Group consensus on a deal

Member since 2023 · 11 posts · 2 votes

I found a brand new townhome in Kissimmee with luxury finishes, resort style amenities, the whole nine. The price is $435K and I was thinking of doing 20% down. This townhome is a 5 bed/ 4 bath with 2020 sqft so it's got more than enough room for bigger families while also being versatile to smaller families who may want to use the extra rooms for storing clothes and suitcases. With a $5,000 rebate back at closing I'm looking to buy down the rate by a point. AirDNA gave me the following estimates: $300/night | 65% Occupancy |$71,100 Revenue with this data I feel comfortable making a move on this one. Let me know your thoughts

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Ryan MoyerBusiness Member

Property Manager · Orlando Kissimmee Davenport Salt Lake City, Park City · Member since 2019 · 991 posts · 1k+ votes

I have 12 in the area. The estimates you're getting from AirDNA are way high and out of date. You're not going to rent that place for $300nt at 71% occupancy or anywhere near that with the extreme saturation in both number of properties and quality of property over the last 2 years.

Disney was slow in the offseason but traffic there has bounced back with avengeance. It is ridiculously packed there right now. The problem is the supply and quality of vacation rentals is through the roof. A regular really nice 5 br townhouse with resort amenities might be a top end desirable unit in Cocoa Beach but it's probably going to be bottom 20th percentile in this market.

As an example, this place is available for $135/nt next week. https://www.airbnb.com/rooms/1002836101465378764

And there are thousands of others like it. How does the place you're looking at compare to that?

Cosmic Vacations4.9174 Reviews

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Taylor L.
Rental Property Investor · RVA · Member since 2016 · 5k+ posts · 4k+ votes
2y
Will it cashflow as a LTR? Generally townhomes have associations, have you reviewed their docs as well as the local STR regulations?
1 Reply
Michael Gangemi
OP
Member since 2023 · 11 posts · 2 votes
2y
Quote from @Taylor L.:

Will it cashflow as a LTR? Generally townhomes have associations, have you reviewed their docs as well as the local STR regulations?

Yes it is zoned for STR and LTR. The LTR rate is roughly $3,200/ month but maybe MTR will be a better option at $1,000/ month per room.
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Culin Tate
Rental Property Investor · Maryland / Virginia / Caribbean · Member since 2018 · 53 posts · 43 votes
2y
Keep in mind as you run your numbers that you will need a budget for any renovations and to completely outfit the house as a STR. I find AirDNA ADR's to be a good starting point, but your true profitability will come from managing the property to achieve higher than the average occupancy.
Is this your first STR?
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Andrew SteffensBusiness Member
Tampa, FL · Member since 2022 · 3k+ posts · 3k+ votes
2y
Quote from @Michael Gangemi:

I found a brand new townhome in Kissimmee with luxury finishes, resort style amenities, the whole nine. The price is $435K and I was thinking of doing 20% down. This townhome is a 5 bed/ 4 bath with 2020 sqft so it's got more than enough room for bigger families while also being versatile to smaller families who may want to use the extra rooms for storing clothes and suitcases. With a $5,000 rebate back at closing I'm looking to buy down the rate by a point. AirDNA gave me the following estimates: $300/night | 65% Occupancy |$71,100 Revenue with this data I feel comfortable making a move on this one. Let me know your thoughts
Hey Michael

We manage 80 or so properties in FL mainly in the Tampa area but a few in Kissimmee as well.
When you ran the AirDNA did you use the free version or do you have the paid version where you can see comps?
Kissimmee is very saturated right now and it has been hard to rent, even some of the best properties are empty at low rates. I do not think this is a forever thing, but right now it is tough.

[email protected]813-563-0877
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Michael Gangemi
OP
Member since 2023 · 11 posts · 2 votes
2y
Quote from @Culin Tate:

Keep in mind as you run your numbers that you will need a budget for any renovations and to completely outfit the house as a STR. I find AirDNA ADR's to be a good starting point, but your true profitability will come from managing the property to achieve higher than the average occupancy.
Is this your first STR?

