Is this a commercial appraisal?

[Gtary]

Greetings,
I've recently been assigned an appraisal order near a university. The subject is a building with 9 occupants, but 1 communal kitchen and living space. All of the occupants are students. This is typical in the subject market area. However, my question is,.. would this be considered a single family residential unit with a family of 9 individual family members paying 9 individual leases? Or, is this a commercial property at this point? Zoning is mixed use.

 

[Fernando]

Is it a house with functional obsolescence?

 

[George Hatch]

That's a good question. If the property wasn't located near a college it might be operated as a group home or a board/care or a halfway house or whatnot. We're also seeing single room occupancy conversions in SFRs and multi-family where the tenants rent a bedroom. Or a bed. Non-SFR zoning will typically allow such occupancy whereas SFR zoning (in our region) limits the number of unrelated occupants to 6/home unless there are use permits in play.

My point being that the occupancy is somewhat separate from the physical attributes. If it's 9 occupants for a 4bd home the occupancy becomes a here today/gone tommorow proposition. But if there are 9 rooms 4 or 9 baths then the typical buyer isn't going to be an SFR buyer.

 

[Terrel L. Shields]

Sounds like a SFR used as a boarding house. And there are laws about boarding houses in many states. In my state, this would be illegal because they have a limit of 8 residents.

 

[George Hatch]

Another thing that might be tricky about this assignment is that student housing is seasonal, meaning they have income for 9 months of the year but not necessarily 12 months a year. Some of the rent goes to the management factor, some to the maintenance, some to the utilities, etc, etc. It s a much more involved analysis than is typical for a 2-4 residential.

 

[Gtary]

Another thing that might be tricky about this assignment is that student housing is seasonal, meaning they have income for 9 months of the year but not necessarily 12 months a year. Some of the rent goes to the management factor, some to the maintenance, some to the utilities, etc, etc. It s a much more involved analysis than is typical for a 2-4 residential.

I would think that the rental amount would cover their 12-month lease whether they choose to stay year-round or not. ?

 

[Dublin ohio]

Sounds like a SFR used as a boarding house. And there are laws about boarding houses in many states. In my state, this would be illegal because they have a limit of 8 residents.

It would depend on local regulations. I have run into that situation numerous times in the local university area. The leases signed by the tenants are joint and several. Gets them around the boarding house regulations

 

[George Hatch]

I would think that the rental amount would cover their 12-month lease whether they choose to stay year-round or not. ?

Unless it's a frat or sorority, more common is lease per semester.

 

[Dublin ohio]

Unless it's a frat or sorority, more common is lease per semester.

12 month leases based on the start and end of the school year are the norm for off campus housing around here

 

[Surf Cat]

Greetings,
I've recently been assigned an appraisal order near a university. The subject is a building with 9 occupants, but 1 communal kitchen and living space. All of the occupants are students. This is typical in the subject market area. However, my question is,.. would this be considered a single family residential unit with a family of 9 individual family members paying 9 individual leases? Or, is this a commercial property at this point? Zoning is mixed use.

I'm assuming you were sent the assignment for an SFR and found out the above during your inspection.

Hopefully, you took lots of photos and took good notes. Relay this information to the client and see how they want you to proceed.

Most likely, the client has no idea about its current use. Maybe the owner put partition walls in each of the bedrooms or Framed an additional entry doors.

This might kill the deal in which you would garner a trip fee, comparable & subject research, time charge, etc.

If they want you to proceed, renegotiate your fee and refer to the posts above in regards to local occupancy rules, zoning, Etc.