STR's

[Surf Cat]

A lot of municipalities in my area have started restricting STR use in R zoned areas. Fort Worth doesn't even allow STR in any residential zoned areas.

It's interesting how these services came about ( Airbnb/VRBO - Uber/lyft). They filled an unmet demand.

The starter of these services tapped into the popularity and everyday use of the cell phone. The thing is, they put the cart before the horse..... no one signed up for a business license. No one bought additional insurance for their vehicle to use as a taxi. They signed up with the app and started giving people rides and got paid. People listed their homes on the app and started charging daily rates and got paid.

The rules and regulations came later, after the ramifications of getting in a wreck while on their way to pick up somebody from the app ( with their everyday insurance company denying coverage as they found out they were doing a taxi business). Or, the police breaking up fight club in the middle of a quiet neighborhood at a STR..... where zoning doesn't allow commercial businesses.

The chief appraiser at slipshod AMC, providing advice to residential appraisers on how to value STR's, without a universal standard, is walking on thin ice.

 

[WestMichiganCG]

You have no idea what you are talking about.

As George stated a STR is a use/occupancy, no different than a longterm rental. When it comes to analyzing the income and expense it is still not any different than a longterm rental. Biggest issue is zoning, building requirements and permitting. My City is in the process of instituting a STR zoning ordinance and they keep running into objections and issues as the cows are already out of the barn and getting them back will difficult.

I would argue that the biggest issue is often that the highest and best use is a single-family home.

 

[alebrewer]

The chief appraiser at slipshod AMC, providing advice to residential appraisers on how to value STR's, without a universal standard, is walking on thin ice.

It's completely disgusting that someone who knows how wrong it is would encourage an appraiser to do it.

 

[CGinMN]

If the annualized market rent for a property is $2,000/month, but as an STR it generates gross receipts of $5,000, then the $3,000 is non-realty income attributable to the business income, which includes expense for turnover and wear and tear, booking and platform costs, licensing, expense for FFE, vacancy risk and managment premium, and maybe a brand premium. Unless a lender is making a business loan, I don't know why they would care about the non-realty components. If they are and they know what they are doing, I don't think they would be engaging a residential appraiser.

 

[Terrel L. Shields]

I hate mornings,

Me too...

 

[alebrewer]

It happened, and I'm saddened that at least one of the folks who is doing this I know personally. That said, ultimately the responsibility lies with the appraiser - hence the post.

 

[Surf Cat]

It happened, and I'm saddened that at least one of the folks who is doing this I know personally. That said, ultimately the responsibility lies with the appraiser - hence the post.

Makes perfect sense. It's their analysis and signature.

You can't run a stop sign while driving because your friends in the backseat told you to do so....

 

[glenn walker]

Fannie and Freddie guidelines for appraisers of residential property are to use long-term, monthly, or annual leases, not use STR. Since the vast majority of lending assignments are URAR GSE bound idk why a res appraise is developing a STR income for a property.

The fact that the GSE and lenders allow STR as part of a borrower's income to qualify them for a loan does not mean the appraiser needs to develop a STR income for the property appraisal. The lender accepts the borrower's tax return /receipts, statements from Airbnb as proof of the STR income. Verifying a borrower's income is a lender's job , not an appraiser's job.

The GSEs don't allow STR annualized income to be used to qualify for a loan and the STR on portfolio loans like vacation cabins etc is limited to a cap of what a regular 12 month lease would pay.

The real problem is most investors lie
and under report STR invome on their tax returns but inflate expenses so the lender gives them nothing. A single family home unless converted to a legally permitted Business Use is always valued as a house. Then it gets a commercial loan not a GSEs type loan.

 

[NC Appraising]

After reading these posts, I can now say that I'm overly qualified to do these. Yes Chief Appraiser at AMC, sign me up.

 

[glenn walker]

Just don't do them period.