Barndominium receiving above market rent from VRBO

[J Grant]

Therefore, it is a commercial use property.

If it is built as a residence , it is a residential property that the owner is USING for commercial purpose/income.

The way an owner uses it, does not transform a residence into a commercial property.

Some properties are designed to be flex use, and/or are located in mixed-use zoning or, in this case, the area has no zoning per the OP. Then the appraiser has to determine a HBU, and or consider the loan type or use of the appraisal and whether there are caveats for appraising it one was or another. Either way, the appraiser has to develop credible results and disclose why they chose to omit or include an approach to value.

 

[Terrel L. Shields]

If it is built as a residence , it is a residential property that the owner is USING for commercial purpose/income.

Ask a banker... @BRCJR can tell you. I bet his bank does not lend secondary market money on commercially used houses. The banks lend upon the use of the property, not its design. They don't lend FNMA on 200-acre cotton farms even if the farm has a 2,400, 4 bed, 2 bath house.

 

[J Grant]

Ask a banker... @BRCJR can tell you. I bet his bank does not lend secondary market money on commercially used houses. The banks lend upon the use of the property, not its design. They don't lend FNMA on 200-acre cotton farms even if the farm has a 2,400, 4 bed, 2 bath house.

Whether to approve teh loan or not is a lending problem, not an appraisal problem.
We present the information on the appraisal, and that allows the lender to make a decision.

And I bet many times the banks lend on the HBU of the property as it is designed and zoned - regardless of a current owner 's use of it. A vacant property has no income an dno user, does the bank delcien a loan beaue of that? ( no)

A 200-acre cotton farm with a 4 bedroom 2 bath house , most of the value is the land and likey use is ag use ( unless HBU is subdivision ). The fact that there is a dwelllin on the land has little to do with it in this case. We analyze properties as whole, rather than getting fixated on a minor aspect of it.

 

[BRCJR]

Ask a banker... @BRCJR can tell you. I bet his bank does not lend secondary market money on commercially used houses. The banks lend upon the use of the property, not its design. They don't lend FNMA on 200-acre cotton farms even if the farm has a 2,400, 4 bed, 2 bath house.

The property may be a residential design and used for an insurance agent office, for example. Absent zoning it could/should be looked at both ways. Which way (residential or office) yields the higher value?
If the higher value is for a commercial use it should not be appraised as a dwelling trying for a residential mortgage.
If the highest and best use is office, the property should be compared to similar offices. That is a commercially structure loan.