Yes this is my first STR that I would be the owner of, but I've been managing STR's for the last two years. This neighborhood in particular has been on my eye for a little and the time to make a move is now due to most sellers being receptive to seller concessions. This has been allowing us to get creative when structuring offers.
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Bonnie LowPro Member
Lender · Asheville, NC · Member since 2016 · 1k+ posts · 1k+ votes
2y
I would just worry about saturation in Kissimmee. I'm not in that market, but I do see a lot of forum posts and comments from people in that market and Orlando who are really suffering. It always depends on your property, location and how hard you work to market yourself. But if you are operating on really slim margins, you might look into overall availability of properties and occupancy rates (always a good idea anyway).
[email protected]
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Michael BaumPro Member
Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
2y
Hey @Michael Gangemi, I would check with @Shawn McCormick.
Give him the details on which community etc and he can give you an idea. He knows a ton about the area.
2 Reply
Edwin Epperson
Lender · Tampa, FL · Member since 2020 · 202 posts · 116 votes
2y
@Michael Gangemi not to be a naysayer at all (I own two STR's in Davenport, 20 min. W of the parks) and the decline in Disney's popularity as well the extreme COVID restrictions they implemented have really hurt park attendance, ie the STR market as well. Be sure that the long term rental market in the area can support your DTI on the project that way you can quickly pivot. An idea, you could always fractionalize the equity portion (ie bring more money to the table, thus reducing your PITI, and increasing your DSCR). This way whether Short-term or Long-term rentals would make sense.
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V.G JasonPro Member
Investor · Member since 2022 · 3k+ posts · 3k+ votes
2y
Quote from @Michael Gangemi:

Quote from @Culin Tate:

Keep in mind as you run your numbers that you will need a budget for any renovations and to completely outfit the house as a STR. I find AirDNA ADR's to be a good starting point, but your true profitability will come from managing the property to achieve higher than the average occupancy.
Is this your first STR?

Yes this is my first STR that I would be the owner of, but I've been managing STR's for the last two years. This neighborhood in particular has been on my eye for a little and the time to make a move is now due to most sellers being receptive to seller concessions. This has been allowing us to get creative when structuring offers.

Only buy it if you can make it a LTR, and it still works for you. If it does, then give it a roll & make it a STR. You seem very anxious to make a deal, but be prudent.
1 Reply
Chai Xiong
Investor · Orlando, FL · Member since 2012 · 312 posts · 165 votes
2y
I own 5 STR over here in kissimmee, msg me the location and i can give you a better idea if those numbers will produce.
0 Reply
Alice Horn
Property Manager · Kissimmee, FL · Member since 2019 · 445 posts · 266 votes
2y
Quote from @Michael Gangemi:

I found a brand new townhome in Kissimmee with luxury finishes, resort style amenities, the whole nine. The price is $435K and I was thinking of doing 20% down. This townhome is a 5 bed/ 4 bath with 2020 sqft so it's got more than enough room for bigger families while also being versatile to smaller families who may want to use the extra rooms for storing clothes and suitcases. With a $5,000 rebate back at closing I'm looking to buy down the rate by a point. AirDNA gave me the following estimates: $300/night | 65% Occupancy |$71,100 Revenue with this data I feel comfortable making a move on this one. Let me know your thoughts
Airdna is not the best source for accurate data. We use Key Data Dashboard which pulls actual booking numbers from same size units in the area. Feel free to reach out, and we can get you a report so you can compare. Also, do your own research by looking at nearby 5bed listings with similar decor - especially after the holidays since everyone’s calendar will be full for the holidays. Good luck!
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Sarah KensingerPro Member
Real Estate Consultant · OH · Member since 2023 · 2k+ posts · 1k+ votes
2y
Quote from @Alice Horn:

Quote from @Michael Gangemi:

I found a brand new townhome in Kissimmee with luxury finishes, resort style amenities, the whole nine. The price is $435K and I was thinking of doing 20% down. This townhome is a 5 bed/ 4 bath with 2020 sqft so it's got more than enough room for bigger families while also being versatile to smaller families who may want to use the extra rooms for storing clothes and suitcases. With a $5,000 rebate back at closing I'm looking to buy down the rate by a point. AirDNA gave me the following estimates: $300/night | 65% Occupancy |$71,100 Revenue with this data I feel comfortable making a move on this one. Let me know your thoughts
Airdna is not the best source for accurate data. We use Key Data Dashboard which pulls actual booking numbers from same size units in the area. Feel free to reach out, and we can get you a report so you can compare. Also, do your own research by looking at nearby 5bed listings with similar decor - especially after the holidays since everyone’s calendar will be full for the holidays. Good luck!
Airdna does the same by pulling numbers straight off of Airbnb and VRBO. That's why it's so expensive, you're purchasing the rights to the data.
[email protected]330-557-3021
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Sarah KensingerPro Member
Real Estate Consultant · OH · Member since 2023 · 2k+ posts · 1k+ votes
2y
I also would throw in to be very sure this is an area you want to purchase in, and it's an area you can use multiple strategies. For the last 6+ months I've been hearing about the lack of tourists in the Orlando/Kissimmee area and hosts struggling to get decent bookings.
[email protected]330-557-3021
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Alice Horn
Property Manager · Kissimmee, FL · Member since 2019 · 445 posts · 266 votes
2y

Airdna is not the best source for accurate data. We use Key Data Dashboard which pulls actual booking numbers from same size units in the area. Feel free to reach out, and we can get you a report so you can compare. Also, do your own research by looking at nearby 5bed listings with similar decor - especially after the holidays since everyone’s calendar will be full for the holidays. Good luck!
Airdna does the same by pulling numbers straight off of Airbnb and VRBO. That's why it's so expensive, you're purchasing the rights to the data.
@Sarah Kensinger that's correct. The difference is that Key Data Dashboard pulls the rates for bookings, not just the rates for listings - so it is a more accurate snapshot of how the market is actually performing. It's not as well known and it is a highly sophisticated subscription based tool for property managers and others in the STR industry. (also quite expensive, but worth it).
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Joseph ProhaskaPro Member
Investor · Member since 2019 · 3 posts · 1 vote
2y
In terms of using the 5k at closing to buy down your rate, my personal opinion would be to take the cash or have the price reduced by that amount. If it doesn't cash flow at the current interest rate then the margin will probably be too thin with a rate that's a couple of points lower.
If you buy down your interest rate with points, then you are essentially betting that interest rates will not go down in the future, since you will lose those points when you refi (some exceptions exist). So if your plan is to refi in the next 5 years, it might not be worth it to buy down the rate.
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Sarah KensingerPro Member
Real Estate Consultant · OH · Member since 2023 · 2k+ posts · 1k+ votes
2y
Quote from @Alice Horn:

Airdna is not the best source for accurate data. We use Key Data Dashboard which pulls actual booking numbers from same size units in the area. Feel free to reach out, and we can get you a report so you can compare. Also, do your own research by looking at nearby 5bed listings with similar decor - especially after the holidays since everyone’s calendar will be full for the holidays. Good luck!
Airdna does the same by pulling numbers straight off of Airbnb and VRBO. That's why it's so expensive, you're purchasing the rights to the data.
@Sarah Kensinger that's correct. The difference is that Key Data Dashboard pulls the rates for bookings, not just the rates for listings - so it is a more accurate snapshot of how the market is actually performing. It's not as well known and it is a highly sophisticated subscription based tool for property managers and others in the STR industry. (also quite expensive, but worth it).

Yes, it's for bookings as well, that's why people get mixed up on the inclusion of cleaning fees. Sorry I wasn't clear on that.....

[email protected]330-557-3021
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Michael Gangemi
OP
Member since 2023 · 11 posts · 2 votes
2y
I'm thinking as another exit strategy may be padsplit since its already a 5 bedroom home with room to make the living room into a 6th
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Shawn McCormickPro Member
Realtor · Central Florida-Orlando · Member since 2014 · 1k+ posts · 892 votes
2y
Thank you @Michael Baum!
Hi Michael, I would be happy to have a conversation and get some more details, especially which community it's in. This is my market, so not just speculating with advice. I just did a really quick search for townhomes near Disney and couldn't find any 5 beds for that price. This concerns me as it is likely not in any of the top 10-15 communities that I would normally advise to start your search. If it is out of this area, you are likely too far from the parks.
Reach out so we can go over some of the details.
1 Reply
Ryan MoyerBusiness Member
Property Manager · Orlando Kissimmee Davenport Salt Lake City, Park City · Member since 2019 · 991 posts · 1k+ votes
2y
I have 12 in the area. The estimates you're getting from AirDNA are way high and out of date. You're not going to rent that place for $300nt at 71% occupancy or anywhere near that with the extreme saturation in both number of properties and quality of property over the last 2 years.
Disney was slow in the offseason but traffic there has bounced back with avengeance. It is ridiculously packed there right now. The problem is the supply and quality of vacation rentals is through the roof. A regular really nice 5 br townhouse with resort amenities might be a top end desirable unit in Cocoa Beach but it's probably going to be bottom 20th percentile in this market.
As an example, this place is available for $135/nt next week. https://www.airbnb.com/rooms/1002836101465378764
And there are thousands of others like it. How does the place you're looking at compare to that?

