I would really appreciate feedback on this deal.
SFR, 1939 sq ft, 7400sq ft lot
Currently a 2/2, I plan to convert to a 3/1 plus efficiency.
Located off 79th St just West of N Miami Ave.
I currently have it under contract for 89k.
I would particularly like to hear from other members in Miami.
Location: Little River
The realtor said its a rough neighborhood.
It's central to transport and shops.
Little River is said to be the next place to boom.
All the flooring throughout is beautiful.
It needs to be repainted on the inside and outside.
The roof is leaking but I think it only requires a repair, not replacement.
1 bathroom needs to be replaced as it's very outdated.
The garage has been sealed off and I plan to convert to a bedroom
There is a back room which was added to the property which has a bathroom. I plan to add a kitchenette and door to turn it into an efficiency.
All the repair work would cost around $20,000.
The 3 bedroom house would rent for $1400 and the efficiency for about $500.
I tend to avoid those types of neighborhoods due to how managment intensive they can be. If you can handle the management, there is much money to be made as those types of properties have bigger spreads. Assuming you can have decent equity after the repairs, and you do it all legally, so there is an exit strategy in case management becomes too much to handle, I'd go for it, as you can easily clear 12%+ return. And if you can get a section 8 tenant in there, It'll be easier to manage.
Find out exactly how old the roof is. If it's more than 15 yrs old, and it's starting to leak, it probably needs a new roof.
My experience in these areas of Miami is that due to the lower economic status, contractors tend to do lower quality work. It may be b/c ppl have less to spend and therefore they get what they pay for, but it's also a case of contractors figuring they can get away with more. So with roofs and AC's (the biggest CapExs), they tend to have a shorter lifespan in Little Haiti/Liberty City/Overtown.
Re: the next Wynwood...
If you are investing in order to capitalize on that future boom, I kinda think you'd be better off squeezing a 3rd bdrm for a 3/2 as opposed to another unit. Electricity becomes an issue, as the efficiency tenant will just keep the air arctic b/c the main unit is paying the bill. If YOU are paying the bill, they'll both keep the air arctic. To me, one tenant is worth the guarantee of less hassles and less expenses than with 2 tenants.
Are you going to invest in some of the bones to be more high end (fixtures, bathroom, kitchen, flooring, etc.)? B/c the area and everything along that Biscayne Blvd corridor is booming, you might be able to get some higher end tenants w/ nicer fixtures, but I don't suggest that. It's a wee bit too far from Biscayne Blvd to get the current tenant overflow, but I may be completely wrong.
I think your best bet is to rehab according to the current neighborhood. Any future equity if the neighborhood surges can be used to justify upgrades to maximize profits on future sales.