How do I determine if a multifamily is a good deal for a house hack?

Question

I’m 19 years old and currently focused on saving and preparing for when the right opportunity comes. My plan is to use a 3.5% FHA loan to get started and then refinance into a conventional loan after 12 months.

For those of you with experience:

• What key metrics should I focus on when analyzing a multifamily deal for a house hack (cash flow, CoC return, DSCR, etc.)?
• What mistakes did you make on your first house hack that I should avoid?
• Do you recommend starting with a duplex, triplex, or fourplex as a first purchase?
• When refinancing from FHA to conventional, what should I prepare for in terms of equity requirements, appraisal, and costs? 
• I’m based in Kissimmee, near Orlando, FL, and I’d also love to hear insights on what areas in this market are best for finding solid multifamily house hack opportunities.

What key metrics should I focus on when analyzing a multifamily deal for a house hack (cash flow, CoC return, DSCR, etc.)?

What mistakes did you make on your first house hack that I should avoid?

Do you recommend starting with a duplex, triplex, or fourplex as a first purchase?

When refinancing from FHA to conventional, what should I prepare for in terms of equity requirements, appraisal, and costs?

I’m based in Kissimmee, near Orlando, FL, and I’d also love to hear insights on what areas in this market are best for finding solid multifamily house hack opportunities.

Basit Siddiqi · Answer

why not get the conventional loan right away?The issue with the refinance within a year is that you would have to repay lender fees again which are not cheap. Furthermore, refinance rates are a bit higher than an original loan.

Jim Thomas · Answer

Multifamily House Hacking: How to Make Your First Deal a Winner

If you’ve ever thought about building wealth through real estate but didn’t know where to start, house hacking might be your golden ticket. By living in one unit of a duplex, triplex, or fourplex and renting out the others, you can cover your mortgage, reduce living costs, and start building long-term equity—all while someone else helps pay the bills.

It’s one of the smartest ways to get started in real estate, especially if you use an FHA loan with a low down payment. But like any investment, success comes down to knowing your numbers and avoiding common pitfalls.

Let’s break it down.

The Numbers That Matter Most

When you’re analyzing a deal, here are the metrics that should guide your decision:

• Cash Flow: Your rental income should exceed all expenses, even after you factor in the unit you’ll live in.
• Cash-on-Cash Return: Aim for at least 8–10% return on your invested cash.
• DSCR (Debt Service Coverage Ratio): Anything above 1.2 means the property easily covers its mortgage.
• Price Per Door: Compare with similar multifamily units so you’re not overpaying.
• Cap Rate: The higher, the better—just make sure the risk and location make sense.

Cash Flow: Your rental income should exceed all expenses, even after you factor in the unit you’ll live in.

Cash-on-Cash Return: Aim for at least 8–10% return on your invested cash.

DSCR (Debt Service Coverage Ratio): Anything above 1.2 means the property easily covers its mortgage.

Price Per Door: Compare with similar multifamily units so you’re not overpaying.

Cap Rate: The higher, the better—just make sure the risk and location make sense.

These checkpoints act like your compass, helping you spot good deals and avoid bad ones.

Quick Reference: Summary Table

Here’s a handy table you can use when evaluating your first (or next) house hack:

Metric/Topic

What to Aim For

Why It Matters

Cash Flow

Positive after all expenses

Ensures property isn’t draining your savings

Cash-on-Cash Return

8–10%+ in most markets

Measures efficiency of your invested capital

DSCR

1.2+ ideal

Shows the property can comfortably cover debt payments

Equity for Refi

20%+

Required for conventional refinance and to drop PMI

Appraisal Prep

Well-documented improvements

Helps justify a higher property value during refinance

Beginner Mistakes That Can Sink a Deal

Even great properties can turn into headaches if you overlook the basics. Watch out for these rookie mistakes:

• Underestimating repairs—always budget more than you think you’ll need.
• Skipping tenant screening (trust me, this will cost you later).
• Forgetting to factor in vacancy and turnover.
• Ignoring local rules or HOA restrictions on renting, especially in tourist areas.

