Appraising In An Airbnb World

[George Hatch]

Renting rooms out on a daily basis is business income. Appraise it as a SFR, assuming H & B use is consistent with SFR's.

Agree except to the minor detail that I don't think you need an assumption to conclude it's an SFR and the typical buyers would be SFR buyers.

 

[Evincere]

. Is a car worth more because the driver decides to use it for uber income? Maybe less due to wear and tear, so not really apples to apples.

Would his insurance premiums be the same?

I’d wager SF vs AirBnB would be categorized differently.

 

[DTB]

Chicago has a Registration requirement for AirBnB properties. I've been reviewing the ordinance and it looks like our guy may be in violation as there is a maximum number for room rentals allowed...

And this as well (maybe)
From Chicago Muni Code 4-6-300

 

[SteveSpy]

And this as well (maybe)
From Chicago Muni Code 4-6-300
View attachment 37179

I saw that.... I read that as the rental of the entire dwelling, not rented rooms. Like most Chicago ordinances, its not so clear!

I was looking at Item #10, Listing and Rental in buildings with 5 or more dwelling units. The issue I see is that the definition of "Dwelling" in the zoning ordinance may differ from the definition in this ordinance (namely it requires cooking facilities, etc.)



Since these rental rooms do not have cooking facilities... are they dwellings?

https://www.cityofchicago.org/conte...s Center/sharedhousingordinanceamendments.pdf

 

[SteveSpy]

Help:VA Appraisal on Bed & Breakfast

from Fannie Mae

Property Eligibility
Q1. In the list of ineligible properties, boarding houses are identified as an ineligible property type. Is a group home considered to be a boarding house and therefore an ineligible property type?
No. Group homes are residential structures utilized for occupancy by persons with disabilities and are not considered to be boarding houses. Group homes are an eligible property type according to the requirements of the Selling Guide.
Q2. Why are boarding houses and bed and breakfast properties considered to be an ineligible property type?
Fannie Mae purchases and securitizes mortgage loans secured only by properties that are primarily residential in nature. Boarding houses and bed and breakfast properties are not primarily residential in nature and therefore are not eligible.​

That is interesting... The fact they now allow AirBnB income to qualify for loans seems to contradict this. To split hairs.. if there is no food being prepared, is it a bed and breakfast? If the owner lives in the home, is it a boarding house?

 

[DTB]

Cross streets?

 

[Elliott]

I always appraise vacation rentals with the same comparables as any SFR. I take photos of the licenses and if they post rules on the refrigerator, and disclose its use as a nightly or weekly vacation rental. If the lender is trying to shoehorn the property into a residential loan program, then its their issue. I think the reality of a vacation rental is that it generates income with substantial expenses that contributes to making the monthly payment (maybe 1/3 to 1/2), but its use predeposes it as a rental and not a very attractive home to a family wanting a vacation home.

 

[SteveSpy]

Cross streets?

Garfield Park area

 

[DTB]

Garfield Park area

Man that sounds more like a rooming house to me now. Doesn't seem to fit the vacation rental model at all.

Personally, I would tread very lightly. Good luck

 

[George Hatch]

I always appraise vacation rentals with the same comparables as any SFR. I take photos of the licenses and if they post rules on the refrigerator, and disclose its use as a nightly or weekly vacation rental. If the lender is trying to shoehorn the property into a residential loan program, then its their issue. I think the reality of a vacation rental is that it generates income with substantial expenses that contributes to making the monthly payment (maybe 1/3 to 1/2), but its use predeposes it as a rental and not a very attractive home to a family wanting a vacation home.

Heavy marketing, management and maintenance expenses and these operations require some FF&E. The net attributable to the realty is nowhere near the gross.