Duplex purchase will be half owner occupied/half tenant occupied

[Zoe]

H&B use could come into play on MV appraisal. Sometimes the H&B use is to combine the units. I have seen it.

 

[Tom D]

It's both estimated rents for the grm. On the Income/Operating statement, you show both estimated, but the non owner unit actual rent is the only one you count on income and expenses.

 

[BRCJR]

If your assignment is to report an opinion of market value, the GRM approach will be exactly the same. You use market rents... not what the borrower proposes to do with the property. The actual income the borrower is earning is an issue for the Lender... not the appraiser.

If you just use the income from one side... it's Value in Use. You can do that too.. if that's what the Client wants.

If they are a regulated lender, can they use the "value in use" opinion for the lending decision?

From the regs:

Value opinions such as “going concern value,” “value in use,” or a special value to a specific property user may not be used as market value for federally related transactions.

 

[J Grant]

The property on the eff date is both units leased; then the contract rent is for both units ( even though the tenant of one unit is purchasing the property and plans to live there )

After purchase, if the tenant stays on and occupies it, it is for future use, not present occupancy. What if they change their mind and move out and lease it? We do not control an individual's future use of a property.

Regarding contract rent and market rents, I have done small income appraisals where one unit is rented under the market, such as to a friend or long-time tenant. I comment on it and use the market rents for the opinion of the rent estimate. I have done appraisals where the owner based the contract rent on very high Airbnb rates. I cite it as a contract rent but use market rent for annual or longer term month to moth ( for a GSE appraisal URAR)

The same appraisal principle applies, contact rent vs market rent. . A typically motivated buyer looks at market rent. If they plan to live in one unit, they figure that forgoing the rental income in exchange for a place to live works out in the math.

 

[sputnam]

If they are a regulated lender, can they use the "value in use" opinion for the lending decision?

From the regs:

Value opinions such as “going concern value,” “value in use,” or a special value to a specific property user may not be used as market value for federally related transactions.

I have seen Lenders use value in use to make loans. Most commonly for churches. I can't say if whether the Lender was making a regulated loan or one that wasn't a federally related transaction. I'm not a Lender. I'm an appraiser.

 

[Zoe]

I have seen Lenders use value in use to make loans. Most commonly for churches. I can't say if whether the Lender was making a regulated loan or one that wasn't a federally related transaction. I'm not a Lender. I'm an appraiser.

That is risky. You do realize that. What if that user dies in a minute? what about dies in a second?

 

[Tom D]

Churches are commercial loans. The hardest part with a church loan is finding someone qualified to sign for the loan.

 

[Zoe]

I have seen Lenders use value in use to make loans. Most commonly for churches. I can't say if whether the Lender was making a regulated loan or one that wasn't a federally related transaction. I'm not a Lender. I'm an appraiser.

I have done tons of places of worship for local lenders. No lenders used "use value". I am in the bible belt.

 

[Dublin ohio]

 

[Zoe]

We can do both sales and cost locally on places of worship most of the time because many smaller places of worship grow and want to move to a larger facility with better amenities. You can do both cost and sales and do MV appraisal. If you can only do cost approach, that will work too on MV appraisal. You don't ever do income approach. Seating capacity, kitchens, sound equipment, etc.etc are important.