7.7.12.5 Short-Term Lease Premiums

A. Projects with lease terms that are less than 30 days are not eligible for HUD-insured financing under any circumstances and should be distinguished from Corporate Leases defined below. Income from other short-term leases may be considered to the extent that it exists in the local market. There must be a thorough discussion of the prevalence of short-term leases in both the appraisal and underwriting summary. The amount of the premium is the difference between the rent for a unit with a term that is typical for the market (generally one year) and the rent for a short-term lease. This premium is residentrelated and is treated as ancillary income. Units with short term leases do not require a separate form HUD-92273, but the rental amount must be based on market information.