraised as a multi family or SFR with accessory unit.

1). If the 2nd house with no stove is rented, a tenant can use a hot plate for cooking. This is not ideal, and would eliminate some renters and might reduce rent, but it is possible. Some people rarely cook so it would not bother them that much since there is a full size fridge and other appliances. This addresses renting unit out in "as is" condition.

Regarding as repaired, or market impact on sales for not having a stove in one unit:

2). Even though it might be difficult or expensive to cure by installing a stove in this kitchen which is laid out poorly, it can be done. Since the dwelling is over 3000 sf, surely there is room to expand the kitchen somehow and add a range? Factor in the impact on marketability and cost to cure, but in most areas, an investor buyer would not be put off by the repair of adding a stove and kitchen expansion. They have seen and dealt with far more challenging repairs when buying properties. The buyers for duplex or even single family properties with income producing units are typically more experienced with repairing or remodeling property. The challenge of how to add a stove would not deter most of them from buying the property if other aspects of it are desirable.
 
Which County and what are the Municipal Building Department requirements for a legal two family dwelling? Does the County require a Certificate of Occupany/Compliance for the new(er) construction?
 
Multi-family means more than one family. Two detached dwellings on one parcel is a multi-family property. So, is a duplex.

Sometimes lenders specify that it's a multi-family property (rather than an accessory unit) if, it's metered separately, if it's rentable, separate entrance, if it's a legal or grandfathered use.
 
Zoning solved the issue.

Thanks for the info guys.

I just got a callback from Zoning and they apparently knew this property very well... which is never a good sign. Based on the zoning specifics for this property they are not allowed to add a second kitchen in the addition, they do not have approval for a multi-family use and due to its size and construction configuration it cant even be considered an accessory unit.

Now time to let the lender know the homeowner may have an illegally use going on depending on how many people are living in the rental unit... Sometimes when the thought...Maybe I should decline this order... crosses your mind it would be good to listen...

Thanks again.

Paul
 
I was suspicious of the owner's explanation of lacking a stove cause he works in a restaurant! (love it how people lie to us all the time ) . Yes, let the client know, if zoning is for single family, Sounds like an assignment perhaps not worth doing, see what happens!
 
Status
Not open for further replies.
Find a Real Estate Appraiser - Enter Zip Code

Copyright © 2000-, AppraisersForum.com, All Rights Reserved
AppraisersForum.com is proudly hosted by the folks at
AppraiserSites.com
Back
Top