Tricky House Hack transaction in Miami

Miami, Florida
House Hacking
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Tricky House Hack transaction in Miami

Adrian Alvarez
Miami, FL · Member since 2019 · 11 posts · 5 votes

Hey guys,

I'm reaching out for some technical advice on how to best approach this deal.

A distant member of my family recently passed away. And she had a house here in Miami that was split into a two-bedroom one bathroom and a one bedroom one bathroom apartment in the main house. There is also an additional dwelling unit in a separate building that was added to the garage that is a one bedroom 1 bathroom.

The property was owned by a contractor who then became a city inspector, and we believe that all of the units are legal but we'll need to run our due diligence just to make sure. Unfortunately, the couple that had lived there for the past few years became very old and let the house fall into a bad condition. It will need a lot of work , such as a new roof on the main house and the additional unit in the back, updating the kitchens and bathrooms, and completely rebuilding the unit in the back as the roof caved in a few years ago during a hurricane.

Now that you have a little bit of background on the property. I am reaching out for some suggestions on what would be the best way to try to acquire a property like this knowing:

  1. that it is going to be put on the market in a few months as is. But also
  2. this is a family member that will give me first dibs on an offer once they get the appraisal back.

Would you suggest to do any of the following:

  1. Offer to fix the property myself with funds that is have saved (around $80k) Then apply for a FHA loan to purchase it.
  2. Applying for a 203K loan And then rehabbing it with that
  3. Or any other creative way to acquire it

Also are there any recommendations for lenders that specialize in 203K loans nationally or in the South Florida market? because that is something that I am not very familiar or versed with.

IF more info is needed to make any quality suggestions please post and I will follow up

Thank you so much in advance for any help

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Ray Hage
Investor · Fort Lauderdale, FL · Member since 2020 · 1k+ posts · 755 votes
3y

Hi Adrian. My first bit of advice is to make 100% sure (not believe) that the units are all legal. You can check with the particular city you are in. You could do a quick peek into the Dade county property appraiser site (99.9% of the time it is accurate), but still it's worth checking with the city. Why you ask? Because if they were done illegally and you have an inspector come by, you can get written up with code violations and you'll need to spend some money curing that. I know one guy in Broward that unfortunately had this happen to him 6 months after he bought his house. He had to demo a part that was added on at his own expense.

I have a good lender that may be able to help you if you are still looking for one. She's based in NJ but can do loans in FL as well. I would agree with your #1-2 suggestions. 

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  • Ray Hage
    Investor · Fort Lauderdale, FL · Member since 2020 · 1k+ posts · 755 votes
    3y

    Hi Adrian. My first bit of advice is to make 100% sure (not believe) that the units are all legal. You can check with the particular city you are in. You could do a quick peek into the Dade county property appraiser site (99.9% of the time it is accurate), but still it's worth checking with the city. Why you ask? Because if they were done illegally and you have an inspector come by, you can get written up with code violations and you'll need to spend some money curing that. I know one guy in Broward that unfortunately had this happen to him 6 months after he bought his house. He had to demo a part that was added on at his own expense.

    I have a good lender that may be able to help you if you are still looking for one. She's based in NJ but can do loans in FL as well. I would agree with your #1-2 suggestions. 

    1Reply
  • Ash Hegde
    Lender · Fort Lauderdale, FL (Lending in FL CT GA MI PA) · Member since 2022 · 470 posts · 349 votes
    3y

    Since you are looking at FHA, I assume you are planning to buy and live in it as a house hack?

    #1 sounds like you would be fixing it up before purchase, every family is different but I would probably hesitate to spend that much on renovations before owning it. 

    From the info provided, a 203k loan does seem like a good fit.  

    0Reply
  • Branden Rivero
    Investor · Miami, FL · Member since 2016 · 197 posts · 65 votes
    3y
    Quote from @Adrian Alvarez:

    Hey guys,

    I'm reaching out for some technical advice on how to best approach this deal.

    A distant member of my family recently passed away. And she had a house here in Miami that was split into a two-bedroom one bathroom and a one bedroom one bathroom apartment in the main house. There is also an additional dwelling unit in a separate building that was added to the garage that is a one bedroom 1 bathroom.

    The property was owned by a contractor who then became a city inspector, and we believe that all of the units are legal but we'll need to run our due diligence just to make sure. Unfortunately, the couple that had lived there for the past few years became very old and let the house fall into a bad condition. It will need a lot of work , such as a new roof on the main house and the additional unit in the back, updating the kitchens and bathrooms, and completely rebuilding the unit in the back as the roof caved in a few years ago during a hurricane.

    Now that you have a little bit of background on the property. I am reaching out for some suggestions on what would be the best way to try to acquire a property like this knowing:

    1. that it is going to be put on the market in a few months as is. But also
    2. this is a family member that will give me first dibs on an offer once they get the appraisal back.

