Help:VA Appraisal on Bed & Breakfast

[Christine Betbeze]

Hi-I received a VA request (refi) on a property in New Orleans. Subject is a 3000sf residence in a historical & diverse area of the city. My preliminary research revealed the owners are advertising property as a Bed & Breakfast. I have not been to the house yet but the owner states he lives in property as his main house but has second homes in other areas (he did not mention anything about it being a B&B when I set up the appointment). This property is in an area that allows B&B (with regulations) but I am still looking into the details. Is there anywhere in the VA manual that I could refer to on this? Not sure yet if he rents occasionally or if it is a "thriving" business venture. I know I will need to check H&B use, zoning, and of course I will disclose everything. Just thought someone here may offer some advise as I just got the request. Feel free to message me if you have some insight on this situation. Thanks in advance-christy

 

[sputnam]

An appraisal of a B&B can be complex task. If you haven't done one before, you might want to find some help. I'm not sure how VA looks at B&Bs. Probably be a good idea to contact someone there to find out.

 

[Don Clark]

Hi-I received a VA request (refi) on a property in New Orleans. Subject is a 3000sf residence in a historical & diverse area of the city. My preliminary research revealed the owners are advertising property as a Bed & Breakfast. I have not been to the house yet but the owner states he lives in property as his main house but has second homes in other areas (he did not mention anything about it being a B&B when I set up the appointment). This property is in an area that allows B&B (with regulations) but I am still looking into the details. Is there anywhere in the VA manual that I could refer to on this? Not sure yet if he rents occasionally or if it is a "thriving" business venture. I know I will need to check H&B use, zoning, and of course I will disclose everything. Just thought someone here may offer some advise as I just got the request. Feel free to message me if you have some insight on this situation. Thanks in advance-christy

From the VA Handbook:

b. Property Characteristics​

Entity​

​

​

​

: The property must be a single, readily marketable real estate entity.
Use: The use must be primarily residential. If a portion of the property has non-residential use, it
must not impair the residential character of the property or exceed 25% of the total gross floor area.​

Provide total square feet of commercial use and total square feet of residential use.

My comments:

A B&B would not likely qualify for a VA Guarenteed Loan. But check with your RLC.

 

[CindyR]

Well since no one has mentioned it yet I would consider the B&B as having a significant commercial component and I would not be qualified to adequately assess that aspect of the property unless I held Certified General qualifications. I would decline the assignment.

 

[Mike Kennedy]

Hi-I received a VA request (refi) on a property in New Orleans. Subject is a 3000sf residence in a historical & diverse area of the city. My preliminary research revealed the owners are advertising property as a Bed & Breakfast. I have not been to the house yet but the owner states he lives in property as his main house but has second homes in other areas (he did not mention anything about it being a B&B when I set up the appointment). This property is in an area that allows B&B (with regulations) but I am still looking into the details. Is there anywhere in the VA manual that I could refer to on this? Not sure yet if he rents occasionally or if it is a "thriving" business venture. I know I will need to check H&B use, zoning, and of course I will disclose everything. Just thought someone here may offer some advise as I just got the request. Feel free to message me if you have some insight on this situation. Thanks in advance-christy

The first step to legally operating your business ..... in the operation of the bed and breakfast. 18. ... Bed and breakfast accommodations limited to no more than.
www.nola.gov/.../Zoning_Permits_and_Licenses_for_Cultural_Businesses_ 2012.pdf

See General Regulations
Pages 20-4 and 20-5
several diff types of B & B
USE STANDARDS www.nola.gov/getattachment/...185f.../Art20-Use-Standards-LOW/

 

[Mike Garrett RAA]

If it is being offered and advertised as a B & B then I would question appraising it as a single family residence with a VA loan guarantee. Best bet would be to call the regional office and get an answer from them.

My sister and her significant other own a B & B. When they bought the property it was appraised as a single family residential property ... something I believe was misleading. That appraiser is no longer in business. The loan was conventional.

 

[Riick]

OTOH... Every B&B I've ever stayed in has looked like a local Mansion.
Multiple rooms, and multiple public bathrooms, but no hotel-like @ room w/full bath.
No large meeting rooms, or even an oversized dining room.
Most uniform thing I've seen about B&B operations is an large wrap-around porch.

Overall, unless someone told you, or you saw a sign, virtually impossible to
differentiate the B&B from other similar size & styles in the area.

On the 3rd hand, don't think VA, FHA, or Conventional lender wants loan against what is essentially a business USE property.

 

[Mike Garrett RAA]

So, could you appraise it as a single family residential property and ignore the fact it is being used commercial and not be misleading?