Multi Family used as a rehab center

[swandel1]

You guys all covered it. It's zoning & HBU. Is the medical use legal in that zone? If renting by the room, that could also possible make it considered a "rooming house" - another thing you need to look at in the zoning. What you are seeing could very well be illegal use.

 

[George Hatch]

Got a call to appraise a 2 family home. Owner informed me of the rents, they are much higher than the market area, I asked for more info and she told me she rents out the rooms to a medical facility for drug and aclohol rehab. Legal use is a 2 family dwelling. I believe they need a commercial appraiser, but I am not sure at this point. any thoughts would be appreciated.

Sticks and bricks.

The occupancy being described appears to be more similar to a single room occupancy of an existing home, not a medical facility. More like a group living arrangement that might not even require a use permit if the number of residents is below a certain number (in my state SFRs are usually limited to 6 unrelated adults).

Most small board/care homes for the elderly or halfway house operations or the like are still SFRs (or in this case a multi-family) with no specialized improvements. It's a group home for furries this year but next year it'll be a family of 5.

 

[sputnam]

Okay, the bigger issue here most likely is if the appraiser can perform income capitalization approach and/or rent multiplier approach in sale comparison approach.

Residential appraisers are allowed to use income capitalization.. or discounted cash flow analysis.. or any other accepted valuation method. The issue is that many residential appraisers haven't been taught how to do much of anything beyond using the GRM for the Income Approach. Again, a matter of compentency.

 

[J Grant]

Residential appraisers are allowed to use income capitalization.. or discounted cash flow analysis.. or any other accepted valuation method. The issue is that many residential appraisers haven't been taught how to do much of anything beyond using the GRM for the Income Approach. Again, a matter of compentency.

We might be allowed to do it , but if it is a residential property and a residential loan, inluding any of the above as part of the appraisal would result in the client asking it be removed ( or the property rejected as being used for commercial purposes )

A residential appraiser is certainly capable of learning the alternative income methods.

 

[Tom D]

Residential appraisers are allowed to use income capitalization.. or discounted cash flow analysis.. or any other accepted valuation method.

The form is a 2-4 family, asking only for the grm to capitalize. Why would you do any other valuation, other than double checking, especially if you come out with a different number. The title of the post is wrong, it's not a rehab center, it's going to house some clients while they are in rehab. So a higher rent for that, who wants ex druggies in their rentals, some of you never owned rental properties. But maybe a lower rent for the other unit cause i don't wanna be living in the same building as ex druggies.

We might be allowed to do it , but if it is a residential property and a residential loan, inluding any of the above as part of the appraisal would result in the client asking it be removed ( or the property rejected as being used for commercial purposes )

That's right, the poster put a fake use into some of heads here. I live in the highest drug use zip code in the country. This is a residential use only, you dopes. I need some pain killer reading some of the posts here.

 

[Mark K]

Certified residential appraisers can appraise 1-4 family properties that have transaction value of less than $1,000,000. The gray area is... there's no definitive explanation of what 'transaction amount' means. Is it the sales price? The loan amount? That has never been made clear.

I've asked that of many instructors. They all said its the loan amount and that's what I went by.

Also, I rented a duplex to an organization that helps the MMH, mildly mentally handicapped, and they used it for a 'group home'. Two bedrooms each side, two individuals in each side and a full-time assistant' that hung around 24/7. They paid above market rent, slightly, because the tenants tended to break things, not out of malice.

Before anyone starts quoting zoning regulations, they need to check out the fair housing laws. I don't know if it's just this state or federal (I'm thinking federal) but this type of group home is allowed in any residential zoning; you cannot discriminate. This same organization I rented to also had several large homes in SFR neighborhoods. Of course the neighbors didn't want it but the city couldn't stop it. BTW, these types of individuals are harmless, mostly lower-IQ that had jobs at Goodwill or other companies that hired their cohort. I'm thinking there might have been a couple of appraisers on one side.


EDIT: Just found this.

Yes, group homes are generally allowed in residential areas because federal laws, like the Fair Housing Act (FHAA), prohibit discrimination and allow group homes to operate in neighborhoods, although local zoning ordinances can impose reasonable, non-discriminatory restrictions on the size and location of these homes. State laws may also permit or regulate specific types of group homes, such as those for the mentally or developmentally disabled, as is the case in Indiana.

 

[Dublin ohio]

Certified residential appraisers can appraise 1-4 family properties that have transaction value of less than $1,000,000. The gray area is... there's no definitive explanation of what 'transaction amount' means. Is it the sales price? The loan amount? That has never been made clear.

Ohio defines it as purchase price for purchases, loan amount for non purchases

 

[sputnam]

Ohio defines it as purchase price for purchases, loan amount for non purchases

Good for OH. At least one state has taken a stand on that. Many others haven't and the TAF hasn't either.

 

[Terrel L. Shields]

Is the medical use legal in that zone?

Zackly. Some of our residential zoning laws allow for assisted-living facilities' churches, day care centers, etc.