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Old 04-23-2012, 04:40 PM
 
Location: Chanute, Ks
10 posts, read 11,369 times
Reputation: 10
Default rental house on same property as home

Hello,
I own two homes on one property, along with a big metal workshop. Has anyone ran into any problems applying for a loan for a property with multiple dwellings? My wife and I are wanting to sell our place and move out of state, but we have heard that some loan companies won't loan on a property like ours. The second home is a rental that we have to provide a source of income for us. I had the opportunity to buy the house and property next door, so we did. Then we wanted to build the metal building on the property and our city codes required a "standoff" from the property lines. Even though we owned both properties, the ordinance was still in effect. We were advised by our city official that if we had the properties merged legally, then the "standoff" ordinance on the property line between the houses, would be eliminated. We had our attorney take care of that and the building was then built. Now we are finding that some loan companies won't loan on a property with two houses. Any input would surely be appreciated. Thanks. We live in Chanute, Ks.

Fredjm127e

Read more: 2 homes on one property
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Old 01-01-2013, 10:02 PM
 
1 posts, read 1,592 times
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I don't live in Kansas, I live in Charleston, WV and yes I have run into this problem over & over while searching for a home to buy. I can't get a mortgage on a home if it has another dwelling on it, I can't get a loan on 5.6 acres with a single wide on a permanent foundation (which happens to be in better condition than some of the homes I have looked at (that they will give a mortgage on). They will loan on the land but say the trailer has to go, although we were going to live in it while building a home. It doesn't make any sense, so while googling this topic I found an article from someone in Oregon about it that explains the lack of knowledge our lenders have on appraising homes and not taking into consideration the rent income into the appraisal. Here is the link if interested ... Appraising properties with accessory dwelling units: a preview of new methods and findings | Accessory Dwellings
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Old 01-02-2013, 07:07 AM
 
Location: Chanute, Ks
10 posts, read 11,369 times
Reputation: 10
Default Multiple dwellings on one property

Thank you for your input. I am going to list the property with a realtor and hopefully it will sell quickly! I have purchased my retirement home in Missouri and I am ready to be there as soon as this property sells! :>)

Fred
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Old 01-02-2013, 07:51 AM
 
21,477 posts, read 35,351,953 times
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I have run into this even on "high end" properties where a "coach house" with separate kitchen and living quarters prevented standard mortgage.

Depending on price point the "penalty" for what a lender will charge for "non-owner occupied" mortgage could be a deal killer -- even if shoppers do not want to rent out the second home they may be facing higher taxes because of additional "improved units" being assessed beyond the "home owners exemptions".

Lots of things that need an expericned real estate agent familiar with local market and possibly a lawyer to determine if it is possible to re-subdivide the property. A "hard ship appeal" may allow the merged parcels to again be separated and the setbacks grandfathered as non-conforming...

Tricky stuff.
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Old 01-02-2013, 07:51 AM
 
Location: Austin
4,317 posts, read 7,926,712 times
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Why don't you split the properties back out with drawing new property lines? Why list it and see what happens when you know there are going to be issues? Take care of the issue first so it's more appealing to people. Market it at the correct amount of acreage so buyers don't get mad when you later have to split them out and the amount of land decreases.
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Old 01-02-2013, 07:58 AM
 
Location: The Triad (nc)
17,194 posts, read 21,839,868 times
Reputation: 14271
Quote:
Originally Posted by fredjm127e View Post
I own two homes on one property, along with a big metal workshop.
Has anyone ran into any problems applying for a loan for a property with multiple dwellings?
That'll be about local zoning issues more than anything else.
If the local laws are OK with the structures (permitted etc) the local banks are your best bet.

Quote:
The second home is a rental that we have to provide a source of income for us.
Have you been declaring this income all along?
Do you have all your 1040's and Schedule E's ?

If the zoning and so forth is OK and you can show ten years of $X income
that the buyer sh/could then be able to also show additional income from...
it shouldn't be hard to sell that place at all.

