STR in Orlando/Davenport, too late?

[Steph Prince]

Hello

I am looking into purchasing a STR in Orlando/Davenport area, just beginning my research. Do anyone think this is a saturated market and a bad idea at this time or is it still growing?

[Dale K Poyser]

I heard a saying that sticks with me

"the best time to invest in real estate is yesterday.. the second best time to invest in real estate is today"

The market may be getting saturated but I think as long as you can make the numbers work you should pursue the deal. Be very sure of your goals for STR and that your numbers are conservative.

If your goal is appreciation think about your timeline. If your goal is cashflow, use conservative numbers. Also look into any regulations and HOA regulations that could affect your HOA.

With the markets cooling I'm seeing a lot of price drops in markets I'm tracking. So you should be able to get some good pricing.

[Steph Prince]

thank you for your advice

I have a question about marketing your STR, what is the best way to make your property stand out? Any advice

[Lyndsay Zwirlein]

@Dale K Poyser love that advice!!!!! yes! 

@Steph Prince we have a couple STRs and I am starting to focus a lot more on decor/furnishings.  I am not a designer, so I have hired people to help put finishing touches on our properties. It is getting really competitive in some markets, so in my opinion your pictures have to stand out.  Also "Optimize your Airbnb" by Daniel Rusteen gives great ideas (it applies to other sites like VRBO, direct sites, etc). Focus on what sticks out about your property and market that -- waterfront view, amenities you provide that your neighbors don't. You can find this by searching the other listings in your area.  Also after we start getting reviews from guests, I start looking for common themes about what they loved about the property and add that to the forefront of my listing.  Professional pics are a must.  Hope this helps! 

[Erik Cardero]

I'm also looking into it, almost done with the getting a heloc and then will have a realtor show me a few apartments, I've been doing research and Airbnb still looks better than regular renting. It all comes down to location and staying under your budget, just in case things get too slow. I'm looking to get a place max $250k furnished , close to the parks , fingers crossed… I saw those same apartments go from $176k to $250k in like 8 months, as long as the parks keep expanding there will be a need for more STR.

[William Arrington]

Quote from @Steph Prince:

Hello

I am looking into purchasing a STR in Orlando/Davenport area, just beginning my research. Do anyone think this is a saturated market and a bad idea at this time or is it still growing?

A quick look at Davenport with key word price reduction says that it might not be right yet but deals are coming to those that run numbers.  

[Tyler Gibson]

Quote from @Steph Prince:

Hello

I am looking into purchasing a STR in Orlando/Davenport area, just beginning my research. Do anyone think this is a saturated market and a bad idea at this time or is it still growing?

There is still an opportunity here! There are a bunch of STR units in this area but STR is unique in that you can give the exact same house to two different people and get wildly different results. The reason for that is that profitability in STR can be heavily impacted by the operator. A good operator will provide a first-class experience for guests which will lead to great reviews, which will lead to better bookings, and allow you to charge more. Bad operators don't always get good reviews and this will impact their profitability. If you think you can operate it better or you hire a great PM (I know one) then it is still a good time to get into the area.

[Mike D'Arrigo]

@Dale K Poyser you should always do a stress test analysis at a best case/worst case occupancy rate and daily rental rate to see where your break even is. I also recommend buying something as a STR only if it can carry it's weight as a LTR. That way, if something goes wrong, you have another option.

[Alyssa Mcgaha]

Hey there! I love all the advice above, especially the quote about best time being yesterday! I work for Vacasa Property Management and can definitely tell you people are still buying and people are still renting. STR's popularity has only gone up since COVID and Central FL has shown it is a market that isn't going anywhere!

I can always give you income projections for certain properties and/or show you which complexes are making more and why, just message me and I can help!

Also, theming is everything.

[Jay Breitlow]

Hi Steph,

@Tyler Gibson has some great advice here as does @Dale K Poyser. With that in mind there are a few properties and subdivisions that are showing some incredible opportunity right now and have seen their entry points go DOWN relative to 3-4 months ago. Specifically some of the "smaller' communities like Tuscan Hills and Hampton Lakes are showing great inventory and pretty good ROI despite a 5-10% reduction in guest spend. Most of our projections are down a little to be honest but I'd rather meet a well prepared conservative investor than pie-in-the-sky. There's also steady performers like Bahama Bay that will always project around $35k and seeing their entry point drop. An easy starter for new investors if u can get condo financing.

Best of luck my friend.  And welcome to Orlandooooo! :) 

[Steph Prince]

Quote from @Jay Breitlow:

Hi Steph,

@Tyler Gibson has some great advice here as does @Dale K Poyser. With that in mind there are a few properties and subdivisions that are showing some incredible opportunity right now and have seen their entry points go DOWN relative to 3-4 months ago. Specifically some of the "smaller' communities like Tuscan Hills and Hampton Lakes are showing great inventory and pretty good ROI despite a 5-10% reduction in guest spend. Most of our projections are down a little to be honest but I'd rather meet a well prepared conservative investor than pie-in-the-sky. There's also steady performers like Bahama Bay that will always project around $35k and seeing their entry point drop. An easy starter for new investors if u can get condo financing.

