All Forum Posts by: James S.

 I don't believe this interpretation is correct.

The decision simply defined the definition of a "residential/dwelling unit" as it stands vis a vis the Conway Zoning Ordinance. And under that definition, because there was no minimum time in the CZO for how long someone needed to occupy a structure to be considered "living" there, the court used literal dictionary definitions (standard practice in NH as can be seen in the similar case Working Stiff Partners v City of Portsmouth) to determine what constituted "living as a household" as it concerns STRs.

The court explicity rejected the idea that this ruling should have larger implications for STRs around the state, and it certainly did not at all in any way prevent municipalities from regulating STRs. They simply ruled on the ambiguity of the CZO, and said that if the voters wanted to amend the ordinance with specific instructions they are well within their right to do so, but since the CZO has no such restrictions are currently written, they cannot be banned.

Everyone here would do well to read the court's own words on the subject before declaring STR regulation dead in NH:

"Lastly, we decline to contemplate any policy considerations regarding the effect of STRs on the community when our task is to interpret the plain language of the Town’s ordinance. It is the role of the legislature and municipal authorities, not the courts, to consider any policy concerns related to STRs. Currently, many municipal ordinances do not clearly address STRs, and, as the trial court recognized, until they do, we “will make decisions based on the language of the ordinances in effect, even if the results vary from one municipality to the next.”"

@Account Closed No problem friend, Durham is rough on this stuff.

@Nicholas Chagnon - Coming from a guy who used to be on a Zoning Board, do not count on that verbal assurance. That's from one person; you never know what everyone else would do. I would say just make sure you don't need the Airbnb to make the deal work, and count it as icing on the cake. So I think you're mindset is right on here. 

Be real careful on the "unrelated rule." Is it likely that you'll have any problems if everyone is a good neighbor, probably not. But I'm actually not sure if your GF and You would count as one or two unrelated people (I'm a little shaky on the specific of what related technically means in Durham, I don't know if the town lawyers have weighed in on non-related cohabiting couples).

I wouldn't worry too much about a family in the 3BD for 2200. When I managed rentals in Durham a decade ago (mostly students), rents could already go for that much for a 3BD. I know families renting out 3BDs for more than that in Durham already. You could probably get 2 students to pay the 2200 no problem as well. You can see my previous posts from years ago for my thoughts on students vs families if you're interested. 

I'm always down to chat about investment stuff, feel free to hit me up. Best of luck in Durham. Worst case you own a house in a town that anyone with kids wants to live in.

I would strongly suggest you familiarize yourself with Durham's zoning laws in detail before executing your current plan. Specifically, this section:

"4. In zoning districts where no more than three unrelated persons may occupy a dwelling unit (as specified in subsection 175-56 General Dimensional Standards), there shall be no more than three unrelated occupants in total for the single-family dwelling and the accessory dwelling unit combined or for the single-family dwelling and the accessory apartment combined."

This include these zoning districts:

1. Rural (R)
2. Residence A (RA)
3. Residence B (RB)
4. Residence C (RC)
5. Central Business District (CB)
6. Professional Office (PO)
7. Church Hill (CH)
8. Courthouse (C) and
9. Coe’s Corner (CC)

It is highly likely that your ADU Home falls within zones 1-4. This would make your current plan illegal under Durham zoning laws. Anyone who has any experience in owning or managing rentals in Durham can tell you that the town does NOT screw around with this stuff. The town and citizens of Durham are determined to continue to bite the hand that feeds them, but at the end of the day, you have to work within their regulations. They can, and they absolutely do, fine/lein/prosecute/whatever, people attempting to circumvent student housing rules.

Furthermore, Airbnbs and the like are not currently allowed in these zones without an exception from the ZBA (good luck with that):

Section 175-53. Table of Uses
Residential Zones:
Rural (R) Special exception
Residence A (RA) Special exception
Residence B (RB) Special exception
Residence C (RC) Special exception.

I don't want to see anyone's investment go up in smoke because of these zoning restrictions. If I had to guess, you're buying the home on Poindexter Rd in Durham, as it matches your description, which is why I wrote what I said. What the prior owner says about rentals should be disregarded going forward. Have an exit strategy that does not involve renting if you are in Durham and are in one of those zones restricting unrelated housing. 

That said, if you are within 5 minutes of UNH but not within Durham, forget everything I said. 

I was a tax collector in NH, but it has been 9 years since I did that so my info may be a tad out of date. 

