All Forum Posts by: Andrew Schaefer

It's worth noting that Pinellas Co. has similar costs as Orlando metro but might be a bit higher exclusively due to Gulf Coast Pinellas Co. being more hurricane prone than further inland Orange Co. That variable is outside the area of my expertise.

Enjoy my annotated Orlando map pulled from the City's permitting dept. I might as well have printed it out and used a crayon but it does the job for non-locals.

Green = OK to apply for STR with the City of Orlando
Grey = Within the city but not approved for STR.
Everything else = Few if any limits. I think Orange County has a deal to collect taxes through AirBnB and maybe others like VRBO but it's more or less STR-friendly.

The threshold for STR with FDOR (known by most as the sales and use tax enforcers) is 6 months so I keep a clause in my leases that if they move out before occupying the property for at least six months they're also on the hook for paying sales tax on their rent (6.5% in Orange Co. but varies from 6% to 7% depending on local voters funding their favorite projects with the amount in excess of 6%). 

For short term rentals where you may be liable (though many dodge it) for the lodging tax of around 10% I believe it might be a month. Frankly I haven't looked into the details but that's probably in the right ballpark and some search terms to use to find out how it affects your specific area.

Also discussing specific areas, this new City of Orlando registration with its owner-on-premises and other limitation hassle lawmaking is only applicable within city limits. Most of the areas around the attractions (locals call Disney, Sea World, etc. "the attractions" because it's 10-20 miles SSW of what to us is "real" Orlando) are outside of the city proper and are in Orange County (non-City of Orlando annexed), Osceola Co, and to a far lesser extent Lake and even Polk Cos. so be sure that you're up to speed on any local developments that might limit renting out the whole property and not living there. It's a massive business near the attractions and most of those properties won't be affected by this crap the City of Orlando is doing because, again, the City footprint is small. Heck, I live about 2 miles from the core of downtown Orlando and there are unincorporated neighborhoods bordering mine.

No problem! It gives me a chance to reflect on my process, thus I benefit from doing this every so often.

Don't get too hung up on the past. If I'd have called my landlord a couple years earlier and found out he was interested in seller financing I could've saved a third of the price vs. waiting to ask about buying it 'til my self-employment and rental income made me able to obtain conventional financing. If I was hung up on what it was worth a few years earlier at the bottom I wouldn't have locked in what in hindsight was a great deal.

I'll respond to this and other points at the bottom.

Correct, my PITI is about $1,250 and the principal and interest portion were locked in when I bought it in late 2015 but if I were to lump together the cost of my repairs and improvements over 30 yrs instead of having paid for them out of pocket it'd be more like $1,400. Price appreciation and mortgage rate increasess would make the same house cost maybe $1,800-$1,900 today. If I were a renter now I'd still consider buying my personal residence in my neighborhood with today's price-to-rent ratio being slightly tilted towards renting when looking at it short-term. I'd buy because 1) I have roots other than real estate laid down here and I'm very unlikely to move, 2) I know inflation's built into the monetary system and makes the principal and interest portion of the payment become smaller and smaller in real dollar terms, and 3) I think Orlando will outpace other markets. Plus I'd have to live somewhere anyways and the rental market's red hot in places I'd want to live.

There's also another perk to owning your own home I didn't elaborate on: A 3% annual cap on property tax increases because of Save Our Homes. Looking at it as a landlord it's a tax on people who rent (bad) and on newcomers to the state (less bad; still bad). Yet SOH is here to stay and should be factored into the decision to buy a home that you can claim as your homestead vs continuing to rent one where ultimately you the tenant pay the landlord's larger and faster-growing property tax bill.

Today my home would conservatively rent for $1,700 as a 3/2, and perhaps $2,100 total if split into a 2/1 and 1/1. I wouldn't mess with trying both sides of the latter option, but I've considered house hacking again and renting out solely the 1/1 side to have it cover most of my mortgage. For you, buying and doing that or having a roommate or two even at today’s prices probably still makes more sense than renting if you plan to stay here for a while. It’s not a no-brainer anymore but tbh none of the places I bought were spike-the-football, dance in the end-zone moments when I signed the papers. That’s the nature of big investments that rely on major variables that are out of your hands.

Are you aware that the CITY of Orlando (a footprint which doesn't cover much area near the attractions) is implementing game-changing regulations starting 10/1/18? Quoting my reply from a separate Orlando-related post reply I made regarding this:

On 10/1/2018 (a week from today) the City of Orlando will end its amnesty period and begin enforcing new home sharing rules.

Major new requirements for short term rentals within city limits as I read it:

1. Pay the city an annual fee ($275 in the first year, $100 o/o, or $125 non o/o in renewal years).
2. Have the resident present during short term rentals.
3. Not rent more than 50% of bedrooms. Therefore a two or three bedroom property cannot rent more than one bedroom at a time.
4. The rental portion of the residence must be designated as an accessory use space.
5. Must include the registration number in all advertisements.

