Multi family vs ADU

[App601]

I am appraising a detached property with a small rear apartment that is rented It has 2 separate power meters
I understand that I need a mall Income form but have received opinions to treat the apartment as an ADU
Those that believe it is an ADU please express why? No insults please we are professionals

 

[sputnam]

Read the definition of an ADU and then make up your mind. You should also consider the Highest and Best Use of the property. Is the most like buyer someone who will occupy the main dwelling and supplement their income with the small apartment? Or is it an investor who will rent both units?

 

[J Grant]

I am appraising a detached property with a small rear apartment that is rented It has 2 separate power meters
I understand that I need a mall Income form but have received opinions to treat the apartment as an ADU
Those that believe it is an ADU please express why? No insults please we are professionals

Is the main dwelling a single-family house? What is the zoning?

If it is a SFR with an ADU, it is not typically done on a small income form ( even if the ADU is rented ).

If it is a multi-family, then typically it is done on a small income form. Did your lender client order it on a small income form or a SFR form? Somtimes they order it on a form which does not suit the property type.

 

[App601]

Is the main dwelling a single-family house? What is the zoning?

If it is a SFR with an ADU, it is not typically done on a small income form ( even if the ADU is rented ).

If it is a multi-family, then typically it is done on a small income form. Did your lender client order it on a small income form or a SFR form? Somtimes they order it on a form which does not suit the property type.

It was requested as a Single family But they have been wrong several times Being an FHA one unit must be owner ocupied but the other is rented and has a separate power meter

There are no sales of properties with ADUs in the immediate neighborhood for the past 3 years but there are 2 multi family for the past 2
There is a question that asks if the H&B use is the present use and since the property is rented I have to say YES
If it were a single/ADU I can not say yes because I would be lying

 

[Tom D]

Call it a multi, then hang yourself with no similar comps. Yes, 1 unit must be owner occupied, no matter the type.

 

[J Grant]

It was requwsted as a Single family But they have been wrong several times Being an FHA one unit must be owner ocupied but the other is rented and has a separate power meter

Indeed a lender client can be wrong.
However, I do not understand what is driving you to conclude that this is an income property vs a SFR with an ADU. The property description was so generic I have no idea what is there and we do not know the zoning.

 

[App601]

Call it a multi, then hang yourself with no similar comps. Yes, 1 unit must be owner occupied, no matter the type.

Thanks I dont have to hang myself there are plenty of similar multi unit sales available
For ADUs the are not

 

[J Grant]

Thanks I dont have to hang myself there are plenty of similar multi unit sales available
For ADUs the are not

We do not change what a subject property is just to make it easier for ourselves in finding comps.

 

[chad hampton]

I don’t know your market, but it sounds like a textbook single-family home with ADU.

 

[Surf Cat]

What's the zoning of your lot? If it's SFR R1.....then multi-family is not allowable under H&B use (legally permissible).

You say in your OP a "small" rear apartment....like Chad said, it does sound like a textbook description of an ADU. That said, are ADU's even allowable under the zoning/building codes? Was the unit constructed with permits? Answering these questions is going to determine your comp search.

Like JGrant stated..... you don't change the legal description of the subject just to make it easier to find comps. Depending on the answers to the above questions, you may need to be looking for an SFR with non permitted additions to determine market acceptance. Or.... expand your search distance to alternative, competitive neighborhoods since you went 3 years back in time in the immediate area for an Adu garnering no results.