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Can I require the lender to add a 1007 Comparable Rent Schedule if the majority of homes in my subject's market area are rentals?

Russ Kitzberger

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Jul 3, 2007
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Certified General Appraiser
State
Ohio
I have done a number of properties in similar neighborhoods. None for gse. Sales are usually rare. Since these properties are cash cows and seldom sell. Like Russ said. Most sales take place between investors. Have seen property "swaps". Small bulk purchases etc. When I do have sales. They are all over the place and very seldom truly "compare" to subject. Sca becomes little more than an attachment. It is all about the income.
Yep, spot on, portfolios selling all around that asset. Unfortunately, I only had one MF left. I was thinking about taking 1031 from it, but it too small to rolling into something I don't love as a investment. So I decided I am just going to take the tax hit and concentrate on the appraisal, brokerage, and mediation business.

I am on several investment forums and in tune with the very local commercial brokers, SFR Ports are bulk selling to hedge funds.
 

ZZGAMAZZ

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Jul 23, 2007
Professional Status
Certified Residential Appraiser
State
California
Addressing the "boardinghouse-style" rental arrangements would be integral to your HBU analyis IMO although most of the AF does not agree.
 

Dublin ohio

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Mar 20, 2008
Professional Status
Licensed Appraiser
State
Ohio
Addressing the "boardinghouse-style" rental arrangements would be integral to your HBU analyis IMO although most of the AF does not agree.
What would you consider "boardinghouse-style" rental arrangements. Part of HBU is being legally permissible. If it is ran as a boarding house and it is not legal. Then you have an issue. The properties I have appraised. Have leases in place that all signers of lease have joint and several responsibility. Do not know of any boarding house that would have that type of lease.
 

Russ Kitzberger

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Joined
Jul 3, 2007
Professional Status
Certified General Appraiser
State
Ohio
What would you consider "boardinghouse-style" rental arrangements. Part of HBU is being legally permissible. If it is ran as a boarding house and it is not legal. Then you have an issue. The properties I have appraised. Have leases in place that all signers of lease have joint and several responsibility. Do not know of any boarding house that would have that type of lease.
The case law didn't seem to prohibit boarding house-style leases, did not seem to care if there was one lease or one lease for each room, etc. You can lease a garage to someone, a room to another, etc.

Some zoning laws that remain on the books are unconstitutional and unenforceable. Some municipalities, particularly townships, have abandoned zoning regulations because the costs to administer a compliant program is too great and the cost to defend against poorly crafted zoning is significant. Plaintiffs (affected landowners) attorneys fees can be recouped in lawsuits.

"Legally" permissible is always an opinion. It seems that appraisal licensing should include more legal coursework.

 
Last edited:

mp2277

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Mar 21, 2008
Professional Status
Certified Residential Appraiser
State
Virginia
You don’t need a 1007 to develop and report an income approach. If you feel you need it develop it and add commentary in the report and keep it in your work file. Sounds like to me you already know that, you're just looking for a way to bill for it LOL
 

Dublin ohio

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Joined
Mar 20, 2008
Professional Status
Licensed Appraiser
State
Ohio
The case law didn't seem to prohibit boarding house-style leases, did not seem to care if there was one lease or one lease for each room, etc. You can lease a garage to someone, a room to another, etc.

Some zoning laws that remain on the books are unconstitutional and unenforceable. Some municipalities, particularly townships, have abandoned zoning regulations because the costs to administer a compliant program is too great and the cost to defend against poorly crafted zoning is significant. Plaintiffs (affected landowners) attorneys fees can be recouped in lawsuits.

"Legally" permissible is always an opinion. It seems that appraisal licensing should include more legal coursework.

The case you cited does not actually address boarding houses. It was more about net density. Not sure it could be successfully used in a case involving an actual boarding house.
 

Russ Kitzberger

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Gold Supporting Member
Joined
Jul 3, 2007
Professional Status
Certified General Appraiser
State
Ohio
The case you cited does not actually address boarding houses. It was more about net density. Not sure it could be successfully used in a case involving an actual boarding house.
Interesting point, If less than 30 day occupant/lease, then there is some regulation that allows AirBnB and other uses in SFR by bedroom and levies a transient occupancy tax (hotel tax). If over 30 day lease, then is not subject to that tax. Other than that, doesn't seem the zoning has any application on the use as long as the number of persons is within the (case) law compared to number of bedrooms?