You sound like me a few years ago. I live about 2 miles east of Orange & Central (for non-locals, that's considered our CBD's bullseye) in a 3/2 that I had rented with roommates for 5 years but then purchased from the owner nearly 3 years ago. It's gone up in value about 50% since then, more due to the market than to my repairs/improvements. My PITI 30 year mortgage is about $400/mo. less than what it'd rent for today as a 3/2, and about $800 more than what it'd rent for as a 1/1 and 2/1 as separate units which is do-able with its layout. But if I bought today @ FMV it'd be closer to break-even with the monthly escrowed payment before factoring in repairs, improvements, vacancies, etc.

That's the only way I'd do it... and have done it that way with roommates in the past. Get a SFR and roommates, or a SFR with a separate rentable portion (aka a "mother-in-law suite" or accessory dwelling unit) and you'll be subsidizing your own housing cost.

Sounds like me again for my primary residence. I bought it because I saw the area trending the right way (without giving away my exact neighborhood think Audubon Park or College Park) and I could afford it with or without roommates. Be certain that you can do the same since you're far outside the original discussion of 1% rule at this point. 

Don't be in a rush to buy. Do the numbers IN WRITING like a business if you intend to treat it like one, even if it's house hacking and not a 100% rental. Then before looking at specific properties be sure to have a pre-approval letter with a local lender in hand. Feel free to ask me for referrals to lenders and a RE broker who will oversee your transaction/buyer's agent if you'd like good ones I've worked with in the past. I have a RE sales assoc. license and would get a referral fee on the latter since I don't use my license for anything other than that and my own transactions. 

Be honest with yourself that you're betting on price appreciation and hedging against inflation because the neighborhoods with a large share of 30-somethings renting or owning in it that are fairly safe are going to be about break-even with rent prices at best. As long as you're OK with that offsetting of various risks depending on where the local market and local economy trend then I'd still consider buying. But don't do it if you're looking to simply earn a return on your money; you're house-hacking to make your cost to ante up to buy into the market less than the alternatives of either not playing or buying elsewhere with a higher ROI but still paying a variable rent for your own personal residence.

 On 10/1/2018 (a week from today) the City of Orlando will end its amnesty period and begin enforcing new home sharing rules.

Major new requirements for short term rentals within city limits as I read it:

1. Pay the city an annual fee ($275 in the first year, $100 o/o, or $125 non o/o in renewal years).
2. Have the resident present during short term rentals.
3. Not rent more than 50% of bedrooms. Therefore a two or three bedroom property cannot rent more than one bedroom at a time.
4. The rental portion of the residence must be designated as an accessory use space.
5. Must include the registration number in all advertisements.

I own three properties in Orlando, but I wouldn't jump in here as a buy-and-hold investor in 2018. Mine were bought over the last 6 years and averaged about 1.1-1.7% at the time of purchase (2%-2.5% in nominal and not real dollar terms now).

Today, you can only reach 1% in Orlando/Orange Co. if you're buying in a not-so-great neighborhood or are in the 45-60 min radius to Orlando proper such as Polk or Volusia. Anything higher and you should be flipping because the better deals than that are hard to find.

Have you ever owned rental property? 

Do you put more weight on long-term price appreciation (with better tenants on average)? Or cash flow by going into iffier areas that go hand-in-hand with greater tenant drama and turnover? 

Do you live in the area? Another idea is there's a brisk market here for short-term rentals so if you live here or have a VERY good ability to manage your business from a distance you can beat 1% easily and maybe even start climbing a little towards 2% if you don't factor in the cost of your time to manage it. But do your homework; the City of Orlando (most of what people think of as Orlando isn't inside city limits) is putting new restrictions on short-term rentals starting next month I believe.

Oh and a disclaimer: I have a Florida real estate sales assoc. license but I don't do it for a living-- I just keep it active for a referral commission now and then since I know great brokers and would be recommending them anyways regardless of the cut they hand to those like me who refer quality buyers, sellers, and landlords seeking tenants.

I might go the Thompson Broker route one day just to mess with the Realtors™ cartel but that's a whole different story.

Ah cool, I've had my office across the street from the former location of Graffiti Junktion for nearly 7 years now (corner of N Hyer and E Washington), and Thornton Park has been a great investment albeit not that great for cash flow. That's why two of my three houses are in class B-type neighborhoods in the county and not the city.. great ROI there.

You're out of town so as long as the City of Orlando follows through with these new rules, you'll be unable to short-term rent the Thornton Park one since it's definitely in city limits, and likely the same case for the one north of downtown (Lake Eola Heights or around Lake Highland, perhaps?) since it's also city limits I'll bet.

The only work-around I can think of would be to have a long term tenant occupy at least 50% of the bedrooms and have someone so good that they competently manage the smaller portion as an AirBnB/VRBO/etc. 

Keep me posted with what you do since I'm in the same situation with one of my three places.