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Updated over 8 years ago on . Most recent reply

User Stats

34
Posts
30
Votes
Patrick Diamond
  • Real Estate Consultant
  • Los Angeles / México City
30
Votes |
34
Posts

Property used as commercial B&B. Can new owners get resi mrtg?

Patrick Diamond
  • Real Estate Consultant
  • Los Angeles / México City
Posted

Hello BP:

I have an interesting situation.

8 years ago, a residential property was purchased by my client and converted to a bed & breakfast and has been functioning as one since.

Client now wants to sell, and, due to the fact that good records weren't maintained, it's being sold/marketed as a residential property.

Someone I work with in REI with quite a bit of mortgage lending background with underwriters advised me that whoever buys the home will likely have a very difficult time getting the deal done with a conventional mortgage, because during the due dilligence phase, the lender will find that the property has been running as a bed and breakfast, and therefore will shy away from it... even if the stated intention is to use it as a primary residence.

Can anyone with background on how the risk factors of these deals are considered and underwritten, or knowledge of common underwriting practices shed some light on this?

I appreciate your time in advance!

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