How do you see it, boarding, rooming, etc should all be ok now with that case as long as they comply with the other regulations related to whatever occupant license or lease term they are catering to?
 

Dublin ohio

Senior Member
Joined
Mar 20, 2008
Professional Status
Licensed Appraiser
State
Ohio
Interesting point, If less than 30 day occupant/lease, then there is some regulation that allows AirBnB and other uses in SFR by bedroom and levies a transient occupancy tax (hotel tax). If over 30 day lease, then is not subject to that tax. Other than that, doesn't seem the zoning has any application on the use as long as the number of persons is within the (case) law compared to number of bedrooms?

How do you see it, boarding, rooming, etc should all be ok now with that case as long as they comply with the other regulations related to whatever occupant license or lease term they are catering to?
The only situation I see would be zoning that restricts true boarding houses. Most of the SFR I have seen that have been converted to "boarding houses'. Have typically had every possible area turned into a bedroom. Might have a small common area and no kitchen facilities. Would be hard to convince anybody that it is just a SFR property with unrelated individuals living there.
 

glenn walker

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Oct 11, 2006
Professional Status
Certified Residential Appraiser
State
California
A hous
Addressing the "boardinghouse-style" rental arrangements would be integral to your HBU analyis IMO although most of the AF does not agree.
Now I know why back in the day the Chief appraisers at the Banks and S & L did not allow us to check anything but the YES box under H & B use. Give some residential appraisers a foot of rope and they will hang themselfs. No matter what a single family home is being used for its legally permitted use and its zoning control its highest and best use. It may generate money as a grow house, a swingers club, a meth lab, many things but its income and use must be legal. If I tear down my house and what Uncle Billy calls his small Casita I now just have a vacant unimproved lot zoned CR-1 which allows one single family and a permitted guest unit and it's zoned 3 to 4 dwelling units ( homes ) per acre. The Zoning and Permitted Land almost always controls a properties H & B use.

Fannie-Freddie-FHA allow an-owner occupant owner to rent a bedroom or bedrooms as long as it does not exceed the bedroom count. Normally they give no allowance toward the borrowers DTI -Debt to Income loan qualification because the rent is considered unstable and temporary in nature and 95% of all owners never declare or claim it on their tax returns. The use does not change the zoning or it's legally permitted use and unless the property had been re-zoned or the owner had received a "variance " to use the home as a sober living, bed-and breakfast or some other use it's still just a single family home. Also almost all Cities and County's allow room rentals. In a Guest Units- or ADU-If it's rented the appraiser my be asked to do a rental survey on a 1007 BUT I have never seen an-Underwriter yet ask for one. A 1007 is never done for boarders or bedroom renters as their income and the rent they pay the owner is considered-personal and private and we all know bedroom rents vary based on relationships they have with the boarder and where the subject is located.

Fannie Mae's the Home-Ready program allows up to 30% of your total qualifying income to come from Boarder Income, but there are strict requirements that must be met to qualify for a Home Ready loan and for using Boarder Income. The H & B Use has to be a single family home.or bedroom occupants inc ( Note: The appraiser does not collect or analyses boarders income or expenses and he she is not to ask the owners. The homes owner lives in it and for Fannie-Freddie-FHA its an-underwriting issue and not an-appraisal issue. The Underwriter requires the owner-borrower to provide evidence of the income either on their prior years Tax Return or cancelled checks or other evidence. ( Note: A boarder-or bedroom tenant cannot have any rental agreement that is over 12 months in length and no leases are allowed or counted.

SAMPLE #1
A single woman-man-A - plans to purchase a new home. She has had a roommate sharing living quarters with her-for the past 12 months, and the roommate plans to live in the newly purchased home. The roommate pays $375 per month in rent. The borrower has provided documentation to validate the 12 months of prior shared residency. She has canceled checks to document the payment of $375 from the roommate for 10 of the most recent 12 months.The boarder income that can be considered for qualifying purposes is $375 multiplied by 10 months received = $3,750. Because the borrower is unable to document a full 12-month history, this amount is divided over 12 months ($3,750/12 months). The total monthly boarder income that can be considered is $312.50.
 
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