Appraising a SRO (Rooming House)

[Eli Weiss]

I have a REO assignment on an 11 bedroom and 4 kitchen SRO (Rooming House), it's a 4-story brownstone townhouse in the Harlem section of NYC, and is highly typical in the area, and there are also plenty of similar listing and sales.

My only question is, is a certified residential appraiser qualified under his license to do this?

I have searched some prior posts, but no real answer for me in there....
Thanks Kevin MC for your help....just want to get some more opinions.

 

[jay trotta]

check your state license law, or call, it should advise what can and cannot be done by regulation. My personal opinion, it's commercial, due to rent roll which exceeds 4 units and generates a different income stream than a typical multi (4 unit).

 

[Kevin A. Spellman]

If you understand the necessary requirements to run lodging house and use sales of like properties. I would do it.

Here in MA hardwire smoke detectors and a sprinkler system is a requirement to maintain a license for lodging or a rooming house.

The income can some time be unreliable. It is not uncommon for the owners of these properties to withhold income and to increase expenses. The personal property is trade fixtures ask for an inventory list for the rooms and calculate a reasonable replacement reserve from the income stream. Are there city or state taxes for the daily or weekly rentals? Ask for the yearly utility costs. I would accept the assignment, but with a fee to adequately pay a general to sign in the event the client request a general license.

These are special use properties and can take years to sell. A typical buyer of a lodging house typically owns another one.

 

[Mike Boyd]

It is more similar to a hotel than it is a 2-4 residential property. I dunno about NY but in CA you would have to be a Certified General. That might be one of the reasons it was foreclosed on.........previously appraised by someone not qualified.

I know I have and I think Greg has aslo, appraised a vacation house (SF) where they rent it out on weekends or by the week during the vacation season. Due to the necessity of forcasting vacancy factors, estimating the contributory value of all the furniture, linens, dishes and flatware, pots and pans, etc., that, too, should probably be done by a CG. However, H&BU might determine that it is really a SFR that just happens to be rented periodically.

A boarding house would fall into the same category as a Bed and Breakfast Inn, which is a commercial venture if there ever was one.

So, what do you do if the appraisal is for a sale and the new buyer assures the lender (and, you the appraiser) in any of the above scenarios, that he does not intend to rent it out but convert it back to a SFR?