Appraising a 2 family Condominium

[Valuation Guy]

I'm appraising a 2 family condominium in Howard Beach , NY.
This is a rare breed of condominium, with absolutely no arms length comparable sales from within the subject's project in the past 4 years, the subject's neighborhood and an expanded search outside of the subject's neighborhood . Even though the subject is a condominium it's legal use as a 2 family unit is how I intend to value it. I'm going to use the 1025 form and the 1004 C (Condominium Addendum).
Now the fun starts. This condo unit is a 3 story bldg. with an owners unit, rental unit, and an illegal (non-permitted) accessory unit on the 1st floor. I plan on including the GLA for this unit in my valuation but that's it. No value is being given to this unit's potential rental income since it is not a legally permitted unit and there is not enough comparable data to justify it being common and typical even though most units in the subject's project are being utilized in a similar fashion.
My question however is: Where should I represent the GLA and the room count for this accessory unit on the sales comparison grid of the 1025 form ?

 

[hastalavista]

I think there is a check-box on page one of the 1025 to indicate "accessory unit".
Since this is non-UAD (thankfully), you can line-item the accessory unit's GLA where you want on the grid.

I'm not familiar with the 2-unit condo configuration you describe.
We have condos, we have 2-unit condos (previously duplexes), and we have 2-unit condos that were previously duplexes and have accessory units (sometimes permitted, sometimes not; but in the 2-unit configuration, while it may be permitted, it is legally not allowed to be rented). But in the 2-unit condos, each unit is seperate (although they could be owned by the same owner); their H&BU would be as individual units (as a rule).

In your case, I presume the 2-unit condo you describe is a single-ownership for the entire site?
If that is the case, why is it a "condo" if the ownership is single-owner, and ownership encumbers the entire site? (Is this part of a larger condominium project? Maybe a townhouse-style project?)

I'm just trying to understand how the ownership (condo) and configuration (2-units and an accessory unit in a 3-story building) relate?

 

[Valuation Guy]

Yes, this is single ownership for each unit. Each unit is 3 stories and is comprised of a rental unit and in this case a walk-in unit. The project consists of 46 units either attached or semi-detached . Ownership entitles each owner to their own private yard.
As with typical condo ownership, all exterior maintenance of the building is handled by the association. Other than that is use is mostly similar to that of a 2 family dwelling . Of course , with a walk-in accessory dwelling.
Thanks for your thoughts on this.

 

[J Grant]

This whole assignment approach is confusing to me. What does two adjacent yet separate legal ownerships condo units have to do with a single ownership property (that is treated as income producing on a 1025 form)

Does the owner own both condos? Even if he owns both condo units, the units, if they are still separare legal descriptons and deeds, are considered separate ownership for report purposes if this is a market value purpose appraisal.

Unless I am missing something, how do two separate legal ownership condo units, even if they are adjacent and are in one building, how do the separate units become treated as a single entity rental property?

The living area of illegal top floor, I don't know if I would treat that as an accessory unit, it's illegal with no permit, correct? Is Howard Beach strict about that? I have not lived in NY for years but from what I recall they are tougher on illegal building than some other areas.

I might treat it as unpermitted contributory value space, don't' know if I would treat it as GLA /accessory unit as usually an accessory unit is legal.

 

[J Grant]

Yes, this is single ownership for each unit. Each unit is 3 stories and is comprised of a rental unit and in this case a walk-in unit. The project consists of 46 units either attached or semi-detached . Ownership entitles each owner to their own private yard.
As with typical condo ownership, all exterior maintenance of the building is handled by the association. Other than that is use is mostly similar to that of a 2 family dwelling . Of course , with a walk-in accessory dwelling.
Thanks for your thoughts on this.

Imo, even though use is similar to that of a 2 family dwelling, (for this owner who is renting a unit out) these units are NOT a two family dwelling. They are two separate legal condos, that are adjacent to each other. Imo, each would have to be valued individually. Just because one owner happens to own both units, you cant' then blend them into one unit of ownership on a report .

Imo, present owner would have to get the units combined into one legal condo deed/title of ownership to result in a use which you describe., and even then it would be questionable.


If this same configuration you describe, if each adjacent unit had a different ownersinstead of the same person owning both units, how would you treat it?

 

[Valuation Guy]

The entire 3 story building is one condo unit .
It is a legal 2 family condominium unit with a 1st floor that is being used as a walk-in unit.

 

[J Grant]

Did the client tell you to appraise it on the 1025 as an income property, or was that your idea of how to approach assignment?

 

[hastalavista]

Ok, I understand that the configuration you describe is under single-ownership: e.g., the condo unit is a 2-unit residence and, in this case, it has an accessory unit (which is not permitted).
There is an owner's unit and a rental unit; neither can be sold separately, and must be sold together as one "condo unit" (along with the accessory unit).

Must the owner-of-record occupy one of the units?
If not, then it really is an income property under condo ownership (interesting).
If they must occupy one of the units, then I don't consider it to be a true "income" property, since investors would pass and only an owner-user can buy it.

We have areas where 2-4s are located in a PUD with mandatory dues. That is about as close as I have come to what you describe.

Good luck!

 

[J Grant]

The entire 3 story building is one condo unit .
It is a legal 2 family condominium unit with a 1st floor that is being used as a walk-in unit.

The above contradicts what you wrote earlier ( in blue below)

Yes, this is single ownership for each unit. Each unit is 3 stories and is comprised of a rental unit and in this case a walk-in unit. The project consists of 46 units either attached or semi-detached . Ownership entitles each owner to their own private yard.
As with typical condo ownership, all exterior maintenance of the building is handled by the association. Other than that is use is mostly similar to that of a 2 family dwelling . Of course , with a walk-in accessory dwelling.
Thanks for your thoughts on this.

Put aside, the number of stories and what they are used for/that one unit is rented/owner name.

Is there TWO SEPARATE legal descriptions for each unit contained in this 3 story building? When you pull up the deeds, is there a separate legal description and tax ID number for each unit? Can the units be sold separately, if he wanted to sell one tomorrow?

(or has this owner combined the two units into one legal unit with one one deed/title for both?
​

 

[Valuation Guy]

Denis, thanks again for you input.
Your question about owner occupancy was one that I had for the owner the other day .He of course looked like a deer in the headlights when I asked him about this and if he had a copy of the offering plan.
I'm now waiting for the association president to get back to me.