How to appraise a "boarding house"

[PropertyEconomics]

I read it as the use "could be legal" which is why I suggested the HBU. That would narrow down the SOW. Generally speaking the SRIP form is designed for multiple units whereas he stated "a boarding house" which usually describes a dwelling that does not have separate facilities for each "unit". Also, the HBU and SOW would determine if the property is something the client can and would lend on, if that is the intended use.
I am not necessarily saying that the SRIP couldn't be used, because there isn't enough info in the post to determine that; however a narrative report format would eliminate potential of misleading the reader of the report.

If you have good comparables you can describe the rooms at the UNITS of measure and I have honestly found several lenders, not banks, that do not understand a narrative report and will not accept one. I know its kinda crazy but they only understand forms ... I ask how they would like it completed ... in fact I had to completely redo one narriative into a form report .. fine with me .. I just charged for the conversion and kept the narrative in my file for back up.
I think via addendas and comments you can do this without misleading your client ... and I still believe you will find plenty of similar properties in a College Town ... they may not have sold but I bet you can find a ton of rents similar ... then its a matter of doing your best finding other sales and completing a good report.

 

[Otis Key]

I will try to find out the situation with the leases. I should mention that the place has 10 bedrooms, 5 baths, 2 kitchens, and 1 living room.

It's no longer a SFR or house - it's a brothel, maternity ward, rent by the minute, dorm, frat house or hotel (speaking of 2 kitchens).

 

[George W Dodd]

Until the appraiser know the HBU and the SOW it is pointless to suggest the format.

 

[valuefinder]

It's no longer a SFR or house - it's a brothel, maternity ward, rent by the minute, dorm, frat house or hotel (speaking of 2 kitchens).

NO Otis! Those are my comps! Seriously!

 

[PropertyEconomics]

It's no longer a SFR or house - it's a brothel, maternity ward, rent by the minute, dorm, frat house or hotel (speaking of 2 kitchens).

Did you appraise that OTIS ... and what kind of Cap rate did you use ... or was it just something you WHIPPED OUT ....

 

[Midwest Guy]

Competency Rule!

This appraiser is unable to determine the details, most likely outside his/her licensure.

It is my opinion that the competency rule is a factor.

It is absolutely the appraiser's business if the home has an illegal use.

I have seen several boarding houses, each had some kind of alterations to accomodate the living conditions. A boarding house is not a SFR that has an owner and some buddies as co occupants, we are talking about a "Flop House." This is complex, in most states outside the licensure of a "Licensed Appraiser."

HUH???? Since when is a property required to be SFR to not be complex? I've seen parents buy a house for their student child to live in and rent out all the other rooms. That doesn't make it commercial, it just means you have a lot of roommates.

What's the highest and best use? What would it be if vacant? Are there any building alterations that would change it from SFR to something else? Don't focus so much on "current use" down to how many people live there and whether they're related - that's none of your business, and in some states it's illegal to discriminate on familial status of co-inhabitors. You're appraising what the house would sell for, that presumes the current occupants move out, unless they're on a lease.

 

[PropertyEconomics]

You guys sure pass judgement quickly ... you think its a FLOP house in a College town ... oh well .. whatever ... I tell the apprasier explore the possibilities, explore highest and best use, find sales, and do a good job.
Heck some here would have you believe you cant appraise a parcel of vacant land because it may have more than one potential use which makes it a complex assignment ... PISHAW .... you can do this ... if you find you need someone to sign it .. find them .. but dont think just because someone here tells you its over your head it is .... Its not that complex of an assignment and if you have questions come ask them ... not all of us will bite your head off ... using the Appraisers Forum is one means of making your self knowledgable ... thus increasing your competency.

 

[Deleted member 77547]

I was just asked to do one like this. From what I understand each rented room with its own lease is considered one unit. The one I had included two 2 bedrm/1 bath units and an addtional 5 rooms that were rented weekly or monthly from time to time...the room rentals had no kitchen but a common bath. 7 leases = 7 units. My license level did not allow me to do a 7 unit property. If your license level allows you to do it, then knock your socks off. Otherwise, this assignment may be better suited for a certified general. Be very very clear on zoning. Make the phone call to the zoning dept. and get clarification as to whether the zoning allows for room rentals with common bath.

Since its a college town, maybe the students are merely renting the entire house. Find out how many "roommates" are allowed on the lease per zoning regs. If that is the case, it might be one lease with five lessees on a joint-in-several lease. In some college towns, if the occupants are female, zoning may only allow for, say five female occupants. Anything more than five is considered a potential brothel....which is why they set those limits. FWIW.

My only other suggestion is to go to Amazon.com and pick up the book 'Appraising the Tough Ones." by Frank E. Harrison It'll explain what to look for and how to approach, organize and report some of the quirky ones you will inevitably run into. Good luck!

 

[Couch Potato]

First answer, "what is it?"

Here we go with lots telling you that you cant do it because its complex ... I think you should put it on a small residential income form and see if you can find comparables very similar in use with similar rents. I personally dont think its all that complex of an assignment ... its a college town correct .... if you look .. you will find many properties used in this manner ... its not unique to your college town ... they were everywhere when I went to school and that was .... well a while ago ....
Think if it as a small residential income property and I bet you can do a very good job. You might need a cert residential to help you but I dont think you need a cert gen .... its just like most other small residential income properties. .... IMHO which often isnt so humble .... HAHAHAHA

Didn't say they couldn't do it, just to get local help. It may well be the improvements are best defined as a 10 unit building (definitely license scope issues if that is the case) or maybe there is a rational for calling it a SFR. With its 2 kitchens, maybe it is a duplex. It is my view that any property which requires effort to identify its type, is by that effort designated as complex, in other words not simple. Calling it complex is not saying, "you can't do it."

Based on what is posted here, to say, "put it on a small residential income form" is irresponsible, IMHO. (Which is obviously just as humble as yours PE. ) Identifying the exact nature of the property and discussing that with the client need to be done before selecting the reporting format that is appropriate. A small residential income form might work, but they are a long way from that decision.