Miami House hack or Pure rental Win-Win??

[Dineen Garcia]

BP Community!  

Would love your thoughts on this "deal".  

Since joining approx 3 months I have tried to be disciplined looking for 2-4 multi unit deals.  I started out searching high & low in Miami with no luck. Everything was either overpriced (400k per door) or distressed.   So, I started researching further north (Lake Worth, Boyton Beach, Delray, Fort Pierce & Vero).  My research and multiple road trips led me to realize that for my first deal I want to stay closer to home and that I needed to reassess budget, neighborhood markets & what I am able and willing to deal with personally.  

One opportunity we are considering is a house hack in Shenandoah...a B+ neighborhood that is highly sought after. It is close to Brickell, Coco Grove and Coral Gables so easy to get around.  The property is listed at 1.5. We are thinking of a deposit of 500K. The seller is open to seller financing. No terms have been negotiated although his wish list is 50% down, and a 3 year payout. He is open to interest only payments during the 3 years.  

The property is a 3/1 house + 2 (1/1) . Fully renovated. Clean...no need to invest unless want to. 2 (1/1) are currently rented for $2500 each and 3/1 house is vacant. If we house hack it is a no-brainer as we can rent our place for more than it would cost to live there. If we don't house hack market rent for a 3/1 in shenandoah is approx $4000-$4200.

Using current & projected rent roll - 9k x 12 = 108k

108k x 45% Expenses = 48.6

NOI = $59,400

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Structured Offer (P&I) and (Interest only)

1.3M max offer

500k down payment

800k @ 6% x 30 year amortization with 3 year balloon.

P&I - $4797 x 12 = Annual debt service $57,600*

Interest only - $4000 x 12 = Annual debt service $48,000

P&I Cash flow = $1800

Interest only Cash flow = $11,400

*This is clearly an appreciation play, not a cash flow one.

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Feb & March multi unit direct comp research shows most recent sales sf average is $472. that being the case on this property the math total is 1.29M (this supports our 1.3M max).

Please share your thoughts...good, bad or ugly. I'm trying to hear how others process & more importantly STRUCTURE their seller financed deals.  We are looking to move on this now so all responses welcome.  

Thanks!  Dineen