Very short term rental...

[Terrel L. Shields]

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?

No flaw. Ask you insurance man. How does he view it?

 

[alebrewer]

No flaw. Ask you insurance man. How does he view it?

You HAVE to be kidding, right? So now, any house used as a rental, yet within a SF detached zoning, is an illegal use?... think, Terrel...

 

[alebrewer]

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.

You are correct that, if an insurance company finds that you've committed fraud (i.e. stating you're going to use it as OO, yet rent it out), they may deny the claim. Insurance has absolutely nothing to do with whether a property is residential or commercial, though, my friend.

 

[Terrel L. Shields]

"If you plan to rent out your primary residence for short periods on a regular basis, to various “guests.” this would constitute a business. Standard homeowners insurance policies do not provide any coverage for business activities conducted in the home. To be properly covered you would need to purchase a business policy—specifically either a hotel or a bed and breakfast policy.". OK , this is from the insurance institute. NOTHING SAID ABOUT ILLEGAL USE. There is a difference in renting out a HOUSE and living in a home.

 

[alebrewer]

"If you plan to rent out your primary residence for short periods on a regular basis, to various “guests.” this would constitute a business. Standard homeowners insurance policies do not provide any coverage for business activities conducted in the home. To be properly covered you would need to purchase a business policy—specifically either a hotel or a bed and breakfast policy.". OK , this is from the insurance institute. NOTHING SAID ABOUT ILLEGAL USE. There is a difference in renting out a HOUSE and living in a home.

You are using insurance guidelines to establish whether the use of a property is commercial or residential. Back to your original point that, if it's income producing, it's commercial - you have to be able to see the flaw in this argument. Based on your definition, again, now any home that (a) is currrently being rented, and (b) falls under a SF detached zoning, is an illegal use. That is just incorrect, Terrel.

 

[Terrel L. Shields]

I said NOTHING about illegal use or zoning, Trollboy.

 

[alebrewer]

I said NOTHING about illegal use or zoning, Trollboy.

No, you've said that, if it's income producing, it's commercial (this speaks to use, just fyi). AND, if it's commercial, then now it IS an illegal use under most SF detached zoning ordinances. Also - please refrain from personal insults. It's unbecoming and generally implies a futile attempt to lash out when losing a debate.

 

[J Grant]

No, you've said that, if it's income producing, it's commercial (this speaks to use, just fyi). AND, if it's commercial, then now it IS an illegal use under most SF detached zoning ordinances. Also - please refrain from personal insults. It's unbecoming and generally implies a futile attempt to lash out when losing a debate.

One thing you will find out about this board, is certain posters (usually not Terelll, rare for him ) certain posters will never admit they are wrong, or admit there can be another perspective. Instead, they will attack the poster who dares disagree and lob personal insults/ make pompous lectures such as "you need a HBU course, you don't understand appraisal 101" etc.

Imo this board needs a section reserved for posters whose content is a predictable stream of insults or pompous lectures. That way the other sections could be actually discussing appraisal topics.

 

[glenn walker]

OK Bottom line the OP Subject property is a 2 unit and main unit is owner occupied. The owner rents the 2nd unit as a Short term AIR-BNB. Fannie has guidelines for these and even a pilot program is in place right now where Fannie is coming out with a special Pilot Program- MUST B A REFINANCE AND NOT A PURCHASE- The appraiser has to consider the positives and negatives, obviously , the owner believes he will make more income than just having one stable tenant ? The negatives are like a hotel or a BNB because the additional wear and tear on a property can be substantially higher than a normal rental. Also the lender will make the OWNER provide an-Insurance policy showing eveidence of a minimum $ amount of both fire and liability insurance. When you have this many people going in and out liability goes through the roof and all it takes is one greedy guy to slip in your shower and personal attorney Sweet James is all over teh owners insurance carrier, worse if someone is raped or murdered. FROM the APPRAISERS perspective he/she cannot determine what income stream will be generated so he/she can just use a estimated rent based on what a typical unit rents for NOT A BNB. As far as being commercial I agree with Terrill but Fannie-Freddie seems to not care and so now it becomes another issue where the appraiser has to make a business decision. Personally I do not think the appraiser has much liability as long as he/she discloses what the owners is using the 2nd unit for. The Underwriter will determine what rent- if any she will count towards the owners DTI , get a copy of the owners INSURANCE and be done. I do not believe this assignment requires a CG because its not complex.
Airbnb Mortgage Pilot Program Backed by Fannie Mae

• Airbnb has teamed up with Fannie Mae
• And lenders Quicken Mortgage, Better Mortgage, and Citizens Bank
• To make it easier to use Airbnb income to qualify for a home refinance
• Can use rental income to lower your DTI if you’ve been renting your primary residence for at least 12 months

 

[J Grant]

OK Bottom line the OP Subject property is a 2 unit and main unit is owner occupied. The owner rents the 2nd unit as a Short term AIR-BNB. Fannie has guidelines for these and even a pilot program is in place right now where Fannie is coming out with a special Pilot Program- MUST B A REFINANCE AND NOT A PURCHASE !
Airbnb Mortgage Pilot Program Backed by Fannie Mae

• Airbnb has teamed up with Fannie Mae
• And lenders Quicken Mortgage, Better Mortgage, and Citizens Bank
• To make it easier to use Airbnb income to qualify for a home refinance
• Can use rental income to lower your DTI if you’ve been renting your primary residence for at least 12 months

That relates to air bnb INCOME acceptable to Fannie as relating to borrower income to qualify, and does not relate to the appraisal . The appraisal uses market rents of what similar properties rent for, not what a subject rents for. If one unit of subject was vacant , do we give it a zero $ market rent? (no)

Glenn Walkers has gone off the rails