Appraising an outlier properties

[App601]

I definitely found the support for some of his assumptions lacking.

Tuck Frump

 

[J Grant]

I'm banging my head on the concrete now using a home for STR makes it motel or commercial real estate.

I agree. It is like saying a Honda whose owner uses it for Uber rides makes it into a Limousine. If the owner of a house used for Air BNB stops renting it out, it is just another house. True, some locations and sizes of houses lend themselves better to Air BNB/STR use. But that is baked into the prices.

 

[App601]

I agree. It is like saying a Honda whose owner uses it for Uber rides makes it into a Limousine. If the owner of a house used for Air BNB stops renting it out, it is just another house. True, some locations and sizes of houses lend themselves better to Air BNB/STR use. But that is baked into the prices.

"If the owner of a house used for Air BNB stops renting it out, " If my grandma had 2 balls she would be my grandpa Sarcasm vs sarcasm

This property is appraised as its present use not as its future potential use. This sale is for the property AND for the business. That is the reason it is sold for $300000 more than double the median values for the development. And you know what ? It may be worth much more. But it requires 2 appraisal report which may be combined into one. The first for the RE and the other for the business or going concern

 

[J Grant]

"If the owner of a house used for Air BNB stops renting it out, " If my grandma had 2 balls she would be my grandpa Sarcasm vs sarcasm

This property is appraised as its present use not as its future potential use. This sale is for the property AND for the business. That is the reason it is sold for $300000 more than double the median values for the development. And you know what ? It may be worth much more. But it requires 2 appraisal report which may be combined into one. The first for the RE and the other for the business or going concern.

Your thinking is scary. First, the house is not worth more than the median low price in the low 200k range from a regression going back to 2018. Now it could be worth 600k because the owner is renting it out as an Airbnb

The client needs to be consulted as to whether they even want it valued as a going concern .. ( In the states, valuing it as a going concern business would kill the deal as a residential loan). Second, HBIU has to be legal. If the home zoning is residential, then a hotel/commercial use is not legal per zoning. That is how communities or towns that are zoned residential and decide to enforce the zoning code are able to prohibit STR use .

Whenver I appraise a property where the owner tells me they use it STR I explain that for a residential loan I have to value it using long-term monthly or annual leases,

When I do the appraisal, it might turn out that the prices of similar comps in the same area are being rented as STR, reflecting the area desirability for STR. That then raises the value of the subject, and I comment on it.

 

[App601]

Your thinking is scary. First, the house is not worth more than the median low price in the low 200k range from a regression going back to 2018. Now it could be worth 600k because the owner is renting it out as an Airbnb

The client needs to be consulted as to whether they even want it valued as a going concern .. ( In the states, valuing it as a going concern business would kill the deal as a residential loan). Second, HBIU has to be legal. If the home zoning is residential, then a hotel/commercial use is not legal per zoning. That is how communities or towns that are zoned residential and decide to enforce the zoning code are able to prohibit STR use .

It is like saying a house that is vacant is worth less because nobody lives there. The HBU is what it is zoned for , not who lives there.

There are some properties in locations that lend themselves to STR and then that property has the potential for it, which is baked into the prices. No need for a business going concern appraisal ( unless that is what the client wants) When I appraise a property where the owner tells me they use it STR I explain that for a residential loan I have to value it using long-term monthly or annual leases,

When I do the appraisal, it might turn out that the prices of similar comps in the same area are being rented as STR, it would reflect that.

Finally some reports without implicit insults thanks
The client needs to be consulted......... It was and his intended use is keep it as an Airbnb business.
Kill the residential loan........... Correct This requires a commercial loan You know what? In Puerto Rico, I don t know if in US, there are wise guys who want a residential appraisal for not paying for a commercial one with shorter terms and higher interest and higher cost
Zoning? The present zoning allows this use. But............... it is in a controlled access development and the residents may object this use. I live in a controlled access development and this use is not allowed

As for valuing the business I use The Handbook of Small Business Valuation Formulas and Rules of Thumb

 

[Surf Cat]

Flenn Yalker Guck Wou

Tuck Frump

Look.....we are just a frustrated as you.

I believe most people here want to help. But you have to admit, you dragged this sceanrio out and the circumstances kept changing along the way. This is why you're receiving commentary that's made you type out the above.

Give the whole scenario up front next time....good luck.

 

[App601]

Look.....we are just a frustrated as you.

I believe most people here want to help. But you have to admit, you dragged this sceanrio out and the circumstances kept changing along the way. This is why you're receiving commentary that's made you type out the above.

Give the whole scenario up front next time....good luck.

My mistake was to post a thread before inspecting the property. I learned the lesson and will never do it again

Thanks

 

[J Grant]

Finally some reports without implicit insults thanks
The client needs to be consulted......... It was and his intended use is keep it as an Airbnb business.
Kill the residential loan........... Correct This requires a commercial loan You know what? In Puerto Rico, I don t know if in US, there are wise guys who want a residential appraisal for not paying for a commercial one with shorter terms and higher interest and higher cost
Zoning? The present zoning allows this use. But............... it is in a controlled access development and the residents may object this use. I live in a controlled access development and this use is not allowed

As for valuing the business I use The Handbook of Small Business Valuation Formulas and Rules of Thumb

Yes, there are borrowers who try to game the system ( and lenders who try as well).

 

[Tom D]

Some very good thinking in the last few posts. You really want to do this appraisal with that sale price. Gives the state many ways to find your mistakes.

Hmmm, i might have learned something here. Have only done a couple of them as refi.

 

[App601]

Some very good thinking in the last few posts. You really want to do this appraisal with that sale price. Gives the state many ways to find your mistakes.

Hmmm, i might have learned something here. Have only done a couple of them as

The report has been placed on hold and most likely will be cancelled