Added Value of a Rented Coach House to a Single-Family Home?

[JTip]

Not one comp with a rentable coach home in the same town.

Sounds like to me that nobody wants that headache, responsibility or liability. I bet the million dollar neighbors hate that house, never knowing what 'renter' will occupy the backyard shack.

 

[Amy Perkins]

I am selling a single-family home that includes with it a fully equipped coach home. It has separate utilities and a distinct address. It pays a very sizable rent and is a major motivating feature for all buyers. I read that a combined income and sales approach is acceptable when the subject property consists of the primary living unit and an income-producing ADU where income is a factor in the buyer’s decision-making process. My untrained approach as a RE agent would be to value the main home alone and add a coach home value based upon a Cap Rate calculation of the coach house value for the current rent.

Any thoughts on valuation?

I'm imagining something on wheels without a permanent foundation, if you can drive it away, my guess is the bank won't lend on it. Personal property. Would the owner drive it away if it were to go into foreclosure? Get my point? It's only worth it from one person to another. I don't know what this "coach" term actually means, but seems like it can be moved.

 

[Dublin ohio]

I don't know what this "coach" term actually means, but seems like it can be moved.

I do believe many call it a carriage house. I am guessing in this case coach is basically a synonym for carriage

 

[Charles West]

If it looks like this definitely adds value but likely worth more when used as a extended family member setup rather than as income producing. Just do a straight 1004 and ignore the income aspect.

 

[glenn walker]

Thats quite nice Uncle Billy and Rambo would have loved to live in that

 

[Tiffany Gibbons]

Unfortunately, it cannot. (But if it could, I would use a Cap Rate or GRM to determine value, which in my mind, would more realistically value the place).

Also, keep in mind buyers looking for such properties most of the time do not rent them out but use ADU's as "granny flats", "in law quarters","teenage angst relief housing", or for out of town guests, etc., and do not actually rent them out at all, especially $1 million+ price range and up homes because the owners don't usually need the additional income. It's a hassle to rent properties unless it's a resort area, college or fetival town, etc. No cap rates, I'd find other home sales in the area with similar ADU's, but I get that it's your job to sell, sounds like you're on that with the "coach house" description, which is lovely. It's difficult to establish market rents on those too. Each have their little quirks the tenant has to live with unlike corporate apartments. And some owners don't ever raise the rent to market levels in my experience.

 

[DTB]

Not one comp with a rentable coach home in the same town. (A wealthy community with most homes over $1m).

What was its prior sale like, compared to similar properties w/o coach house? That will give you an idea.

 

[Tiffany Gibbons]

I do believe many call it a carriage house. I am guessing in this case coach is basically a synonym for carriage

Might be historic (built before cars were a thing). Oak Park has several Frank Lloyd Wright homes. I don't think OP meant a "motor coach".

 

[Amy Perkins]

A carriage house is a really old garage. Is this a converted detached garage? If so, it adds some value. Typically, a two unit owner occupied property would allow a person to use the income to qualify however its done on a 1007 which is 2-4 units. My guess is that it is an SFR with assessor building, so it goes on a 1004. You could get a rent survey. However, in a higher end neighborhood it's usually a person who uses it for guests, which would bring a higher price than a rental...most of the time in my experience. However, if it's in a cheap area, 2-4 units would be a better value. So, just market it as guest quarters. If you are desirous of calling it a carriage house; no one will understand what you mean and just think about Cinderella.

 

[sputnam]

I am selling a single-family home that includes with it a fully equipped coach home. It has separate utilities and a distinct address. It pays a very sizable rent and is a major motivating feature for all buyers. I read that a combined income and sales approach is acceptable when the subject property consists of the primary living unit and an income-producing ADU where income is a factor in the buyer’s decision-making process. My untrained approach as a RE agent would be to value the main home alone and add a coach home value based upon a Cap Rate calculation of the coach house value for the current rent.

Any thoughts on valuation?

That would be one reasonable approach providing the current rent is also market rent. Better would be to locate sales of other properties that have rental units and do a Sales Comparison Analysis. Even better would be to look at it using both approaches. Of course... you could just hire an appraiser.