Opportunity - Inheriting a debt free FL home (advice needed)

[Phillip Hernandez]

Hello all:

My grandfather passed away (Ft. Lauderdale) a couple weeks ago. Part of his estate leaves his home to his 2 children (my father and aunt who lives in North Carolina). My father wants to keep the house, my aunt does not. My recommendation to my father as an option - to buy my aunt's share out based on current market value and a 50% buyout. It is fair and she will agree to it (she has said as much). My father's current house is in disrepair and he also needs to address it (both homes are close to each other in very good locations). My brother lives near my father and this is a great oppty for him to dip his toe in investing. We have a couple options as I see it (using an assumption that the market value is say $800k for the purposes of this discussion):

1. Dad takes out a loan to "purchase" the house from the estate and arranges to give my aunt $400k. He can use some cash and finance the rest. Question 1: is there a general guideline for LTV ratio in this scenario? My father would then use the house as an investment - renovate it (roughly $100-125k) and rent it out and (probably) sell it at a later time (FYI, the $800k price is considerably lower than market value due to the fact that the house needs a lot of work).
2. Brother "purchases" it from the estate using the above scenario (via some simple arrangement with my father), renovates it and lives in it before renting it out. It's his.
3. Sell it - too much trouble to reno, rent, etc.

I say this is a good oppty b/c they would be getting the house at a discounted value in a prime location. It would be a shame to go with option 3. However, the issues are as follows:

- my brother is not so keen on living in our grandparents' house and living in the same bedroom. Just a strange vibe, etc., and I totally understand (he is single).

- If my father purchases the house and mortgages it for the purpose of renting it out later, he runs the risk of not being able to renovate his own house due to the fact that he might be considered highly leveraged (he is currently not working).

- if my brother purchases it, and another house in a good area more to his liking comes on to the market, he also runs the risk of appearing over leveraged and won't be able to purchase is more preferred house.

None of us is a real estate investor but we are close to folks who specialize in home remodels, etc. We are looking to leverage his oppty as much as possible without it being too burdensome financially on any of us. Just looking for best options.

TIA!

-Phillip