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Air BNB Occupancy question

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
If an owner runs their single family house as an AirBnb, but then decides to stop and just live there, it is still a house. Structurally and per zoning, it was always a house. If owner decides to sell , it will compete against other residential houses on the open market.

If an owner runs their small Inn as a B and B hotel use,, but then decides to stop and just live there, it is still a B and B. Structurally and per zoning, it was always a B and B .If owner decides to sell, it will compete against other small Inns/B and B properties on the market.
 

Non Sequitur

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Supporting Member
Joined
Feb 14, 2002
Professional Status
Certified Residential Appraiser
State
Louisiana
The owner is operating the property as a commercial hospitality business, that business including some non-realty interests which are not part of the realty interest you are appraising. Mark the box as "owner-occupied" and then include a prominent disclosure which explains the non-residential use of the subject, which is atypical for such properties. If the property is sold it would most likely be sold to an owner-user.

You do not work for the form; the form works for you.
George's post is worth the price of admission.

What's driving this debate is owners of Airbnbs believe the income stream makes their property worth more than similar properties that do not have that income stream. That may be true, but it also makes the assignment commercial in nature.
 

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
George's post is worth the price of admission.

What's driving this debate is owners of Airbnbs believe the income stream makes their property worth more than similar properties that do not have that income stream. That may be true, but it also makes the assignment commercial in nature.
You did not get George's post since you say the above.

The owner Believes their income stream makes their property worth more, but since the property itself is a regular house or condo , it will compete on the open market as a sale against similar houses or condos, so why would a buyer, (unless they are an idiot), pay more for the subject ? A well informed buyer would not pay more , because they could buy a similar house or condo and run it as an airbnb.

Unless the assignment is to appraise the income stream, it is not a commercial assignment.

I personally would not check owner occupied unless the owner truly does occupy it , if the owner lives elsewhere how does it merit an owner occupied - but regardless of which occupancy box checked, it is a residential valuation with disclosure it is being used as an aribnb by current owner.
 

Non Sequitur

Elite Member
Supporting Member
Joined
Feb 14, 2002
Professional Status
Certified Residential Appraiser
State
Louisiana
You did not get George's post since you say the above.

The owner Believes their income stream makes their property worth more, but since the property itself is a regular house or condo , it will compete on the open market as a sale against similar houses or condos, so why would a buyer, (unless they are an idiot), pay more for the subject ? A well informed buyer would not pay more , because they could buy a similar house or condo and run it as an airbnb.

Unless the assignment is to appraise the income stream, it is not a commercial assignment.

I personally would not check owner occupied unless the owner truly does occupy it , if the owner lives elsewhere how does it merit an owner occupied - but regardless of which occupancy box checked, it is a residential valuation with disclosure it is being used as an aribnb by current owner.
Again "IF" any property is worth more due to non-realty income stream (whether traditional BnB, Airbnb, gas station, CVS store, etc.) the assignment is commercial. That's classic H&BU.

Owners of these properties, essentially, are trying to borrow against that income stream believing their residential dwelling is worth more than what similar residential dwellings are selling for. That's commercial practice and resi appraisers shouldn't pound that into a residential form.
 

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
Again "IF" any property is worth more due to non-realty income stream (whether traditional BnB, Airbnb, gas station, CVS store, etc.) the assignment is commercial. That's classic H&BU.

Owners of these properties, essentially, are trying to borrow against that income stream believing their residential dwelling is worth more than what similar residential dwellings are selling for. That's commercial practice and resi appraisers shouldn't pound that into a residential form.
it Is NOT worth more than other properties, because any competing similar property can yield that income stream if owner uses it as an air bnb
MV assumes a well informed buyer acting knowledgably - (not a moron ) A well informed buyer would not pay 50k more for a 1000 sf condo used as an airnb, when they can buy a model match 1000 sf same condo for 50 k less, and run it as an air bnb to get that same income stream.

A gas station competes against other gas stations, it does not compete against bootleg use of a residential house with a gas pump out back. Owners are monetizing these residential areas in a bootleg manner. The fact that an owner might want to borrow against that income stream is not an appraisal issue, it is a lender issue. Fannie and friends now allow air bnb income, to maximize profits for lenders by allowing whatever .

A valuation problem has nothing to do with a form, it has to do with what the property will compete against on open market. Residential properties compete against other residential properties, any of which can offer air bnb use. A HBU has to be legal. Airbnb hotel use on a residential property may not be legal per zoning, it is a gray area that some cities crack down on , but others give it a pass. That FF allows it to qualify as income is their decision , but it is a borrower qualification independent of the appraisal.
 
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residentialguy

Elite Member
Joined
Mar 24, 2009
Professional Status
Certified Residential Appraiser
State
Minnesota
If an owner runs their small Inn as a B and B hotel use,, but then decides to stop and just live there, it is still a B and B. Structurally and per zoning, it was always a B and B .If owner decides to sell, it will compete against other small Inns/B and B properties on the market.
How is a b&b different than an airb&b? I've been to both and they're the same. Just a res house. I've had both make me breakfast.

Edit: oh you mean it started as a hotel?
 

George Hatch

Elite Member
Gold Supporting Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
California
You did not get George's post since you say the above.

The owner Believes their income stream makes their property worth more, but since the property itself is a regular house or condo , it will compete on the open market as a sale against similar houses or condos, so why would a buyer, (unless they are an idiot), pay more for the subject ? A well informed buyer would not pay more , because they could buy a similar house or condo and run it as an airbnb.

Unless the assignment is to appraise the income stream, it is not a commercial assignment.

I personally would not check owner occupied unless the owner truly does occupy it , if the owner lives elsewhere how does it merit an owner occupied - but regardless of which occupancy box checked, it is a residential valuation with disclosure it is being used as an aribnb by current owner.
As I read it, the operative phrase in his post was what the owners *believe*. They *believe* the RE itself is worth more than other parcels of otherwise similar legal and physical attributes. Just like they *believe* their 2000sf home is worth just as much as the 2600sf that just sold down the block.

Now the combination of the realty + non-realty interests onsite might indeed be worth more than the value of the realty of the model match next door, except we're excluding the valuation of non-realty interests in these appraisals.

And if a reader wants to argue that point, we can just refer them to the hardwired verbiage on the report forms we use. We identify the property rights being appraised on pg1 of the report (Fee Simple, Leased Fee, Leasehold, other), and we explicitly conclude to the value of the real property that is the subject of our report in the Reconciliation.

As for B&Bs those are usually houses, although they'll occasionally also run a motel or multi-family property that way. Same with most of the group homes being operated out of regular SFRs. Unless they're making modifications to the structure that would detract from single family occupancy then WYSIWYG.

reconciliation.JPG
 
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J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
 

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
Above post from an internet search, a bed and breakfast is typically licensed and is multi room occupancy, even though the exterior can still look like a house. Usually the interior has had some modifications. It is a real business entity as a boutique kind of small hotel or inn, B and B the common name for them -
 

J Grant

Elite Member
Joined
Dec 9, 2003
Professional Status
Certified Residential Appraiser
State
Florida
Aside from the RE aspect, fwiw I have mixed feelings about these bootleg hybrid grey area activities -Uber displacing a taxi and Bnb Displacing a hotel. They do give ordinary people a chance to monetize a car or property they own, but how much $ do most people make from them, and there is an element of risk and danger wrt criminals ripping off the driver or passenger, or owner of house or wrecking the property,- lacks the oversight and security of a licensed business .

..
 
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