HABU SFR rental

[Carnivore]

Oddly , I ust did a search of the FNMA Selling guide for STR's..... AND it is no longer there,,,gone, poof , nada

What s so strange is it was easy to find in the past year, NOW IT'S CONE. all I get is the typical 1-4 long term rental guidance.

I suspect they were receiving all kinds of bogus Bull chit URAR with goofy stuff about the STR.

Originally all the STR income was to be provided to the UW. That required the applicant to give the lender UW past Income tax Returns. this was mean t for the UW to use that str income for loan QUALIFICATION ONLY! If the Applicant provided false or fake income tax return to the UW , well that is very serious federal offense.

So I am glad FNMA finally got their head screwed on right for the this never ending story of STR's.

below is all I could find,

Selling Guide Search

Selling Guide search page

selling-guide.fanniemae.com

 

[Dublin ohio]

I believe that is an AMC form, not a GSE form. Not a chance I would gamble my license on it.

Clickforms created one. But it is to report gross annual rent only. No reference to the IA whatsoever. Doesn't have any provisions for personal property etc.

 

[Tom D]

If our state even thinks you are doing something not residential, they will burn you. around this big city it's legally called a boarding house license. But, everone hides that use from l&i.

I sometimes think the insurance co might no pay out for hiding that use. They look for any excuse to not pay, or to drag it out.

 

[sputnam]

But they don't allow you to use the STR income to estimate the market value.

Not sure who 'they' is. The recent statement from FNMA said that it is up to the Lender to decide how the property's income should be evaluated.

 

[J Grant]

The even have a ST rental form now that can be used instead of form 1007

So what if they have a form?
Read the Fannie Mae selling guide, they do not want STR on a SFR/condo.

 

[J Grant]

Not sure who 'they' is. The recent statement from FNMA said that it is up to the Lender to decide how the property's income should be evaluated.

INCOME wrt the lender qualifying the borrower is different than the STR qualifying the PROPERTY on the appraisal

That same recent statement states in an appraisal that there is no STR for an SFR- they want it based on monthly.

 

[Carnivore]

In many states there are resort areas where weekly STR exist. Those resort areas do not have and daily rentals. So a residential appraiser can do that kind of work for non-conforming lenders. In other words these appraisals of the weekly str are NOT FRT's They get all the data they need from the local RE Brokers who are Leasing agents. These RE Brokers do manage weekly rentals for the actual property owner. The have sources for all the maintenance , Cleaning companies etc. They also have all the seasonal weekly data.

So per my state rNC, residential appraisers MUST have COMPETENCE IN(per USPAP) performance of those assignment(s) and again it can not be a FRT.

Now I know I will get pushback from some of the CG regular members at this forum. So below is the link to my NC Appraisal Board where give some examples in appraising vacant land that supports what I have said above.
1. Assignment is not a FRT
2. USPAP Competency Rule

https://ncappraisalboard.org/bulletins/Spring2023.pdf

 

[J Grant]

Short-term rentals and Form 1007​

Recently, Fannie Mae has received many questions about the Single-Family Comparable Rent Schedule (Form 1007). It enables the appraiser to document the estimation of monthly market rent for the subject property when completing an appraisal on a single-family investment property for conventional lending. It can also be used for condominium investment properties.
The Selling Guide allows lenders to use rental income for qualifying purposes under certain circumstances. Form 1007 is only required when rental income is used to qualify, and the subject is a one-unit investment property. The lender may also use the 1007 as the basis for reporting gross monthly rent at loan delivery. (See “Reporting of Gross Monthly Rent” in B3-3.1-08, Rental Income.) For refinances, the 1007 is used in combination with either tax returns or lease agreements, while for purchases, the 1007 may be used in combination with lease agreements or as a stand-alone.
One question we often hear is whether the 1007 should be used for short-term rentals (STRs). The Selling Guide is silent on whether an STR should be considered rental income. STRs differ from longer-term leases in several ways. The most obvious is the length of the agreement: STRs are typically executed on a nightly basis, similar to a hotel, while residential leases are typically structured on a monthly basis. Also, STRs typically involve not only usage of the real property but also personal property, such as furniture, fixtures, and equipment (FFE). STRs are typically executed with a terms and conditions agreement, not a lease agreement. The STR may include additional services such as food or housekeeping.

​

Note: When appraising an STR for conventional mortgage lending, the appraiser must take care to only include the real property in the value, not the personal property or the business/going concern.


In light of these differences, it may make the most sense to think of an STR as a going concern and the income as business income rather than rental income. But, under our current policy, the decision of how to categorize the STR income is up to the lender. If the lender chooses to treat STR income as business income, then Selling Guide provisions for underwriting business income would apply, and the lender would not need a 1007. Conversely, if the lender chooses to treat it as rental income for qualifying purposes, then the lender must obtain Form 1007 where specified by the Selling Guide.
The 1007 was not designed for appraising single-family properties that are used as STRs. Specifically, the 1007 calls for the “Indicated Monthly Market Rent.” This means the appraiser needs to analyze competing properties leased on a monthly basis. It would be incorrect for the appraiser to use STR comparables and then multiply the nightly STR fee by 30 to estimate a monthly rent. Such an approach would fail to account for FFE, other services, vacancy rates, and business expenses.
In summary, while a lender may choose to request a 1007 for an appraisal of an STR, in fulfilling the assignment the appraiser must use rental comparables with monthly lease rates to support the “Indicated Monthly Market Rent.” Alternative definitions and methodologies are not acceptable. Form 1007 cannot be used to estimate the nightly fee for an STR.

 

[J Grant]

I pasted the above from a Fannie update that they email to appraisers ( put your name on their list if you are not getting them )i-
it is not in their selling guide, but it should be. I isolated the last two sentences as most relevant to appraisers. IMO, Fannie makes it confusing by first talking about how the lender can use STR to qualify a borrower; then they address it in light of appraisals.

In summary, while a lender may choose to request a 1007 for an appraisal of an STR, in fulfilling the assignment, the appraiser must use rental comparables with monthly lease rates to support the “Indicated Monthly Market Rent.” Alternative definitions and methodologies are not acceptable. Form 1007 cannot be used to estimate the nightly fee for an STR.

 

[mp2277]

If you are not allocating values to the

I believe that is an AMC form, not a GSE form. Not a chance I would gamble my license on it.

I don't believe the form matters does it? People have been screaming that about 2055's for years and I don't think anyone has ever gotten in trouble simply for the form. And yes it is an AMC proprietary form but is is absolutely FANNIE approved and accepted. It is opining and reporting rents I don't see how this would in any way jeopardize anyone's license. And what about those hybrid appraisals? F/F orders them themselves for REO's. It's technique not the forms. A lifetime ago when I was taking my first appraisal classes one of the instructors was an old school Certified General and he said there was no such thing as a appraisal if it wasn't narrative LOL. When asked why he used forms then he said "because that's what they want" LOL

and the personal property of a STR, then you are doing a bad job of valuing the property. And who can trust the P & L of a B & B operation?

It is a rental analysis not income approach.