All Forum Posts by: Kevin Maher

I don't if anyone mentioned this but they are not financeable without land. No conventional, FHA, FNMA, or VA without land. You can finance just the home when new without land but rates are way higher than conventional

It counts ang GLA for the main house if it is attached and accessible from within the main improvements. Appraiser looks at what did someone else pay for a similar Det Apt. Appraiser will only give value to what is legally permissible. Is it zoned for multi family. Don't fall into the trap that it is a mother in law quarter therefore it is legal. It might be legal for a family member non renter, but not for joe blow. What does this mean. It means you can't legally rent it to the general public and you say no one will ever know who is in there. Well I as appraiser is not going to give much value to it because it is non rentable by law. If the county or city decides to crack down on these properties there goes your renter. I have seen this happen because the noisy neighbor turns you in for it and raises hell until they do something about it. All that being said I appraise in a resort area where these are legally permissible rental units and for short term. This is important for you ARNB guys. Are there any deed restrictions to short term rentals? Some say min 6 months. Read the paperwork. So back to the vacation homes that allow it. In my area these carriage houses, detached apartments, Detached Accessory Units, are sold and marketed including these units. They are considered by the market as part of the overall GLA because it is useable in that fashion. Typical homeowner does not as they are not going to put the new born baby in the garage apartment. Not going to put the 12 year old kid out there either. So it's a different market. So the way these units are handled on a appraisal is by using a separate line item for it. I label it MIL or Carriage House. And adjust separately for it. Now for the value of this unit. If you are in the resort area where they are utilized and the market sees equal value in the unit as part of the overall GLA I give the same value to it as additional GLA to the main improvements. In other words if I am adjusting $100 a sqft for differences in GLA I give it $100 a sqft in value as a separate line item. Now if it is in a general neighborhood that is not zoned for a accessory building that is rentable to the general public what is it's usefulness to a buyer. Not much. Like a detached workshop, storage, auto shop, crafts, a She Shed, whatever you call it has very limited use to the general public. Like a pool not everyone wants one. Some see it as a liability. Who buys a house with a small house in the back yard you can't legally rent to anyone. You can let Grand ma live in it for free. How many of you want your in laws in the back yard thats right there are only 2 of you out there the rest of us don't want a place for her at all. Don't want even thinking she can come here. Joking. Most of these structure's are originally built because of a ailing relative that can no longer take care of themselves. So after they pass there is no use for the building and it just sits. So unless it is legal and rentable to the public you are not going to get anymore value for the structure than a unfinished detached garage. Also if you enclose a garage you loose that feature that has value. I highly recommend you spend time reading a appraisal. Not just the numbers. Read every damn line. You should be able to understand the reasoning and rational that the appraiser is employing if not call him/her and ask. Why did you put all your weight on that sale and not this one. Why no comps with a ADU. How did you come to the additional value of the ADU. It's not just about the number at the bottom of the page. I did a appraisal on a house where a investor renovated a oversize 4 car garage into a 2 bedroom rental unit. Well after he spent around 100k on this thing he got 5k in value for a accessory building. It was not legally rentable. He could let family members live in it for free. You can't even charge family members in the city of PCB rent to live in it. So does it have income value, No. Buyer buying this property ran when he found out he couldn't legally rent it. Owner wanted to shoot me until I told him the law which he never bother to read and how guide lines will only allow me to give value to what is legally permissible. Spend a hour with a appraiser. You need to understand what the guidelines are. They are not the same as the hard money lender. Understand what is a comp to your house. Ask the realtor to show you one that recently sold for, that they are saying the one you are looking, is going to be worth when you rehab it not just what he/she thinks it will sell for. They have pictures of the inside, look at them.

Why not the fastest growing county in the state.  6th fastest growing county in US.  Newest construction with a regional development plan for the next villages in FL.   It is located in the other florida called Northwest Florida.  They typically leave this part of the state off the map.  Short term rental demand has continued to grow.  It is a drive able vacation from anywhere in the south.  Brand new international airport.  St Joe development with a 50 year growth plan.   
Walton County Florida.  

