First Home Orlando - First Hack

Orlando, Florida
First-Time Home Buyer
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First Home Orlando - First Hack

Evan Linder
Member since 2022 · 3 posts · 5 votes

Hello,

I have delayed gratification for a number of years in preparation to buy my first home in the Central Orlando, FL area.  My short term goal would be to find a house hack property that would set me up with a long term goal to repeat the process many times over.  I know there's a learning curve to this and I'm not averse to making some mistakes.  However, I am here to seek advice in avoiding the biggest ones.  

A few scenarios I'm pondering below... 

1) Rent rooms:  Easiest and quickest option but also my least favorite since the whole privacy factor.  What layout works best for those currently doing this?  What type of lease term agreements have worked best with your roommates? 

2) Multi-family:  I have not seen a decent side by side 2/2 multifamily for sale in any decent areas in the past 6 months for under ~$600k.  Beginning to think this won't be realistic my first run.  Any of the ones I do find are over an hour (without traffic) outside central Orlando where I'm based.  Let me know if I'm missing an angle on this. 

3) Single family and add ADU: Let's say I get a 3/3 or 3/2. How much should I expect in renovation cost and permit red tape to convert a section into an ADU. What characteristics would make this the easiest to do? Big garage? Sun porch? Detached garage? Large yard? For those that have done this, what floor plans make this make this as painless as possible for a novice?

4) Loans: I'm in great standing for all standards when qualifying for a loan. I qualify for a conventional with putting some money down. Since I qualify for a conventional, should I be going that route as opposed to a FHA? How negotiable are interest rates with a mortgage broker? Again, with the long term goal in mind, what's the best option for repeating the process every 1-2 years when considering loan options.

5) Agent: I have not tried the agent finder yet and wanted to ask on here first.  Any agent can find me a 3/3, I'm looking for someone that understands what the long term vision is and how to get it started for long term success.  


As they always say on the podcast, the key is asking how can I do this?  What other big questions should I be asking?  Thank you

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

I can help on #4 - FHA has a great low down payment option if you need it. The down side is a permanent mortgage interest if you go really low with your down payment. Also, you can generally only have one FHA loan at a time so it's not great for repeat use (you'd have to refi out to use it again).

Mortgage brokers have more wiggle room than a traditional big bank but there are still limitations based on the market rates of the lenders they work with. They are usually going to be close in rate, but response times and loan processing times can be other important non-rate factors when choosing a broker. The cheapest rate won't help if delays mess up the closing date and cause additional costs (and sometimes lose a deal). 

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

    I can help on #4 - FHA has a great low down payment option if you need it. The down side is a permanent mortgage interest if you go really low with your down payment. Also, you can generally only have one FHA loan at a time so it's not great for repeat use (you'd have to refi out to use it again).

    Mortgage brokers have more wiggle room than a traditional big bank but there are still limitations based on the market rates of the lenders they work with. They are usually going to be close in rate, but response times and loan processing times can be other important non-rate factors when choosing a broker. The cheapest rate won't help if delays mess up the closing date and cause additional costs (and sometimes lose a deal). 

    1Reply
  • Shawn McCormickPro Member
    Realtor · Central Florida-Orlando · Member since 2014 · 1k+ posts · 892 votes
    3y

    @Evan Linder Congrats on getting started and willing to take some risks!

    1. renting by the room. I am on your side, privacy is a huge concern. This works with college area homes, but for me, not as a house hack that I would be living in. There are many leases available online or you can have an attorney draw up specifics to your criteria and needs. 

    2. Orlando multi family is exactly as you say. The closer you get to the city, the more you pay, that is just the way it is in any metro area and don't hold your breathe thinking that will change. If that is really what you want, either save up and buy a decent one or suck up the commute knowing the end goal is to build wealth and there are rarely shortcuts, only sacrifices to get started!!

    3. ADU- each county/city/municipality will have its own rules and allowances for this, there is no blanket answer. If you are going to stay strictly in Orange County, then focus on what they allow and don't. Be prepared for long permit times, the area is growing and that puts strains on all areas of county offices. Plan on using a GC, getting plans drawn up and likely engineers too, it won't be easy.

    4. If you are house hacking and looking for easiest point of entry so that you have money to add value to the property and not use all your saving on the purchase, FHA would be the way to go. Then you move on to the next one and repeat. Unless you are a veteran and can use your VA entitlements, FHA is the route. However, the condition of the property will be important here, FHA rules are more strict than going with a conventional loan, so make sure the property is in good shape.

    5. Many of the agents on here, including myself are here because we are investors ourselves. So using one of us makes sense, but still, interview and make sure they understand YOUR vision. Every investor has different experience levels, goals, timelines and so on. You understanding your goals and vision are paramount to connecting with the right agent, we are not CPA's or lawyers and don't always know what is best for you, we facilitate real estate transactions and help educate you along the way.

    Hope this helps, best of luck to you!

    1Reply
  • Evan Linder
    OP
    Member since 2022 · 3 posts · 5 votes
    3y
    Quote from @Ash Hegde:

    I can help on #4 - FHA has a great low down payment option if you need it. The down side is a permanent mortgage interest if you go really low with your down payment. Also, you can generally only have one FHA loan at a time so it's not great for repeat use (you'd have to refi out to use it again).

    Mortgage brokers have more wiggle room than a traditional big bank but there are still limitations based on the market rates of the lenders they work with. They are usually going to be close in rate, but response times and loan processing times can be other important non-rate factors when choosing a broker. The cheapest rate won't help if delays mess up the closing date and cause additional costs (and sometimes lose a deal). 


    Thanks Ash I appreciate the insight on loans. Apologies for taking so long to reply back. What is the minimum down on an FHA to get the loan out of the permanent mortgage interest?