Cosmic Vacations4.9174 Reviews
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3 Reply
Carlos Ptriawan
Member since 2019 · 7k+ posts · 4k+ votes
2y
Quote from @Michael Gangemi:

I found a brand new townhome in Kissimmee with luxury finishes, resort style amenities, the whole nine. The price is $435K and I was thinking of doing 20% down. This townhome is a 5 bed/ 4 bath with 2020 sqft so it's got more than enough room for bigger families while also being versatile to smaller families who may want to use the extra rooms for storing clothes and suitcases. With a $5,000 rebate back at closing I'm looking to buy down the rate by a point. AirDNA gave me the following estimates: $300/night | 65% Occupancy |$71,100 Revenue with this data I feel comfortable making a move on this one. Let me know your thoughts
I am pretty sure your cap rate would be 3.5 percent when you calculate correctly , and would achieve DsCR 1.0 only after 40 to 45% down including HOA cost and electricity.

but is okay as long as you like to visit Disney it should be good ; for STR you have to calculate your happiness level as well , if you have kids or spouse that likes to go there , that would be the highest metric :)

1 Reply
Yu Liu
Investor · Tallahassee · Member since 2019 · 249 posts · 93 votes
2y
Kissimmee is the most competitive STR market in the USA so unless that property can beat the 100 nearest properties near you with regard to design, finishes, amenities, etc I would stay very cautious.
I do not mean to scare you but just hoping you quadruple check and confirm your numbers as I know a lot of people struggling in that market. Good luck!
2 Reply
Carlos Ptriawan
Member since 2019 · 7k+ posts · 4k+ votes
2y
Quote from @Yu Liu:

Kissimmee is the most competitive STR market in the USA so unless that property can beat the 100 nearest properties near you with regard to design, finishes, amenities, etc I would stay very cautious.
I do not mean to scare you but just hoping you quadruple check and confirm your numbers as I know a lot of people struggling in that market. Good luck!

This market really meets the definition of overcrowded-oversaturated-oversupply market ; for 2/1 entire home there're 130 listing, cheapest is sixty five per night and their booking is looking good.
with sixty five bucks for entire home it's better to have it as LTR.
in my market for same query there're only nine houses.
1 Reply
Samuel L.
Investor · Orlando, FL · Member since 2021 · 57 posts · 22 votes
2y
Quote from @Ryan Moyer:

I have 12 in the area. The estimates you're getting from AirDNA are way high and out of date. You're not going to rent that place for $300nt at 71% occupancy or anywhere near that with the extreme saturation in both number of properties and quality of property over the last 2 years.
Disney was slow in the offseason but traffic there has bounced back with avengeance. It is ridiculously packed there right now. The problem is the supply and quality of vacation rentals is through the roof. A regular really nice 5 br townhouse with resort amenities might be a top end desirable unit in Cocoa Beach but it's probably going to be bottom 20th percentile in this market.
As an example, this place is available for $135/nt next week. https://www.airbnb.com/rooms/1002836101465378764
And there are thousands of others like it. How does the place you're looking at compare to that?

For comparison purposes with AirDNA, wouldn't it be more accurate to say that place that you linked to rents for closer to $300/night? My understanding is that AirDNA includes cleaning fees in their gross income projections. The listing you shared for two nights is $283 +$339 cleaning fee = $622 / 2 = $311/night.
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Michael Gangemi
OP
Member since 2023 · 11 posts · 2 votes
2y
Would you happen to have a pest control company as well?
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Alice Horn
Property Manager · Kissimmee, FL · Member since 2019 · 445 posts · 266 votes
2y
Quote from @Michael Gangemi:

Would you happen to have a pest control company as well?

We use Action Pest Control, Melissa Carey and we are happy with their service. DM me for the number.
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