I read that the servicers are the ones being pinched with no money coming in with the obligation of paying the investor.  So far no stimulus specifically targeting this.  Servicing companies don't have the resources to float the money.  I read somewhere that in march they were expecting possibly 25% of the market not paying which would translate into 50 billion a month that servicer's would have to pay to make up the difference.  It's not 25% of the market but it if it is 10% and it's been 6 months say at 20 billion thats 120 billion dollars.  If servicing collapses this will cause a disruption and panic possibly.  Investors wouldn't buy the loans as they wouldn't trust the servicers to pay.   Also major banks JP morgan, goldman sachs,  etc are going to have to set a lot of money to the side additionally every month as they have to have larger and larger reserves to cover unpaid loans pilling up.  Just speculating.  I think the economy is teetering on the edge and could go either way.  Bidden would tip it but would spend piles and piles of money which is going to end up in the stock market.  That must be were the 2 trillion they borrowed in 08.  The economy needs to open by the 1st of the year or I think it's over. 

Someone is going to bite the bullet somewhere.  You can't just say you can't foreclose.  Everyone will quit paying the mortgage and rent.  Investors aren't getting paid and will not buy anymore loans.  Best bet of that is with Biden.

Once there is a glut of inventory due to delayed sales and foreclosures starting people will become upside down in their houses due to falling values which will propel more to give them back like in 08. Never before in history could you just give the house back and then get your credit score back to 700 in a year or two. In years passed if you had a foreclosure on your credit your were over. Couldn't get loans for many years. This caused a cascading event in 08 as the typical person was not going to pay 200k for a house only worth 100k. They just walked. Especially highend second homes. My son lived in a Orlando in 2010 had a neighbor in a house he paid 600k for. Value had fallen to about 250k for same house. This guy made 150k a year with his wife's salary. One day he walked across the street and rented the exact same house for less than his payment and just moved. Let the house go back to the bank. 1and half later buys almost identical house for 350k as the market started leveling out. People have figured out you can just give it back with little repercussions. REO's are typically discounted about 15% for a quick sale. This is what starts the ball rolling down hill when the REO's start coming in a large number.

My two cents worth. I am a appraiser in Fl in a second home market. Haven't seen a REO appraisal in 5+ years. Got 3 week before last and 2 yesterday. These are million dollar homes.

But the market has been on fire here as well.  Lots of Northerns NY, NJ, Ohio,  buying sight unseen before could even travel.  Prices are up 20% in the past 90-120 days.  Rentals have been thru the roof.  Full capacity.  These are vacation homes.  Remember Fl was one of the fist to open especially in NW FL.  We are at full capacity in restaurants currently.  Everyone mentions the down turn in 08 well it started here at the end of 2015.  Prices started turning down before national attention with the collapse of the banks.  The clue I had in 15 was that inventory started to climb.  The bidding wars subsided.  Market times went up.  It will take a year to two after things slow I think.    I think the reo appraisal orders are very bad sign.  Red hot market and people giving them back to the bank?  There is a under current that I don't think people are seeing right now.  For 3 months you couldn't rent your vacation home/investment property.  Then their business is suffering and having to take out loans with hope you won't have to pay back?  In every economic downturn for the past 50 in this market the 1st thing that hits the blocks as a reo it the vacation homes and condo's.  The last thing you need when times get tight is a vacation house/condo.  Unless there is a continued migration to this area from the wealthy I don't see how it keeps going forward with demand.

If you are talking about real estate in general maybe so. However the market is made up of many sub markets. These sub markets will improve at different rates. For instance the lower end priced homes will come back first as they are the most affordable for the majority of buyers. Do so trend analysis in different GLA sizes. 1000-1500 sqft homes, then do 2000-2500. You will probably see that the smaller homes have less inventory and have a higher asborption rate. High end properties ie waterfront, golf course, high quality all will most likely decline further as well as condo's. This is due to the lack of available financing. Jumbo loans start around 400k, so properties priced over that are hard to finance, require more down and a more stable borrower. :D All is not bad there are markets in NW Florida that currently have less than 5 months of supply which is normal. 3-6 months typical. Also sales to listing ratio's around 96%. This is normal. Do some research and you maybe surprised.