Buying short term rental property in Davenport/Orlando (Kissimmee, Apopka: rentals, condos)

[Jon D]

We have owned a 6 bed villa on Windsor Hills Resort (2 miles to Disney) since it was built in 2005. We have a mortgage and rent the house out, with a nice income covering all the bills and much more and have regular holidays. We constantly rent over 40 weeks per year. It does boil down to where you buy.

[AONE]

jon, you are right that location is important, as are the specs of the home, its look and the rental amount. There are some that do well with short term rental as they master the management / cleaning and rental issues. It is a full time job in many cases and gets better with time as you develop a reputation and client list. For the most part short terms simply don't offer the hope people want.
Look at all the short term rental neighborhoods in Davenport and Kissimmee that have had a ton of foreclosures. They were simply unable to live up to their promotions. It all comes down to the numbers If you get one for 1/3 the original price you certainly have better odds but if it is ugly and has little desire except the price to you then travelers won't want to stay there.

I suggest at this point working with some of the many hoems that can be positive cash flow from a long term rental position. When you add that you are getting them for discounts over 50% then even better. I work with myi investors on this strategy and it has worked for them.

ken

[NationalCapitalresidents]

AONE.. we are looking at purchasing one on the condos (2 bedroom/2baths), as an investment property, located in the Legacy-Dunes Resort. We are located in Canada and would need a property manager to oversee the property. Any thoughts you can share? It looks like a beautiful resort which we hope we can rent out without too much problem. We are really looking at it as a good investment for when we retire in 15 years.

[Itstimeforamove]

I do have something to add to Erica's excellent advice. If you decide to go ahead with your plans to buy a vacation villa, make sure you don't settle with the first management company that you speak to. I advise you to interview at least four or five and ask for references.

Also, make sure the management company allows you to supplement their efforts with your own bookings. There are many websites you can advertise on to help with this process.

One more thing, some communities do better than others for short term so you will need to investigate that further.

[khayker]

Hi
We bought a new place just off the 192 last year and have had trouble getting renters in to offset costs. I think we've had around five weeks since October 08, so if you really need to have renters to pay the basics for you forget it. This is a holiday home for us and a rental secondly. We did decide that it would be good to get around 15 weeks per year as that would nicely offset our costs. I can't see us doing that in our first year, perhaps in our second if things pick up but you need to be realistic, if you can't afford it without rental income, your can't afford it full stop as the income can dry up at any time. Forget what people say about getting rent for most of the time they're not using it, that may not happen for you. There are also too many rentals out there competing with you to get a lot at the moment, hopefully this will change due to foreclosures etc but with the recession some second homeowners in the area are now opening their homes up for rental as a second income which just adds to the competition.

[annerk]

Originally Posted by NationalCapitalresidents

AONE.. we are looking at purchasing one on the condos (2 bedroom/2baths), as an investment property, located in the Legacy-Dunes Resort. We are located in Canada and would need a property manager to oversee the property. Any thoughts you can share? It looks like a beautiful resort which we hope we can rent out without too much problem. We are really looking at it as a good investment for when we retire in 15 years.

Your chances of renting it out enough to make even a small dent in the carrying costs are very slim. If your real estate agent is saying otherwise, they are lying through their forked tongue and you should find a more honest agent. The property management contract can easily eat up any profit you get from the maybe dozen or so weeks you might rent in a year at this point in time.

Also look into all of the other costs--business licenses, taxes on rental income, inventory, and increased liability insurance costs over just owning a second home. Make sure you go into with with your eyes fully opened.

[AONE]

Originally Posted by annerk

Your chances of renting it out enough to make even a small dent in the carrying costs are very slim. If your real estate agent is saying otherwise, they are lying through their forked tongue and you should find a more honest agent. The property management contract can easily eat up any profit you get from the maybe dozen or so weeks you might rent in a year at this point in time.

Also look into all of the other costs--business licenses, taxes on rental income, inventory, and increased liability insurance costs over just owning a second home. Make sure you go into with with your eyes fully opened.

Well I'm not sure if this is pointed to me but I never say it is an easy road to make money in Short term rentals, In fact I say the opposite. of course part of that comes from what a property costs to begin with. if it is $40k that is very different than 200k. You can always bet a mgmt co will eat more than 1/4 of your income, especially if you include the cleaning costs. The best record I know of inn this business is a couple guys that get 50 weeks / year rented in their 1/2 dozen properties. They manage them and even do their own cleaning and have excellent advertising sources for rentals... They work very hard at it and as a result do very well..... They are the exception. Like I say look at all the foreclosures, they are proof the promises were empty after the sale was made. I am always in favor of the long term rentals as an investment. Positive cash flow is easier to reach with them.

Personally, I won't even manage short term rentals. I will do the long terms. There is a website I've seen listed where owners can advertise their rentals.. It certainly shows how much competition there is. I think 1 rental / year is easier to deal with than 52.

Like with any investments you need to crunch numbers and know your break even. It is a simple process and no agent need tell you anything. You can do your own math.
Unit cost xxxx
cost of money / week xx
the 15% mgmt fee
the upfront costs
the cleaning costs,
taxes
insurance.
loss/damage replacement
furnishings if not furnished
HOA's

rental price x weeks

There are far more expenses than one likes but thats the way it is. Don't ever figure 52 weeks.... plan for 15-20 and hope for 30. and work like a dog to make it happen. It can be done but to often it is less than expected.

Is that enough reality?

[WesternUS]

Hi can someone provide some advice if buying a condo at village at town center near Davenport is a good idea? If so what should the price be for either a 2 or 3 bedroom? Also, the places at the village are all electric. Is this common in Florida or would this impact someone wanting to buy the property if I were to sell it in the future? I am looking at buyign it first for the family second as a short term rental. Is the area safe...crime doesn't look to be an issue...please advise..Thanks

[WesternUS]

Hi can someone provide some advice if buying a condo at village at town center near Davenport is a good idea? If so what should the price be for either a 2 or 3 bedroom? Also, the places at the village are all electric. Is this common in Florida or would this impact someone wanting to buy the property if I were to sell it in the future? I am looking at buyign it first for the family second as a short term rental. Is the area safe...crime doesn't look to be an issue...please advise..Thanks

[cfIfan]

You will find that electric is very common, unless you are in an area like Winter Garden which is serviced by Apopka Gas.

If your looking at buying a property you really should consider using a realtor. The questions you ask in terms of price your realtor will be able to answer by creating a CMA on that particular neighbourhood and giving you a price analysis of what is on the market taking into consideration shorts and foreclosures and giving you a good idea of what fair market price is.

Good luck.

Nick

Originally Posted by WesternUS

Hi can someone provide some advice if buying a condo at village at town center near Davenport is a good idea? If so what should the price be for either a 2 or 3 bedroom? Also, the places at the village are all electric. Is this common in Florida or would this impact someone wanting to buy the property if I were to sell it in the future? I am looking at buyign it first for the family second as a short term rental. Is the area safe...crime doesn't look to be an issue...please advise..Thanks