    Would you suggest to do any of the following:

    1. Offer to fix the property myself with funds that is have saved (around $80k) Then apply for a FHA loan to purchase it.
    2. Applying for a 203K loan And then rehabbing it with that
    3. Or any other creative way to acquire it

    Also are there any recommendations for lenders that specialize in 203K loans nationally or in the South Florida market? because that is something that I am not very familiar or versed with.

    IF more info is needed to make any quality suggestions please post and I will follow up

    Thank you so much in advance for any help


     Hey Adrian i can point you in the right direction, I am from Miami also. Feel free to reach out by dm on here or ig @ prophunters_

    1Reply
  • Ryan ThomsonBusiness Member
    Real Estate Agent · Colorado Springs, CO · Member since 2018 · 1k+ posts · 1k+ votes
    3y

    @Adrian Alvarez I would consider meeting with the county to make sure everything is good to go. I would NOT recommend fixing up the place before you have it under contract or own it. 

    If you are going to live there than a 203(k) or a home renovation loan could be a great way to pay for it. 

    The Assumable Guy544 Reviews
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    1Reply
  • Adrian Alvarez
    OP
    Miami, FL · Member since 2019 · 11 posts · 5 votes
    3y

    Hey Guys,

    Thanks so much for the quick replies. I really appreciate all the feedback.

    Here are the steps I am going to take based on recommendations


    1. Go to County Appraiser website and check to see if the units are legal

    2. Look into how to apply and the things i need for a FHA 203k loan

    In addition, after taking some time to think this over I thought of another idea. 

    Can I get the property deeded to me then once i do the repairs/updating take out a mortgage on the property to then pay my family members for the property ?

    Would this be a better move ? Any tax benefits ? Any negatives ?


    Thanks so much again 
     

    0Reply
  • Claribel Mateo
    Real Estate Agent · South Florida · Member since 2022 · 3 posts · 1 vote
    3y

    Sounds like a great move to me! You can offer some money now, if possible. Just to show them you want to help them as well. Win-win for everybody

    0Reply
  • Malgorzata SadowskaPro Member
    Real Estate Agent · Miami, FL · Member since 2017 · 506 posts · 205 votes
    3y

    @Raymond Rodriguez might be able to help you with FHA 203 loan.

    0Reply
  • Adrian Alvarez
    OP
    Miami, FL · Member since 2019 · 11 posts · 5 votes
    3y

    @Malgorzata Sadowska

    Can you please provide me his contact info ?

    1Reply
  • Malgorzata SadowskaPro Member
    Real Estate Agent · Miami, FL · Member since 2017 · 506 posts · 205 votes
    3y

    Check your messages :) Not sure am supposed to share contact info on this thread.

    0Reply
  • Lawrence Potts
    Real Estate Agent · Member since 2018 · 459 posts · 414 votes
    3y
    Quote from @Adrian Alvarez:

    Hey guys,

    I'm reaching out for some technical advice on how to best approach this deal.

    A distant member of my family recently passed away. And she had a house here in Miami that was split into a two-bedroom one bathroom and a one bedroom one bathroom apartment in the main house. There is also an additional dwelling unit in a separate building that was added to the garage that is a one bedroom 1 bathroom.

    The property was owned by a contractor who then became a city inspector, and we believe that all of the units are legal but we'll need to run our due diligence just to make sure. Unfortunately, the couple that had lived there for the past few years became very old and let the house fall into a bad condition. It will need a lot of work , such as a new roof on the main house and the additional unit in the back, updating the kitchens and bathrooms, and completely rebuilding the unit in the back as the roof caved in a few years ago during a hurricane.

    Now that you have a little bit of background on the property. I am reaching out for some suggestions on what would be the best way to try to acquire a property like this knowing:

    1. that it is going to be put on the market in a few months as is. But also
    2. this is a family member that will give me first dibs on an offer once they get the appraisal back.

    Would you suggest to do any of the following:

    1. Offer to fix the property myself with funds that is have saved (around $80k) Then apply for a FHA loan to purchase it.
    2. Applying for a 203K loan And then rehabbing it with that
    3. Or any other creative way to acquire it

    Also are there any recommendations for lenders that specialize in 203K loans nationally or in the South Florida market? because that is something that I am not very familiar or versed with.

    IF more info is needed to make any quality suggestions please post and I will follow up

    Thank you so much in advance for any help

    From my experience, you don't want to assume! Just because he was a contractor and is a city inspector does not mean that this property was done up to code...always do your due diligence.

    Some investors will offer to do rehab work prior to closing to force equity and be able to finance a property easier (less down, less risk on the lenders if there's a lot of equity, etc). It is actually an interesting strategy. However, it is very risky for you: you are putting money into a property you do not own yet. The risk is that the deal falls apart and you have to back out and lose your investment.

    203k is a viable option for first time home buyers! It's hard to find contractors willing to do it but it's a great opportunity for the right people!

    0Reply
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