Underestimating repairs—always budget more than you think you’ll need.

Skipping tenant screening (trust me, this will cost you later).

Forgetting to factor in vacancy and turnover.

Ignoring local rules or HOA restrictions on renting, especially in tourist areas.

Duplex vs. Triplex vs. Fourplex

So, which property type is right for you?

• Duplex: Lower purchase price and easier to manage, but less income potential.
• Triplex/Fourplex: More income and diversification, though usually more expensive and competitive.

Duplex: Lower purchase price and easier to manage, but less income potential.

Triplex/Fourplex: More income and diversification, though usually more expensive and competitive.

The key is to buy what fits your budget and comfort level—not just what looks the most profitable on paper.

Planning Ahead for Refinancing

If you start with an FHA loan, refinancing into a conventional loan can save you money long-term. Here’s what to keep in mind:

• Build 20% equity to get rid of PMI.
• Expect a new appraisal—document upgrades to boost value.
• Budget for 2–5% in closing costs.
• Check lender “seasoning” requirements (usually 12 months before you can refinance).

Build 20% equity to get rid of PMI.

Expect a new appraisal—document upgrades to boost value.

Budget for 2–5% in closing costs.

Check lender “seasoning” requirements (usually 12 months before you can refinance).

Local Insight: Kissimmee & Orlando

In Central Florida, the right neighborhood makes all the difference. Look for:

• Areas near major employers (steady job demand = steady tenants).
• Stable, working-class neighborhoods instead of oversaturated tourist zones.
• Up-and-coming sections that local agents and investors are already buzzing about.

Areas near major employers (steady job demand = steady tenants).

Stable, working-class neighborhoods instead of oversaturated tourist zones.

Up-and-coming sections that local agents and investors are already buzzing about.

Final Thoughts

House hacking isn’t just a strategy—it’s a lifestyle shift that can accelerate your path to financial freedom. Whether you start with a duplex or jump into a fourplex, the most important thing is to run the numbers, plan for expenses, and think long-term.

In markets like Kissimmee and Orlando, where demand stays strong, the right multifamily property can give you the best of both worlds: a place to live and a wealth-building investment.

Kate Nixon Taylor · Answer

Hi Orlando,

I am curious about your focus on FHA for financing. I bought my first investment as a house hack and used a conventional loan. You can put down 3% with conventional depending on your credit score. As a loan officer, I would recommend using conventional if you can upfront and avoiding the cost to refinance at 12 months time. The closing costs are the same for the most part. With FHA, you will have more closing costs. What was the thought process with refinancing at 12 months? You will build less than 1% equity in the first year, so a refinance would only make sense if there was a tangible benefit.

Once you occupy the property for a year with FHA or conventional loans, you can move out and fully rent the property without refinancing into a different loan type. Thats the benefit to house hacking. Your cash on cash return is higher since you are leaving less cash in the deal.

If you refi into a conventional loan after a year, then you would need to owner occupy under that loan unless you did a conventional investment loan which will require you to put a lot more down.

I am happy to look at an application for you. If you need help with your credit, we can figure out how to get your score up so you qualify for the best products for your situation. I'd love to understand your goals better and strategize with you.

Lets connect! Cheers, Kate

Joseph Tadres · Answer

• For my first deal, I was thinking about the appreciation. I was able to pull a HELOC and buy my first flip, which led to buying a rental.  
• One of the mistakes I made was leaving too much cash in the deal. I bought the duplex with a hard money loan and used my cash to rehab the property instead of refinancing it into my conventional loan.
• I recommend starting with a duplex.
• When I refinanced from a short-term hard money loan, my property had to be appraised.Cost-wise, I didn't have to spend any money, it was factored into my new loan.