Best of luck my friend.  And welcome to Orlandooooo! :) 

Hi do you think condo and small properties are more lucrative, meaning higher ROI in Orlando that the 5-7 br homes ?

[Steph Prince]

thank you all for your advice.

[Steph Prince]

Quote from @Mike D'Arrigo:

@Dale K Poyser you should always do a stress test analysis at a best case/worst case occupancy rate and daily rental rate to see where your break even is. I also recommend buying something as a STR only if it can carry it's weight as a LTR. That way, if something goes wrong, you have another option.

 I agree, Not sure about that option in Orlando and that is what concerns me.  

[Ryan Ridge]

@Steph Prince there's a lot of resales going up in the older STR communities. Most of them are able to do LTRs. It's the newer communities with HOAs that prevent anything but STRs in them. If you can find a solid home in one of those communities and go all-in on your decor and amenities you can for sure perform well in the STR marketplace depending on how far you are from the attractions.

I'd suggest getting a few STR valuations on different properties like that and start working the numbers to see what you can do. The newer communities are nice, but being able to roll over to a LTR if needed is something a lot of people want and PMs can help with getting those numbers.

[Shawn McCormick]

@Steph Prince There are many opinions about any market, you have to see what your risk tolerance is and have faith that you pick qualified partners to help you in the purchase. Having an agent that knows the right community, a PM that can give accurate pro formas and keep your property in tip top shape, help you get great reviews and solid bookings. 

Orlando has all types of properties from condo-tels, condos, timeshares, townhomes and single family from 3 -14 bedrooms and all classes of communities from just basic to World class 5 star resorts with multiple golf courses and simply amazing amenities (lazy rivers, flo-riders, movie theaters, restaurants, arcades and so much more). So finding your desired demographic while staying within your budget can help narrow the communities you should be looking at. Many don't agree with having an HOA, but in Orlando, that is vital to your success in order to get your guests all of those amenities in a guard gated community.

The area is still growing, new STR projects are still being built and the future is even bigger than most know..check this out. (like this one..https://evermoreresort.com/) so lots of room to grow and be profitable.

Best of luck to you!

[Steph Prince]

Quote from @Shawn McCormick:

@Steph Prince There are many opinions about any market, you have to see what your risk tolerance is and have faith that you pick qualified partners to help you in the purchase. Having an agent that knows the right community, a PM that can give accurate pro formas and keep your property in tip top shape, help you get great reviews and solid bookings. 

Orlando has all types of properties from condo-tels, condos, timeshares, townhomes and single family from 3 -14 bedrooms and all classes of communities from just basic to World class 5 star resorts with multiple golf courses and simply amazing amenities (lazy rivers, flo-riders, movie theaters, restaurants, arcades and so much more). So finding your desired demographic while staying within your budget can help narrow the communities you should be looking at. Many don't agree with having an HOA, but in Orlando, that is vital to your success in order to get your guests all of those amenities in a guard gated community.

The area is still growing, new STR projects are still being built and the future is even bigger than most know..check this out. (like this one..https://evermoreresort.com/) so lots of room to grow and be profitable.

Best of luck to you!

thank you for sharing, will a big community like Evermore shift the market for STR in that area, or is the market big enough to absorb a project of this size?

[Alyssa Mcgaha]

Quote from @Steph Prince:

Quote from @Jay Breitlow:

Hi Steph,

@Tyler Gibson has some great advice here as does @Dale K Poyser. With that in mind there are a few properties and subdivisions that are showing some incredible opportunity right now and have seen their entry points go DOWN relative to 3-4 months ago. Specifically some of the "smaller' communities like Tuscan Hills and Hampton Lakes are showing great inventory and pretty good ROI despite a 5-10% reduction in guest spend. Most of our projections are down a little to be honest but I'd rather meet a well prepared conservative investor than pie-in-the-sky. There's also steady performers like Bahama Bay that will always project around $35k and seeing their entry point drop. An easy starter for new investors if u can get condo financing.

Best of luck my friend.  And welcome to Orlandooooo! :) 

Hi do you think condo and small properties are more lucrative, meaning higher ROI in Orlando that the 5-7 br homes ?

 In Central Florida, single family homes are the way to go. With a pool and more bedrooms the better. More bedrooms = more beds = more people = higher occupancy.

