Residential Bed & Breakfast

[timd354]

It's not up to the state board to decide what kind of property it is. It's up to the market and up to the appraiser.

If it's just some couple who want to play part time hotel keeper for their too expensive beach front and only have a few guests during Memorial Day and the Fourth of July the HBU is probably a SFR regardless of what type of use permit they get.

In my opinion, appraising a B & B for a single family residential loan is just not worth the risk for a residential appraiser. Even if the HBU was determined to be as a residence (as opposed to a B&B), the property had not been modified in such a way that is no longer usable as a SFR and the appraiser made all of the required disclosures to the intended user, it is simply not worth the risk to appraise the property and be subject to potential discipline from a state board who may have a different opinion on the matter.

 

[Howard Klahr]

Would the percentage of the property that is actually used for guest have any influence?

That depends upon the local/state regulations that govern bed and breakfast facilities. These regulations determine the legally permitted aspects of the Highest and Best use analysis.

If you are trying to finagle a way to justify calling the use of a property as one thing as opposed to what is actually occurring, then you should step back and think about why you need to justify it one way or another.

 

[DaveH]

I our experience B&B are always income producing with a possible going concern association. Kind of hard to explain income in any other sense, due to the specialities of the property. Ask the board if a residential is allowed to appraise such a property, then hopefully a solid narrative report with a solid HBU consideration is warranted. Just be careful, not to let the possibility of doing something different get you into trouble.

 

[mark hurlock]

It doesn't matter what the market says or we think. It is what our regulators think. And they tend to think of it as non-residential. And the reason why is given below.

From a Pennsylvania State Board Newsletter in 2011

I have no doubt that some appraisers have misled clients, like not informing the client the subject was mixed use.

But I think FNMA does allow mixed use if reported properly. So my question deals with the honest appraiser trying to follow the rules, not those avoiding them.

 

[mark hurlock]

That depends upon the local/state regulations that govern bed and breakfast facilities. These regulations determine the legally permitted aspects of the Highest and Best use analysis.

If you are trying to finagle a way to justify calling the use of a property as one thing as opposed to what is actually occurring, then you should step back and think about why you need to justify it one way or another.

Absolutely not. I would never mislead a client. But proper is proper and knowing the difference is what matters. I have never appraised a B&B but found this topic interesting enough to ask questions.

 

[Mountain Man]

Most B&Bs I know of have been converted back to residential uses with the market crash. So just do a 2055 drive by, who cares?

 

[CANative]

Howard, what about houses in recreational areas that are on the vacation rental lists... Owner may spend a few weekends a year and have a vacation rental manager rent it out the rest of the time?

Is that a commercial property?

 

[Howard Klahr]

Greg,

You are just intent on beating this horse to death. As you know if it looks like a duck, walks like a duck, sounds like a duck, then its a duck. Yes, there is a difference between short term rentals, vacation rentals and bed and breakfast facilities. This is handled through local/state regulations related to these activities as well as the scope of services and amenities offered.

 

[CANative]

Greg,

You are just intent on beating this horse to death.

It doesn't sound like the OP should be trying this. But I'm fairly serious that not all houses owned by people who call their houses B&Bs really are Bed and Breakfast Inns. I've seen too many properties where it was silly to appraise a SFR as a B&B where transient occupancy income is the motivation for purchase.

 

[mark hurlock]

It doesn't sound like the OP should be trying this. But I'm fairly serious that not all houses owned by people who call their houses B&Bs really are Bed and Breakfast Inns. I've seen too many properties where it was silly to appraise a SFR as a B&B where transient occupancy income is the motivation for purchase.

How can income producing be a criteria for determining commercial use when rental properties produce income.

Is a 2-4 commercial?

I had the same thought on transient occupancy.

If i live month to month or longer I am a residential tenant but if I spend the night, weekend or week I am now a commercial tenant?????

someone please explain