Accessory dwelling unit zoned R2 - Will FHA count the rent

Washington D.C. Real Estate Q&A Discussion Forum
8yFollow

Accessory dwelling unit zoned R2 - Will FHA count the rent

Orren Prunty
Investor · washington, DC · Member since 2014 · 2 posts · 0 votes

Hello All,

My Washington DC experts I need your help. I am in the process of purchasing a semi-detached row home, zoned R2. There is an accessory dwelling unit, which I intend to rent out. I spoke with DCRA and have reviewed the website - they have confirmed it is legal to rent the unit and will not require a separate certificate of occupancy. It is a basement unit, however it is sperarely metered and does not have access from the main unit. It does have the appropriate ingress and egress requirements.

My problem is my appraiser is saying that they can not include the rent since it is technical a single family zoned area. The zoning is somewhat grey as it states that it's legally rentable, as long as it is owner occupied, on the website but still listed as a single family zone.

Does anyone have or know of an example where an accessory dwelling units rent was counted in an appraisal or towards qualification for purchasing a property using an FHA loan. I am trying to appeal to my appraiser but he does not agree, even though it seem clear to me.

Any assistance would be greatly appreciated! 

-Orren 

0Reply
43 views

Most Popular Reply

Russell BrazilBusiness Member
Moderator
Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
8y

Not only will you not be able to count the rent....but if the 2 separate units do not have interior access to one another, you will need to create that access for it to conform loan requirements.  The stove will also need to be removed during the appraisal process.

Also regarding your conversation with DCRA.....either you misunderstood them, or the person who gave you  the information is simply wrong....you will need a certificate of occupancy to rent the unit.

[email protected]301-893-4635Podcast Guest on Show #192
District Invest Group545 Reviews
WebsiteView Page
2Reply
See this reply in the discussion

5 Replies

Jump to latestLatest
  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    8y

    Not only will you not be able to count the rent....but if the 2 separate units do not have interior access to one another, you will need to create that access for it to conform loan requirements.  The stove will also need to be removed during the appraisal process.

    Also regarding your conversation with DCRA.....either you misunderstood them, or the person who gave you  the information is simply wrong....you will need a certificate of occupancy to rent the unit.

    [email protected]301-893-4635Podcast Guest on Show #192
    District Invest Group545 Reviews
    WebsiteView Page
    2Reply
  • Chris MasonPro Member
    Moderator
    Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
    8y
    Originally posted by @Orren Prunty:

    Hello All,

    Does anyone have or know of an example where an accessory dwelling units rent was counted in an appraisal or towards qualification for purchasing a property using an FHA loan. I am trying to appeal to my appraiser but he does not agree, even though it seem clear to me.

     Hi Orren,

    Sorry, got to be a wet blanket on this one. Even if you convince the appraiser to go along with risking his status as an FHA appraiser for this one transaction, the FHA underwriter would still shoot it down.

    No way you're going to get both an appraiser and an underwriter to risk their livelihood for you.

    0Reply
  • Orren Prunty
    OP
    Investor · washington, DC · Member since 2014 · 2 posts · 0 votes
    8y
    Thank you for your quick response A few questions - Why would interior access be necessary? An accessory unit can be completely separate as a carriage house as well as an English basement. Now they could just be wrong, but I was very specific when I went down to DCRA about completely separate entrance with no interior access. They said all I would need is a business license and a single family rental application. The main unit will have a certificate of occupancy - however I was told I don't need two. Why would the stove need to be removed? I believe the appraiser may be wrong, as legal accessory units in an R2 zone are a some what newer concept, with zoning laws changing a few years ago. I spoke with another appraiser and they believe that I am right as well. Sorry if my initial post wasn't as clear as I intended. Thank you, Orren
    0Reply
  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    8y

    So we are talking aboit 2 different issues, that while similar have different requirements. Renting the unit, and Financing the property. 

    Renting an English Basement. You need the CoO. DCRA comes to the unit, inspects it, make sures it conforms to the requirements in their checklist eg, 7 foot ceilings on 70% of the ceiling.

    https://dcra.dc.gov/service/get-two-family-rental-...

    Financing the property. If the tax record indicates it is a 1 unit, there is probably a 98% chance it can not be financed as a multi.  So if the tax record indicates it is single, then to conform with loan underwriting guidelines interior access needs to happen between the 2 units. In the last 2 years Ive had this issue come up 3 times, and each time the loan officer said it wouldnt be an issue...and it was an issue every single time. Removal of stove means that 2nd kitchen isnt a kitchen, its just a wetbar then. 

    There have been instances in DC where the property was legally converted to a multi and the tax record was not properly updated to reflect this, so it can happen, but it is very very rare. It happened to me in Petworth last year where a 2 unit was legally converted to a 3. Also the conversion needs to have happened prior to 2012 and be on file with the city.

    [email protected]301-893-4635Podcast Guest on Show #192
    District Invest Group545 Reviews
    WebsiteView Page
    2Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free