NH RSAs give communities the option of passing a veteran tax credit. In the towns and cities I served in, it was always 500 dollar credit per bill. So it's not 100%, though it's definitely better than nothing.

Since local communities rely on property tax for over 90% of their revenue, you aren't going to see town's offering up crazy disabled veteran discounts. This may change as the amount of disabled veterans continue to drop (amen for less war), but it's never a guarantee.

A senior living in a 55+ mobile community can expect a pretty large discount off their tax bill, but someone in their family home not so much.

hope that helps

There are a lot of potential pitfalls to this strategy.

First, the zoning. It's very unlikely in NH that the home exists in a place that allows 5+ unit buildings, unless it's in a downtown commercial area. Most NH towns have, in general, four types of residential building types, SFH, 1-2 units, 2-4 units, and 5+. There is usually no overlap between places that allow 2-4 and 5+. If your home is in a zone that allows 2-4 units, it's usually unlikely you are even allowed to apply for a variance or special exception with the ZBA, and it's even less likely it will be granted.

Second, as other have mentioned, is financing. There is an entirely different world of rules for 5+ units, as that is the arbritary numebr someone decided on years ago making it a commerical building. You may be unwittingl violating rules of your mortgage that may trigger a due on sale clause, and you will most certainly need a different type of insurance regardless. Check with everybody about your plans before you start them.

Thirdly, and I would consult with an expert on this (so don't quote me as it's been a few years since I looked into this) adding units is generally considered a class three renovation in NH. This would mean that, per the state fire code, I believe you would have to add sprinklers to the building. The whole building. And that can be a very expensive task, and difficult to do with occupied buildings. Especially when you are bumping up into a commerical level of units, which have more stringent rules, the code will require sprinklers. Furthermore, even if code didn't require it, the fire chief is allowed to require it as a condition of granting the variance.

Do NOT rush into this deal if a) the deal ONLY works with the 5th units and b) you have not crossed every t and dotted every i Twice. Because if you make a mistake, it may cost you a lot of money to fix. Tread lightly and get answers in writing, and have them looked over by professionals, before you sign anything. Adding a unit is much more of a hassle than it feels like it should be, but doing your DD ahead of time will give you the most protection.

Seeing as you're on the seacoast, check out Newburyport bank. They are loaning aggressively in the area as they are trying to expand here. I have done a HELOC with them in the past where they didn't even inspect the property, and they were willing to loan 75% on a cash-out refi on an investment property while other banks were only doing 65% or 75% but only on money invested and not just a straight cash-out. 

Hey Daisy,

I have no doubt it's harder to be a woman in real estate than a man. People assume I have a competence in a trade or business all the time simply because I'm a man. Whether it's cars, homes, science, math, whatever. There is no question as a woman you have to scratch and fight harder for respect every moment of your life than I do. I see it all the time with my wife, who is much, much, much smarter than I am.

This is doubly worse in the trades, which are (I'm generalizing here) full of old, racist, sexist men. They infest every segment of this business, and they are numerous. They also show up out of nowhere with their nonsense. I had a contractor last year tell me I was "sick in the head" and delusional because I thought we should just give people who are hungry food for free (this was after he started an unsolicited political discussion I tried to get out of). Or the amount of times I've heard the N word said for no reason at all. Or remarks towards Hispanic people, or god forbid a woman. I don't know which group gets hit the hardest (it's probably women to be honest). And of course all these old geezers say no one wants to join the trades, and it's not because of the trade, it's because of the attitudes of all these old ******** we're all forced to work with. The level of cognitive dissonance that a lot of these guys display boggles the mind.

To get back to your situation, I'd chalk it up to experience. Always get at least 2 quotes before you do something, and always run it by somebody you trust to see if they just react with utter disgust at the cost. It doesn't even need to be someone in the trades; i.e. if you told me you were quoted 2 grand to re-plumb a sink, that that quote is probably junk. I mean, you got taken advantage of for sure, and that sucks. It's happened to all of us. Just learn from it and you'll do fine. Also, don't be afraid to push back on these ********. Most of these guys are all bark no bite. At the end of the day they really need you more than you need them. Except for the really good ones...but they won't act like that in the first place and that's why they're so busy.

A good trick I've had is if I find someone who is OK, I ask them who they like to follow in their trade, and then get that information for the future. So I ask my painter what drywallers he likes to work after, etc. This has yielded pretty good results. Also, try giving new young guys a shot. I ended up with a great high end carpenter because he was new to the area, so he had no references around town.

I can't say I know how hard it is to be a woman in this business, but I do know what it felt like to be clueless, and it's really hard. Best of luck.

