Orlando Vacation Rentals
Hi,
I'm searching for anyone familiar with the Orlando theme park area.
I think I'd like to buy a 3-4 bedroom SF close to the theme parks for an income generating vacation rental.
And I'm looking for some insight.
Personally, I'm not wild about Orlando, but a friend recently came from Disney and stayed in a SF, renting for roughly $3500 for the week. He was complaining about how expensive it was, which got me thinking $$$.
The advantages, as I see them, are RE prices (much, much cheaper compared to the property prices in Mass and surrounding New England, which is where I live) and year-round rentals (obviously in NE its seasonal unless it's near a ski area). I also like Orlando because of the constant influx of vacationers/potential renters.
The disadvatanges are I know zero about Orlando. But this can be addressed through research, homework, due dilligence, a couple trips to the area, etc. You guys know the drill.
So I'm wondering if any of my fellow REIers have knowledge of Orlando RE and can shed some light on the area's vacation rental market.
Is there any money to be made? Are there other areas in Florida I'm overlooking with better profit potential?
After a quick and dirty search of retail properties, I think I can spend $150K on a SF and get something decent. Now I have no idea if that get's me close enough to the action of the theme parks. Again, I don't know the area. At that price, I figure I need to generate anywhere from $1200 - 1500 per month in vacation rents to break even with mortgage, taxes, property manager, etc. But ultimately I'm not looking to break even.
So like I said, this is simply in the "lightbulb" stage. I have nothing concrete. I'm just throwing it out there to see if it sticks, and to see if it's time to begin firing up the spreadsheets.
Thanks in advance.
Ken
[addsig]
SF weekly home rentals in the orlando area is a huge business, just do a google search and you will find 20-30 different "management" companies listing available rentals.
I think you friend either stayed at a 10 br Mansion, or is fibbing about his rent (or was $3500 his total out of pocket for the whole week???).
I considered this type of rental a few months ago because I spend 3-4 weeks in orlando in January and thought that might be a good inn (pardon the pun).
But, we normally stay at the Swan (a Westin hotel on Disney) and like the convenience of being on property, free parking, disney transportation (bus and boat), and normally pay $125 to $150 per night. So to make your friends nightly rate equilivant, you could get 3 rooms and still have $50 left over per night.
Take some time really looking into the revenue before you get to wide-eyed; for me I saw $700/week rentals EVERYWHERE; and $2000/month true expenses at a minimum at most of the places were occupied only 60% of the time - basically they were losing money!
II am confident there is a way to make some money in the home rental biz in orlando, but it is in no way as easy as it looks to you right now.
Thanks for the reply, feltman.
I'm going to call a few of the property mangement companies I found online and pick their brains.
[addsig]
Keep in mind that Florida is a very seasonal place. I know that people go down there year round but FL definitely has a "season". Rents are substantially higher during the "winter" months. The snow birds and vacationers typically start traveling to FL in Nov. and depending on the weather leave around mid March.
It is possible that your friend was in Orlando smack in the middle of "season" and that could account for the high rent. Just remember that the rent in FL can change drastically depending on the month and you have to take that into account when computing your expected rental income.
As far as Orlando goes, it is still a huge tourist desintation and I don't see that changing in the near future. My family lives in South Fl so I am a little partial to the Southern part of the state but I know that people love orlando and return there year after year
Keep us posted.
monkfish,
Your income tax impact will be different that what you might expect. When your average tenant occupancy is seven days or less, the IRS says that you are operating a business (much like a motel). Schedule C and self-employment income taxes are in play.
This may affect your after tax cash flow calculations and make the investment less desirable.
Be sure and check Florida laws regarding renting out a home for short term rental. You may find that you are required to meet the same standards as a motel for the operation you are considering. Sever penalties for violations/
William S Cook
:-D
Very good advice so far. I live near Disney and lots more homes, townhomes etc. are being planned as we speak for this type of rental. Keep in mind, only certain areas are zoned for short term rentals. Very strict in other areas. Right now, the Brits are buying preconstruction, Disney area, short term rental deals, as fast as they can. Wish I had the land near there zoned for that.