Get an attorney.
Read the code and conversion regs for the area you want to buy in - they are usually online.
Re-ask your attorney for guidance.
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The 203K loan will give you 6 months to complete your renovation. Getting an extension might be possible. If you know that the permitting process might be a longer more complicated process, you might decide to purchase and close on the single family first. You can then work on the permits, then refinance with a FHA 203K loan to complete the conversion. There might be some duplication of closing costs because you will be financing the property twice.But the reduced stress coming from having more time to secure the permits may be a luxury worth paying for.
1) Hire an exclusive buyer's agent. In this scenario you really want someone who is only working for you (interests aligned at all times) because there will be a lot of due diligence on each property;
2) Line up a great real estate attorney;
3) Line up a contractor in advance. Tell them about your project and bring them to each property you are seriously considering. You may need to pay them a small amount but 100% worth it; and
4) Definitely search, identify the property and do your due diligence first before buying. The big question will be zoning. Not all single family homes (sometimes even certain locations) are zoned for multi's. Other things to identify are any set back restrictions on the property and of course amount of work that needs to be done. Again, this is where your buyer's agent and attorney will really come into play.
Another option to consider is buying multi's, converting into condo's and reselling.
If you are looking for single families and multi's in Cambridge prepare for a highly competitive market. Multi's are selling on average about 3% over asking price.
In regards to financing you will be buying it (and closing) as a single family so your question doesn't apply. However, once you have converted to a multi you can refinance. Prepare for a higher loan to value so you may need to pay some money out of pocket (you might be able to get a better rate but not guaranteed)
Hope that helps!
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I don't believe you'll be able to obtain approval from the city before you actually own the unit--although they may be willing to tell you what is likely to happen. You should at least find out what the zoning is for the area--and then there are other factors, such FAR (floor area ratio), that may come into play. As for your mortgage, I believe it will be difficult to get financing based on a multi-family house for a property that is legally a single-family.
You are considering a transaction that could have many complications and you would be wise to work with a buyer agent who may be able to advise you. If I were your agent, though, I would not advise you to buy a single-family property if the only way you can make it work financially would be to convert it to a multi, since there are so many variables involved.
Good luck to you and if you decide you'd like to speak with an agent feel free to email or call me.
Ellen G. Friedman, ABR (Accredited Buyer Agent)
Keller Williams Realty
Hope that helps,
I also would recommend consulting a real estate lawyer for this matter.
Please keep in mind that if you are borrowing money for this project, you will run into limitations and restrictions on closing some units.
Best of luck.
Also, if you need a brokerage firm to represent you when you want market and sell the condos, please feel free to consult with us first.
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