It was not, though the comps used were. The appraiser was actually from Mass (we were using a Mass bank), which was the first sign something was wrong, as they weren't local to the area.

Thanks for the reply Patrick. That's actually what I thought, but he was using all those things, GRM, price per unit, etc. to justify a price via in the income approach. But if they can't be used legally, than why are they even in the report to begin with? For instance, he dismissed the cost approach off-hand as impractical because there is no comparison to the home (my mason told me the brick-work alone in this building would cost over 2 million to do today, and my carpenter said the interior wood which is all mahogany would be another million). So then why did he not do the same with the income approach? Like I said in my first post, I really have no clue about the world of appraising at all, other than to know that they are usually prima facie my enemy in this game. Is there a larger regulatory body that mandates only using the sales
approach? It seems odd when comparing rental buildings, which are ONLY bought for the amount of income they provide, on anything other than the income they provide.

For the sale approach, there was only one three unit building sold in my area in the last 6 months, so he used a 5 unit and a pair of two units instead. So he couldn't even get an accurate picture of value if he wanted, which is why it would seem the income approach should make the most sense. I'd love to know the justification for this rule; I know someone however many years ago arbitrarily split the world into 5+ and under 5 units, but it seems like slavish loyalty to this principle isn't helping anyone make the most informed financial decisions?

Hi guys,

Just wanted to share a small success story on challenging an appraiser, mainly because before I just (successfully) did it this week, I honestly wasn't sure if it was a thing you were "Allowed" to do, much less if it actually worked.

Just for background; I was looking to do a cash-out refi on a property. The home in question was a 3-unit in NH, with gross rent of 72k, and we were looking for a 600,000 appraisal. Being that it was in a small town of only 4000, the comps I (and the appraiser) looked at were from the next town over, of about 30,000 people.

The appraisal came back at 525,000....so 75k short of what we were looking for. Looking at the comps, I knew something was wrong right away, even with not knowing the actual practices of how appraisers really come to their values. I simply looked at the average of price per unit, GRM, price per bedroom, and price per room that he figured out for the three comps. Then I looked at the numbers he valued our property at, and he used substantially lower values for each of these figures, while giving no justification for why he chose those lower numbers. For instance, the average price per unit of comparable properties was $225,000 yet he used a valuation of $175,000 for my property. Or the average GRM of the subject properties was 116, and he used 86 for ours in calculating the income approach method of valuation. One of the comps was even well over a year old (and happened to be my next door neighbor so I knew intimately about the quality of the property and the rents), and the appraiser had ignored, or missed, better comps.

Being that I was going to have 80k less cash than I thought was a bit of a problem, so I resolved to challenge the appraisal as it just overall seemed sloppy, and very out of line with what I thought the value should be.  I simply wrote up a list of comps from the area, showed why they were more accurate, what made them more in line with the subject property, and roughly adjusted their prices according to the adjustments the appraiser had done (for things like sq footage, garages etc). Then I went over the three comps specifically, and why the comps the appraiser chose were worse and less like the subject property than the comps I came up with. Then I pointed out the discrepancies in the amount per units and the valuation he used on our property. I think this part was key. I emphasized repeatedly that no justification was ever given for any of these lower values. And that he needed to justify his reasons for doing so, whether they were some weighted aspect he didn't list, some secret formula he used, or just gut feeling.

I sent it off to my loan officer, and when the appraisal came back a few days later, the value had magically changed to 600k. He had added a comp that sold for 750k to balance out his equations (I believe he could not use the comps I listed, which were more accurate, due to how bad that would look professionally or ethically), and STILL lowered the value of our property (per unit, per room etc) relative to the comps, but not by enough that it didn't get me the value of 600,000 that I wanted (using the metrics of the comps, my place is valued between 675-700k). I think this was pure laziness, and rather than being forced to justify his amounts, he just went and found some reason to change the values without having to do extra work by adding a higher priced comp. This is why I believe demanding justifications for the lower values was a key point in getting the appraisal changed.

My point in all of this was that if an appraisal comes back low, look it over carefully and see if something to you, as a layman, sticks out as off. You don't really have much to lose in challenging a low appraisal, and making sure you have good data to back up what you think the value should be. I was worried I'd be laughed out of the room by the bank or appraiser, where they told me how naive I was and how appraising really worked. Instead the appraiser changed it without really refuting any of the points I brought up, and the bank just said "nice work" cause now I get to give them more money after they give me more money.

So try and challenge the appraisal, I don't see how it can hurt.