The next step up the line would be a buyer with more of their own cash...
someone like a local contractor who can operate out of there.

hth
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Old 01-02-2013, 10:02 AM
 
3,910 posts, read 2,398,159 times
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The key is "some" loan companies won't loan or make it difficult to obtain the loan. Before you jump through all the hoops of lot splitting or other suggested solutions, exhaust your other loan opportunities. It is so easy for someone to say split the lots or do this or that when the better choice is to first exhaust the best solution if it is available, find an agreeable lender.

Put together a list of lenders willing to work with the situation and then include that information when/if you list the property. Once more, a good realtor would suggest that first instead of taking the easy way out of paying for and going through all the effort of splitting lots and things like that. In fact, a competent Realtor/REA will have this information available and insure that prospective buyers get the same when considering the buy.

If a REA doesn't have this information, that is an indicator they don't know what they are doing or have virtually no experience with the property type. Hopefully you don't believe you are the first one to have this type of property, they exist all over the country.

Standoff or setbacks are a common zoning requirement but often waivers for certain aspects of construction can be obtained, depending on neighborhood objections and such things. When it comes to zoning, REAs should be the last people you ask, they don't usually know, aren't accountable for what they tell you; go to the source.

There are also alternatives to a lot split. If the second home is unoccupied and not the primary residence, some lenders will disregard it for the purposes of lending and treat it as just an accessory building and lend against the property.

As Mr. Rational commented (and you'd be wise to pay heed if not) people get into trouble when declaring rental income but not reporting it for tax purposes. The banks will, faster than Bernake prints money, inform the IRS and State tax boards of unreported income over $10,000. After that, all this will be trivial.

Also as he stated, income property, documented, is a bonus, not something that makes selling more difficult.

A good REA should be able to leverage the fact that you have income property on the lot and this opens up lots of opportunities for buyers so long as the zoning requirements were properly taken care of. As usual, if the REA gives you flack and your ducks are in a row, dump them and get a new one, that one is one of two things, lazy being one of them.
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Old 01-02-2013, 10:14 AM
 
Location: Salem, OR
10,850 posts, read 18,116,894 times
Reputation: 6718
Quote:
Originally Posted by MrRational View Post
That'll be about local zoning issues more than anything else.
If the local laws are OK with the structures (permitted etc) the local banks are your best bet.

hth
This ^^^.

Any lender that holds their own loans as opposed to selling them to Fannie and Freddie is your best bet. They can make independent decisions and aren't beholden to terms set out by the secondary mortgage market. The local lenders will still need confirmation that the property is zoned correctly and has any variances as required by your local area, but I would start with them.
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Old 01-03-2013, 10:03 AM
 
3,318 posts, read 7,233,212 times
Reputation: 1360
Quote:
Originally Posted by Silverfall View Post
This ^^^.

Any lender that holds their own loans as opposed to selling them to Fannie and Freddie is your best bet. They can make independent decisions and aren't beholden to terms set out by the secondary mortgage market. The local lenders will still need confirmation that the property is zoned correctly and has any variances as required by your local area, but I would start with them.
This ^^^^

It will reduce your buyer pool as the majority of people want a Fannie/Freddie low 15/30 year fixed rate loan as opposed to 'in house' bank financing, but it can be done.
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Old 08-24-2013, 06:58 AM
 
Location: Chanute, Ks
10 posts, read 11,369 times
Reputation: 10
We have explored the option of splitting the property, but our city codes require a 10' standoff from the property line, which both our deck and metal building overlap the old property line. We may be able to have it surveyed, creating a new property line, but it would create an unusual division. Our house would have the metal building and deck on it and the rental house would lose a portion of the back yard. Also, I believe we would have to allow an easement at the back of the property to allow the owner of the rental house to access the alleyway. Another issue would be the new sewer line for the rental property runs directly under the metal building. Our answer may end up being having the rental moved or torn down to resolve the two house on one property issue. Taking a loss of that magnitude is not easy to think about.
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