Very short term rental...

[CANative]

Fee simple two unit, one unit not currently occupied but available, market rent opinion, income approach using GRM developed from similar two unit properties, description and explanation.

 

[KONA]

CAN, you are "spot' on. Stabilized market rent, GRM, market derived.

 

[Mark K]

Air B & B is in reality a business enterprise.

Agree. Nothing special in this assignment. I assume appraisal is for fee simple....the subject is not encumbered with any leases. Appraise like any other duplex.

Around here we have a lot of minor businesses in owner occupied residential dwellings; one or two chair beauty/barber shops, boarding a couple of horses, computer repair, and other home businesses allowed by zoning. None of these small business enterprises affect the HBU or market value.

 

[Elliott]

"Occupancy Clause Basics

When you fill out an application for a home loan, you must state what you intend to do with the house. If you're planning to rent your house out or use it as a vacation property, you shouldn't complete a mortgage application for a primary residence, because these almost always have occupancy clauses. Your mortgage company can use several methods to ensure that you're living in the home, including looking at the type of homeowner's insurance you purchase. If a renter takes out renter's insurance at your address, this will also be a giveaway.

Justifying the Clause

Lenders generally use slightly less stringent eligibility requirements for primary residences. Owner occupancy can also affect property values. Rental homes typically sustain more wear and tear, and vacation homes may fall into disrepair if someone is not there to repair minor issues. This can result in an underwater mortgage, which often leads to foreclosure and a loss to the lender.

Changing the Clause

If you want to rent your property out, you'll need to get your mortgage company's permission. If your mortgage company won't authorize you to convert to a rental property, you may need to refinance your home loan. However, sometimes all you need to do is wait. Many occupancy clauses only last for a year, so if you can stay put for a few months, you might be able to rent your property out.
Don't Violate the Occupancy Clause

Violating your occupancy clause is a form of mortgage fraud. Your mortgage company could revoke your mortgage and call the entire loan due and payable. If you can't pay it, this could lead to a foreclosure. Mortgage companies can also file a suspicious activity report to alert the government to potential mortgage fraud. This report could make it difficult or impossible to refinance or move to another home."

https://homeguides.sfgate.com/occupancy-clause-mortgage-62107.htmlhttps://homeguides.sfgate.com/occupancy-clause-mortgage-62107.html

I'm not the occupany police. But if the assignment comes over as a "refinance" then I'm probably going to assume its owner occupied, unless told otherwise. I'm more fond of giving a heads up then 'assuming' everything is copacetic. Loan originators have been known to lie. I'm not paid enough to be an accomplice.

 

[Terrel L. Shields]

I'm not the occupany police

BINGO...we have a winner. It is a mixed use commercial and residential. Take the time to find out if the board will allow it. My board will if below the de minimus regardless license. Then go to the lender and find out what they want to do.

 

[alebrewer]

"Occupancy Clause Basics

When you fill out an application for a home loan, you must state what you intend to do with the house. If you're planning to rent your house out or use it as a vacation property, you shouldn't complete a mortgage application for a primary residence, because these almost always have occupancy clauses. Your mortgage company can use several methods to ensure that you're living in the home, including looking at the type of homeowner's insurance you purchase. If a renter takes out renter's insurance at your address, this will also be a giveaway.

Justifying the Clause

Lenders generally use slightly less stringent eligibility requirements for primary residences. Owner occupancy can also affect property values. Rental homes typically sustain more wear and tear, and vacation homes may fall into disrepair if someone is not there to repair minor issues. This can result in an underwater mortgage, which often leads to foreclosure and a loss to the lender.

Changing the Clause

If you want to rent your property out, you'll need to get your mortgage company's permission. If your mortgage company won't authorize you to convert to a rental property, you may need to refinance your home loan. However, sometimes all you need to do is wait. Many occupancy clauses only last for a year, so if you can stay put for a few months, you might be able to rent your property out.
Don't Violate the Occupancy Clause

Violating your occupancy clause is a form of mortgage fraud. Your mortgage company could revoke your mortgage and call the entire loan due and payable. If you can't pay it, this could lead to a foreclosure. Mortgage companies can also file a suspicious activity report to alert the government to potential mortgage fraud. This report could make it difficult or impossible to refinance or move to another home."

https://homeguides.sfgate.com/occupancy-clause-mortgage-62107.htmlhttps://homeguides.sfgate.com/occupancy-clause-mortgage-62107.html

I'm not the occupany police. But if the assignment comes over as a "refinance" then I'm probably going to assume its owner occupied, unless told otherwise. I'm more fond of giving a heads up then 'assuming' everything is copacetic. Loan originators have been known to lie. I'm not paid enough to be an accomplice.

This sounds an awfully lot like it applies to sf residences, Elliott. Ans if so, that is exactly right. Loan terms are generally much more attractive for OO than for 2nd homes/rentals. The topic of this thread, however, is multi-family, which the lender expects to be tenant occupied.

 

[alebrewer]

BINGO...we have a winner. It is a mixed use commercial and residential. Take the time to find out if the board will allow it. My board will if below the de minimus regardless license. Then go to the lender and find out what they want to do.

What makes it mixed use, Terrel? The fact that it is short term rental vs long term rental? Think you might be off track here...

 

[J Grant]

What makes it mixed use, Terrel? The fact that it is short term rental vs long term rental? Think you might be off track here...

He is off track, calling it mixed use/commercial. Air bnb as others said is a business enterprise for the OWNER INCOME, and does not affect the property ( unless they make physical alterations to the property ). The market rent is what other units and small income properties rent for in the area, If an owner makes income using their Toyota Corolla for UBER drives, that is a business enterprise for the owner and does not affect the car. If owner sells the car, to the market it is just another Toyota Corolla for sale.

If one of the subject units is vacant on the eff date we appraise, hat does not make the market rent for that unit zero. The market rent is for whatever similar rents rent for in area.

I would of course disclose in the appraisal that even though for analysis the opinion market rent is based on annual rentals in area, the use of the unit for present owner is air bnb rental. Just as we disclose a unit is vacant on eff date.

 

[Terrel L. Shields]

What makes it mixed use, Terrel? The fact that it is short term rental vs long term rental? Think you might be off track here...

The difference between a hotel and an apartment. Some CRs have been sanctioned over b & b operations. Our state was plain on the subject. Regardless Fannie will loan on same, the state board may view it different. If not over $250,000 a CR can do this here. Also, your insurance agent will deny a claim if you use it for commercial (income producing) purposes. Read your policy. You have to pay them extra for coverage of such guests.

 

[alebrewer]

if you use it for commercial (income producing) purposes

so you're saying (now) that any income producing property is a commercial property? To carry that logic out, you're saying that a single family detached residence, used as a rental, is now a commercial property? Do you see the flaw in your logic, Terrel?