    0Reply
  • Evan Linder
    OP
    Member since 2022 · 3 posts · 5 votes
    3y
    Quote from @Shawn McCormick:

    @Evan Linder Congrats on getting started and willing to take some risks!

    1. renting by the room. I am on your side, privacy is a huge concern. This works with college area homes, but for me, not as a house hack that I would be living in. There are many leases available online or you can have an attorney draw up specifics to your criteria and needs. 

    2. Orlando multi family is exactly as you say. The closer you get to the city, the more you pay, that is just the way it is in any metro area and don't hold your breathe thinking that will change. If that is really what you want, either save up and buy a decent one or suck up the commute knowing the end goal is to build wealth and there are rarely shortcuts, only sacrifices to get started!!

    3. ADU- each county/city/municipality will have its own rules and allowances for this, there is no blanket answer. If you are going to stay strictly in Orange County, then focus on what they allow and don't. Be prepared for long permit times, the area is growing and that puts strains on all areas of county offices. Plan on using a GC, getting plans drawn up and likely engineers too, it won't be easy.

    4. If you are house hacking and looking for easiest point of entry so that you have money to add value to the property and not use all your saving on the purchase, FHA would be the way to go. Then you move on to the next one and repeat. Unless you are a veteran and can use your VA entitlements, FHA is the route. However, the condition of the property will be important here, FHA rules are more strict than going with a conventional loan, so make sure the property is in good shape.

    5. Many of the agents on here, including myself are here because we are investors ourselves. So using one of us makes sense, but still, interview and make sure they understand YOUR vision. Every investor has different experience levels, goals, timelines and so on. You understanding your goals and vision are paramount to connecting with the right agent, we are not CPA's or lawyers and don't always know what is best for you, we facilitate real estate transactions and help educate you along the way.

    Hope this helps, best of luck to you!


     Shawn - Thanks for your patience in my reply and for taking the time to give info on every item.  

    2) The hour away is without traffic.  With traffic it's probably double or more.  It's not as much of a bite the bullet scenario as it is not realistic to fight traffic for a couple hours every evening. What areas do you point clients to that want to avoid the I4 and after work log pile?

    3) Good info here. Are you still seeing the occasional single family with an attached ADU pop up? I've been combing the MLS they seem to be exceedingly rare.

    4) For FHA, I would need to be in there for a year before moving correct? Conventional I could buy a second whenever? Any advice on strategy of which loan route might make more sense or easier to scale?

    5) Thank for your help so far.  When I have a few more things ironed out, I would like to see if we'd be a good fit.   

    0Reply
  • Ash Hegde
    Lender · Fort Lauderdale, FL (Lending in FL CT GA MI PA) · Member since 2022 · 470 posts · 349 votes
    3y

    @Evan Linder no problem! If you can put at least 10% down the mortgage insurance can come off after 11 years. Most will refinance by then anyway and will take the 3.5% down option even though the MI is for the life of the loan.

    FHA has a one year occupancy requirement, but conventional does as well if you take the loan out as a primary (lower down payment possibilities). FHA is usually going to be the best for a first loan to get started.

    To truly scale, you will eventually need to get into investor commercial products like DSCR loans. FHA has a one loan limit, conventional has a ten loan limit, and even before that most people will have too high of a DTI at some point to qualify. DSCR will use the income of the rental property vs the mortgage payment and ignore personal DTI.

    0Reply
  • Zach Wain
    Scottsdale, AZ · Member since 2019 · 435 posts · 248 votes
    3y
    Quote from @Evan Linder:
    Quote from @Ash Hegde:

    I can help on #4 - FHA has a great low down payment option if you need it. The down side is a permanent mortgage interest if you go really low with your down payment. Also, you can generally only have one FHA loan at a time so it's not great for repeat use (you'd have to refi out to use it again).

    Mortgage brokers have more wiggle room than a traditional big bank but there are still limitations based on the market rates of the lenders they work with. They are usually going to be close in rate, but response times and loan processing times can be other important non-rate factors when choosing a broker. The cheapest rate won't help if delays mess up the closing date and cause additional costs (and sometimes lose a deal). 


    Thanks Ash I appreciate the insight on loans. Apologies for taking so long to reply back. What is the minimum down on an FHA to get the loan out of the permanent mortgage interest?


    Evan - 10% down to answer your question. But, the main reason to go FHA would be if you are buying a 2-4 unit home. That is where FHA shines. The majorty of the time, a conventional loan will offer a much better deal. Conventional loans have as little as 3% down. Depending on your credit scores, the PMI can be drastically cheaper, the PMI will one day get automatically removed, and there is no up front PMI like FHA has.

    Every scenario is different, but conventional out shines FHA.

    0Reply
  • Asare Nkansah
    Rental Property Investor · Castle Rock, CO · Member since 2022 · 9 posts · 12 votes
    3y

    Currently implementing #1. My wife and I are under contract on a property in Denver, CO - we are house hacking and have a 4 bed, 3.5 bath.

    The way that we are making the privacy factor work for us is by renting out the basement. We intentionally found a home that has a separate mother-in-laws suite in the basement that's connected by an external entrance that leads from the backyard straight into the suite. The suite has a full kitchen along with a full bath. We're planning on Airnb'ing that part of the house while we live upstairs.

    So, it's possible to house hack and rent rooms if you can find a house with a build that works well.

    1Reply
  • Paul Pratt
    Real Estate Agent · Member since 2023 · 92 posts · 80 votes
    3y

    Hey Evan,

     I hope I'm not too late on your post. In regards to multi family, as I'm sure you are aware, are good options in Daytona Beach. However, if you structure the property management situation you would be fine. Unless you were planning to live in the unit too and didn't want to be so far.

    Reach out with any questions.

    0Reply
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