Newbie looking for some help in Orlando, FL

6 Replies

Hi everyone -

Little history on my situation:

I have been obsessively learning about real estate investing over the last year and getting my fiance into it as well. I was renting in a nice neighborhood close to downtown Orlando when Hurricane Irma came through. Coincidentally, I was trying to get out of the high rent we were paying and Irma decided to put a large tree in the house destroying the kitchen and dining room (we weren't home). So we placed our belongings in storage the next day and moved into the fiance's mother's home. 

We're currently looking for a home to buy to quit renting. I found a house hack over in Conway (by orlando int'l airport) that we have under contract for 295k. It is a 3/2 with all the bells and whistles and even has a 700 sq ft apartment attached to the garage with its own private entrance. I can expect to be all in (expenses at 2100 with vacancy, opex, capex, pmi, PITI) at $1200 with $900 in rent for the apartment. My fear on this home as that we offered too much with all the surrounding home values being at 200-230k for 3/2's. I do not know how to value an in-law suite and fear I may be overpaying at 65k+ for the 700 sq ft attachment. Does anyone have any experience with evaluating an in-law suite (full kitchen, w/d stackable, walk-in closet, bedroom, bathroom, living room, and dining area with private yard and separate entrance)? There are no comparable homes in the neighborhood and it sits as one of the most expensive homes in the neighborhood (although price per sq ft is slightly lower than the smaller homes) which scares me a bit if there is to be a market correction in the next few years. Anyone have any advice on this deal?

All replies are greatly appreciated!

Have you tried throwing it in the rental property calculator here on the site?
When my girlfriend and I were looking for our house hack property, we just performed the calculations as though we were paying market rate rent on the unit we'll be occupying.

I wouldn't be too worried about what the other places nearby are going for if none of them have a comparable out dwelling. Especially if the plan is to buy & hold with a focus on cash flow, provided the math works out to be a good deal.

Likewise, a market correct won't hurt a buy and hold investment *as* bad (compared to a flip or something). Since you'll be holding it for cash flow, if you want to sell in the future, you'd just have to wait until another crest in the market comes along. You still have to worry about market rent rates dipping below your expenses, but even then, in a house hack situation it's still likely to beat the alternative: paying rent in an apartment and not building any equity.

If you're looking for rent estimates in your area, I've found Rentometer to be the easiest to use to get a quick estimate. I feel like it comes in a bit high though, so I prefer to adjust it down a bit to be conservative. Zillow and Craiglist are the other well known places to check comparable rents for your area.

I’ve been appraising in Orlando for 15 years. I can help you with any questions that you may have

@Mike Arlington thanks for the reply. I did use the rental calculator and the rental rates had to be pretty high to make the cash flow work. I don't see it working great as a first time deal for us. We're pulling out of the contract today and considering some other properties around Orlando right now. Next time I'll post well ahead of time before I need to make a decision haha! Thanks for your help!

If you're calculating PMI in there, I'm assuming you're shooting for less than a 25% DP? If that's the case and you're in the $295k range, have you looked in Thorton Park/College Park areas? You can find some deals there if you look and most have the 'mother in law' suite in the back.

The kicker there is that the majority of them are not zoned to add one... don't quote me, but I believe it needs to be R2, R2A, or R2AA to add them in.

@Josh Calcanis
I've been poring through the zoning guide PDF on the City of Orlando site, and I can actually shed some light on those mother in law suites regarding zoning.
I'll paste the relevant info from the PDF below, but from the looks of it, it is OK to get those small out dwelling type buildings permitted as long as you follow a couple guidelines regarding their size, the lot size, etc.

22. (a) Where Permitted. In R-1AA, R-1A, R-1, R-1N and R-2A zoning districts an Accessory Apartment, Accessory Cottage, or Garage Apartment may be
allowed as a second dwelling unit on a single-family building site under the following conditions:
i) Accessory Apartment.
(1) Inside the Traditional City, one Accessory Apartment shall be allowed as a Permitted Use when the building site is at least 1.5 times the
minimum lot size for the applicable zoning district.
(2) Outside the Traditional City, one Accessory Apartment may be allowed as a Conditional Use in accordance with the regulations and
procedures provided in Chapter 65, Part 2D, when the building site is at last 1.5 times the minimum lot size for the applicable zoning
district.
ii) Accessory Cottage.
(1) Inside the Traditional City, one Accessory Cottage shall be allowed as a Permitted Use when the building site is at least 2.0 times the
minimum lot size for the applicable zoning district.
(2) Outside the Traditional City in the R-1AA, R-1A, R-1 and R-1N Districts, one Accessory Cottage may be allowed as a Conditional Use in
accordance with the regulations and procedures provided in Chapter 65, Part 2D provided that the building site is at least 2.0 times the
minimum lot size for the applicable zoning district.
(3) In the R-2A district inside and outside of the Traditional City, Accessory Cottages shall be a permitted use provided that the minimum
building site area for an Accessory Cottage shall be the same as that required for a duplex development.
(b) Design Standards. The living quarters of an accessory cottage dwelling (ACD) shall not exceed 40% of the living quarters of the principal structure
or 1,200 square feet, whichever is less. However, principal structures with living quarters less than 1,700 square feet may have an ACD up to 700
square feet. Appearance Review is required for ACD's, wherein ACD structures shall have the same exterior finish as the principal structure located
on the same lot and shall incorporate at least two similar architectural details found on such principal structure into their design. Examples of similar
architectural details include, but are not limited to, windows, doors, roof style, cornice detailing, vents, and dormers.

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