[Shawn McCormick]

Quote from @Steph Prince:

Quote from @Shawn McCormick:

@Steph Prince There are many opinions about any market, you have to see what your risk tolerance is and have faith that you pick qualified partners to help you in the purchase. Having an agent that knows the right community, a PM that can give accurate pro formas and keep your property in tip top shape, help you get great reviews and solid bookings. 

Orlando has all types of properties from condo-tels, condos, timeshares, townhomes and single family from 3 -14 bedrooms and all classes of communities from just basic to World class 5 star resorts with multiple golf courses and simply amazing amenities (lazy rivers, flo-riders, movie theaters, restaurants, arcades and so much more). So finding your desired demographic while staying within your budget can help narrow the communities you should be looking at. Many don't agree with having an HOA, but in Orlando, that is vital to your success in order to get your guests all of those amenities in a guard gated community.

The area is still growing, new STR projects are still being built and the future is even bigger than most know..check this out. (like this one..https://evermoreresort.com/) so lots of room to grow and be profitable.

Best of luck to you!

thank you for sharing, will a big community like Evermore shift the market for STR in that area, or is the market big enough to absorb a project of this size?

I don't believe so, just more options and these will not be competition for the overall individual STR owners. The theme parks are still growing and adding more rides, parks etc so this is just another way to diversify the type of offerings when visiting Orlando.

[Valentina Calla]

It is always a good time to buy an investment property! It is all about how you approach it. The main thing to remember when buying an STR is that you are in the hospitality business. Make sure to present your home in the right way and have a lot of amenities for your guests. Unique properties with multiple bedrooms tend to do the best. I would also invest in hiring a theming company to decorate your property. As long as the numbers make sense it will work!

[Mike D'Arrigo]

There's a real misconception that a STR has to be in a resort/vacation destination which on the surface, makes sense. These markets however, can be very volatile during economic downturns. If you just look at what happened to Cape Coral, FL and Las Vegas during the 2008 crash and in 2002 during the pandemic, they were hit hard. There are a lot of reasons people utilize short term rentals including business travel, non vacation personal travel such as family visits, contract employement (particualrly common in health care), people who have moved in to an area and haven't settled on their permanent living situation. The list goes on. Personally, I prefer non vacation rentals because there is more stability, less seasonality and they tend to generate longer term stays. This is why we've chosen to do STR's starting in Kansas City. KC gets 35M travelers a year who spend $1.4B on lodging and it's not even a vacation destination. On the other hand Polk County, home to Davenport FL gets only 5.2M visitors per year which spend $1.5B on not just lodging but restaurants, shopping, entertainment, attractions etc.

[River Sava]

There is still opportunity in these areas. Would love to connect and discuss what you have researched and offer insight!

[Steven May]

Quote from @Mike D'Arrigo:

There's a real misconception that a STR has to be in a resort/vacation destination which on the surface, makes sense. These markets however, can be very volatile during economic downturns. If you just look at what happened to Cape Coral, FL and Las Vegas during the 2008 crash and in 2002 during the pandemic, they were hit hard. There are a lot of reasons people utilize short term rentals including business travel, non vacation personal travel such as family visits, contract employement (particualrly common in health care), people who have moved in to an area and haven't settled on their permanent living situation. The list goes on. Personally, I prefer non vacation rentals because there is more stability, less seasonality and they tend to generate longer term stays. This is why we've chosen to do STR's starting in Kansas City. KC gets 35M travelers a year who spend $1.4B on lodging and it's not even a vacation destination. On the other hand Polk County, home to Davenport FL gets only 5.2M visitors per year which spend $1.5B on not just lodging but restaurants, shopping, entertainment, attractions etc.

 Agreed with Mike here - Kansas City has been great for Air BNB and short term rentals in general. I personally own one and have helped several our of state investors purchase Air BNB's around Kansas City for the same reason - multiple exit strategies at our price points. Put in a offer today on a 315k house that should be doing 7-8k/mo in slow season and 10k+/mo during the busy season. The house could also cash flow as a long term rental as well but the exponential returns of short term rentals are greater.

[Jessica Wygal]

@Steph Prince you got some great feedback and some interesting points, great post. Any update? Are you still in the research phase? This is something I have been wondering about as well. 

[Scott Esmail]

I personally feel it saturated. There is so many rental by Disney I often see people who own in that area end up renting out long term for much less because there not able to fill it. The daily rate can be so low sometimes I personally. I am no expert in short term but whenever I look into it doesn't seem to work for me.

[Tyler Gibson]

Quote from @Jessica Wygal:

@Steph Prince you got some great feedback and some interesting points, great post. Any update? Are you still in the research phase? This is something I have been wondering about as well. 

 Disney short-term rentals is still a good market but not every property will work. If you focus on larger homes 7 plus bedroom in resort style communities and you invest in high quality design and theming then you'll have a great opportunity to generate a higher nightly rate and outshine the competition.