All Forum Posts by: Jon Loca

Here is the FNMA guidelines (my loan is conventional). Isn't the appraiser required to following the guidelines of the investor?

"Only finished above-grade areas can be used in calculating and reporting of above-grade room count and square footage for the gross living area. Fannie Mae considers a level to be below-grade if any portion of it is below-grade, regardless of the quality of its finish or the window area of any room. Therefore, a walk-out basement with finished rooms would not be included in the above-grade room count. Rooms that are not included in the above-grade room count may add substantially to the value of a property, particularly when the quality of the finish is high. For that reason, the appraiser should report the basement or other partially below-grade areas separately and make appropriate adjustments for them on the Basement & Finished Rooms Below-Grade line in the Sales Comparison Approach adjustment grid.

For consistency in the sales comparison analysis, the appraiser should compare above-grade areas to above-grade areas and below-grade areas to below-grade areas. The appraiser may need to deviate from this approach if the style of the subject property or any of the comparables does not lend itself to such comparisons. For example, a property built into the side of a hill where the lower level is significantly out of ground, the interior finish is equal throughout the house, and the flow and function of the layout is accepted by the local market, may require the gross living area to include both levels. However, in such instances, the appraiser must be consistent throughout the appraisal in his or her analysis and explain the reason for the deviation, clearly describing the comparisons that were made."

https://www.fanniemae.com/content/guide/selling/b4/1.3/05.html#Gross.20Living.20Area

I have recently requested to have my PMI dropped on my primary residence because I believe the value of the property has increased enough to merit the PMI cancellation. The appraisal was done utilizing three comps, 2 in my condo development, and one in a condo complex close by. My unit of the condo is on the second and third floor, the other two units in my complex used by the appraiser are on the 1st floor and basement. The appraiser counted the basement finished square footage as the same value as the above grade square footage. Everything I understand about appraisals tell me that is incorrect. So, I wrote a response explaining how I think the appraiser made a mistake counting the below grade square footage the same as the above grade (due note that this building is from 1901 and the foundation is limestone blocks). The response I received is as follows "Your Appraiser is and was aware that sales 1 and 2 (the two units in my condo that were used for the appraisal) have lower level finish It was included in the GLA  due to the fact that these units were all finished at the time of conversion (the condo was created and basement finished in 2005 when a developer bought the former mansion and split it up into units) with similar material and quality. The subject is the 2nd and 3rd floors. Sale 1 is the 1st floor and lower level of the same building" Essentially he's saying the basement does count the same as above grade because it has similar finishes to the above grade. Maybe this is new but this is not my understanding. Can someone shed light if I'm off base here? and if I'm not what's my recourse for an appraisal that is done incorrectly? 

Do you know if this applies to section 8 in all of Minneapolis or certain areas of Minneapolis? I've always thought a section 8 in uptown (hypothetically speaking) would bring in more than a section 8 in North?

Thank you all for the feed back. James I wrote you a message with my email address.

I'm going to be renting out a 2 car garage in Minneapolis to someone other than one of my current tenants (current tenants didn't want to pay extra for the garage). I'm curious if anyone has experience doing this in Minneapolis and can provide some guidance. My questions are should I run a background check, do I get a security deposit, and what type of contract / lease agreement should I be using? 

I've been receiving rates at the same 5.5 and 5.6 precent for investment properties.

I'd be interested

Thank you everyone for the input. 

@John Woodrich The property is deeded to him but we split the income, he gets 75% and I get 25%, that's how we've been reporting it on our taxes the last 2 years. The one concern if I buy the property from my dad he would have to pay capital gains tax around 50K. We were all into the place for 100K after purchase, rehab, and closing cost and it would appraise around 150K today. 

@Tim Joyce I really like the idea of converting the equity to my name on a schedule 

Not to sound to grim, I thought that when he passes he could give the property to me or my sister (All his assets are in this property and his primary residence) without a tax implication. However, reading that 50% of people require some sort of long term care and that's not included in medicare, I figured it was prudent to protect his one asset in that scenario so he could qualify for Medicaid, but it doesn't sound like there is a way of passing the property without triggering some tax rule

Hey Kyle I used Metro Heating and Cooling. When I did the same research as you I didn't see a huge difference in price but these guys were the cheapest and did a fine job

Eric Olson

Metro Heating & Cooling, LLC.