Very short term rental...

[PMA930]

The Subject is a two family near Boston. When I called the borrower and asked if there was a tenant, he said no. He lives in the Subject and uses the other unit as an Air BnB. "Guests" come in after 4:30 pm and have to be out by 11:30 am. Should I return this order to the Lender or just ask their policy on Air BnB units? Thanks.

 

[Terrel L. Shields]

Ask their policy. Some lenders and boards consider B&B of any type 'Commercial", so call your state board investigator to see if you can. Then call the lender for their guidance. I personally would require a profit and loss statement to calculate the vacancy rate, and I want to know what they are deducting as expense. Wonder if their insurance company knows it is an airBnB?

 

[alebrewer]

The Subject is a two family near Boston. When I called the borrower and asked if there was a tenant, he said no. He lives in the Subject and uses the other unit as an Air BnB. "Guests" come in after 4:30 pm and have to be out by 11:30 am. Should I return this order to the Lender or just ask their policy on Air BnB units? Thanks.

If it were me, I'd ask for clarification on their policies. If the borrower is going to use rental income to qualify, most lenders will require lease agreements (which he won't have if it's an airbnb). If they're not going to use rental income for DTI calculations, it may be perfectly ok.

 

[Jerry Bone Jr]

The Subject is a two family near Boston. When I called the borrower and asked if there was a tenant, he said no. He lives in the Subject and uses the other unit as an Air BnB. "Guests" come in after 4:30 pm and have to be out by 11:30 am. Should I return this order to the Lender or just ask their policy on Air BnB units? Thanks.

It's not so much about the current use, more about the H&BU.

 

[Restrain]

We have done seasonal/short term property multi-family appraisals, but these were for a private lender, not a ‘conventional ‘ loan. Agree, talk to the lender. They may want you to treat the second unit as if it is rented on an annual lease (what a typical owner would do as opposed to the current type of occupancy). Interesting thing is that a rental through VRBO, AirB, etc may generate a significantly higher income stream. We did a home that was rented through VRBO and the lender required us to do it that way, while reporting the actual rental terms.

 

[Tom D]

in this city i think you would need to have specific zoning use for a boarding house, you can call it 'whatever use'. what does his permit/zoning allow. you can do what you like renting, but if it isn't the permitted use can l&i stop you. and i bet you he don't declare that income. so i guess that unit will show no income on the form. i always found tricky people have trouble with r.e. loans.

 

[Elliott]

Read your engagement letter. If it isn't clear, then tell them one unit is being used as an AirBnB. Ball in their court.

 

[KONA]

Highest & Best Use.

 

[ucbruin]

"Should I return this order to the Lender or just ask their policy on Air BnB units?"

I think if I were in my 30's-40's I'd try to learn how to appraise these types of properties....
But I'm not, so I'd just return the assignment to the lender....

 

[KONA]

Air B & B is in reality a business enterprise.