Aaron Zimmerman · Answer

1. key metrics : does the house hack save you money while living there? Does it cash flow upon leaving?

2. Mistakes - being too lenient with late paying residents.

3. would choose quadplex all else being equal

Chris Grenzig · Answer

@Orlando Ferreira I think @Tyler Gibson helps people with house hacks in the Orlando area if I remember correctly, but I might be mistaken.

I'll take a stab at some of your questions.

1. I would definitely look at DSCR and your break even occupancy. That shows how much your NOI can drop before you're going to start eating the costs yourself. It's very possible the rents after expenses from the other units might not cover your mortgage and operating expenses entirely, but it might lower your housing costs while paying down the loan which is still a win. Obviously a fully cash flowing house hack would be ideal, but in FL I think that's going to be tough to find, especially with 3.5% down. After those I would focus on getting your operating expenses dialed in, and pay special attention to deferred maintenance when acquiring and any major upgrades that are likely to be needed in the near future (old HVAC, old roof, etc)

2. Ha, good question, plenty of answers. I think the biggest one I touched on at the end of my last answer. Before you buy anything you need to spend a ton of time before offering and during your inspection period figuring out all your expenses, deferred maintenance, and future maintenance items as best as you can. I've bought 150 units of MF in Jacksonville and we still miss items that need fixing in a year or two, or under budget true costs. Sometimes it's hard to know, or something random will happen you need to pay for, but the more you can do upfront the better.

Do your own rent comps! Don't rely on anyone else telling you what stuff will rent for unless it's a property manager who is going to manage the property for you. An agent, broker, seller, lender, etc aren't the ones buying it and have no recourse if it rents for less than what they say.

Set aside money for reserves for the property up front! Stuff will break you don't expect and need repairing or replacing. You will be thankful to have an extra $3-15k set aside for the property when that does happen! If you can't afford a bunch upfront, set aside money every single month to build it up! Trust me on this one

3. I don't think it matters if its a single family home where you rent rooms, or all the way up to 4 units. I think there would be a slight preference for more units so any vacancies impact revenue less, but more important is the specific property, the budget, price, and business plan. A duplex that will conservatively break even with you living in 1 unit, is better than a quadplex that you get wrong and it really loses you $500 a month.

4. Can't speak to this

5. I think FL is going to be tough that finds you anything that cash flows. Yields and cap rates are around 6% give or take in decent areas, and thats with all units paying rent. Interest rates are 6-7.5% so at 3.5% down and if you could have everyone paying rent, you're probably negative cash flow. So if you're occupying one of the units it will probably be negative cash flow quite a bit. However, where you can make up some of that difference is doing the property management yourself, and doing any repair work yourself. You could cut your operating expenses a lot lower than or company or another owner could, but you'll be spending your time to do so. Only you can decide if thats worth it or not.

Alexander Medina · Answer

Hey Orlando, great plan! For a first house hack, focus on cash flow, CoC return, and local rental demand. Duplexes or triplexes are usually easiest to start with.

Jackie Carmichael · Answer

@Jason Nightingale

Great question, Jason — yes, when you’re running numbers in the Rental Property Calculator, you’ll want to underwrite as if all units are rented at market rate, even if you plan to live in one. That way you know the property stands on its own as a solid investment, regardless of your personal living situation.

From a lender’s perspective, especially on DSCR or rental loans, we’re looking at whether the property cash flows with full occupancy. If it pencils out that way, then house hacking just makes your numbers stronger.

Jason Nightingale · Answer

@Jackie Carmichael I am looking at house hacking a triplex or a quadplex as well. When you say

"Cash flow after reserves: Run it with conservative rents + all expenses (PITI, mgmt, maintenance, vacancy). Even if you’re living in one unit, underwrite as if you weren’t."Do you mean and the rent for the unit you are living in when you use the Rental Property Calculator?

Thanks

- Jason

How do I determine if a multifamily is a good deal for a house hack?

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