Looking to buy in Magic Village…

Realtor · Sorrento, FL (NW of Orlando) · Member since 2015 · 27 posts · 1 vote

Hi All! I’m researching Magic Village Views and Magic Village Yards, to purchase a unit and rent out short term on Airbnb and VRBO. Does anyone on here own a unit in these communities? Or is anyone familiar with the pros and cons of owning? Looking for any feedback to help with research. Specifically, curious if occupancy rates and what other’s experience has been renting these out. Any help is appreciated, thank you!

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Andrew SteffensBusiness Member

Tampa, FL · Member since 2022 · 4k+ posts · 3k+ votes

11mo

Hey Matt - I would proceed with caution still in the Orlando market - it is saturated and nearly impossible to cash flow.

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Matt JamiesonPro Member
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Realtor · Sorrento, FL (NW of Orlando) · Member since 2015 · 27 posts · 1 vote
11mo
both are neighboring communities in Kissimmee, FL area near Disney.
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Andrew SteffensBusiness Member
Tampa, FL · Member since 2022 · 4k+ posts · 3k+ votes
11mo
Hey Matt - I would proceed with caution still in the Orlando market - it is saturated and nearly impossible to cash flow.
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- Mike GrudzienPro Member
  Lender · Eugene, OR · Member since 2019 · 2k+ posts · 1k+ votes
  11mo
  Quote from @Andrew Steffens:
  
  Hey Matt - I would proceed with caution still in the Orlando market - it is saturated and nearly impossible to cash flow.
  
  I agree with Andrew. Carefully run your numbers in advance and be conservative...
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JD MartinBusiness Member
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Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 17k+ votes
11mo
I have a STR in 4 Corners. My occupancy level for the year of available dates (meaning not including down time for repairs/maintenance/other unavailable dates) is 43%. I will probably pick up a last minute booking or two for December so I will hit just under 50% for the year. Outside of holidays my booking rates for a 4/3 3000sf house with a private pool, on a lake, run about 195 for weekend nights & 185 for weekdays. You can do some quick math to figure out it's not making anything right now (in fact it loses money). If I couldn't afford for it to lose money I'd be in trouble with it, but it's 10 minutes from my father's house and serves well for large family get togethers.
There are things I could do to maximize income, that I'm not particularly interested in, including running more specials, dropping my off-season rates, doing more theming, allowing pets, etc. But I don't care about attracting cheap bastards and deal seekers. I have a nice place that I can use when I want, and I am particular about the type of guests that I want so that reduces some of my income. But not perilously - 3 years ago I ran a few experiments on super cheap specials, short night minimums, etc and didn't like the quality or nature of guests I was getting, and I didn't make enough extra money to warrant the approach.
Bottom line is that unless you bought 15 years ago, or buy something really niche (think 7-10 bedroom houses with heavy theming) you need to be prepared to lose money down here right now. There's a ton of inventory and too many bottom feeders willing to give their places away for $89/night.
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Chris Grenzig
Property Manager · Orlando, FL · Member since 2016 · 479 posts · 277 votes
11mo
@JD Martin thank you for your transparency on this, I did a podcast episode with TJ Gibson where we spoke about this. We haven't released it yet, but seems there are a lot of people want to offset their costs of ownership and that effects the whole market. TO be clear, I'm not saying its a bad thing at all, I think its a great thing, but if you're just looking to buy something to only make a profit and cash flow, it makes it very challenging to compete in a marketplace where not everyone has that same goal.
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- JD MartinBusiness Member
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  Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 17k+ votes
  11mo
  Quote from @Chris Grenzig:
  
  @JD Martin thank you for your transparency on this, I did a podcast episode with TJ Gibson where we spoke about this. We haven't released it yet, but seems there are a lot of people want to offset their costs of ownership and that effects the whole market. TO be clear, I'm not saying its a bad thing at all, I think its a great thing, but if you're just looking to buy something to only make a profit and cash flow, it makes it very challenging to compete in a marketplace where not everyone has that same goal.
  
  I think that's a big part of the problem (issue?). Our competition - not in reality, but on paper/on the computer screen where people can't objectively compare what they are getting - is a lot of other people who have owned for many years, don't really keep the places up beyond a bare minimum, and just want to have it full 75% of the time so they can use it in the winter or for holidays. They don't mind letting the place out for $700 for the week, before fees, because they paid $175k for it 12 years ago.
  
  Pictures and reviews help, for sure, but in reality there's no objective way for people who are booking to really compare what they are getting for the money. That's a major weakness of the entire STR model. If you've traveled and stayed in a Motel 6, Budget Inn, or the Marriott, you have a pretty good idea of the differences in quality and amenities and can choose accordingly. With one-off houses, beyond location and maybe some specific amenities, it's really difficult to make great choices just on a screen so lots of people gravitate towards price. They won't necessarily pick the cheapest place - reasonable people tend to be suspicious of super-cheap prices - but they'll hedge their bets with lower-cost rates, which drives everything down. Anyone who has stayed in STRs before has had the experience of picking a place that has had great reviews and the pictures were really nice, but when you get there half the stove burners don't work, the hot tub goes out of order twice and the airport flight path is overhead. Then you think "Man, this place isn't worth this kind of money", and next time you're booking you either go real high or you hedge low.
  
  That problem is amplified where I am because a lot of people are just looking for a place to drop their stuff while they're at the parks all day. We get a lot of guests that never even turn on the TVs or use our pool or turn on the stove. Those people often just want the cheapest price they can get, and there's plenty of cheap price people in this area.
  
  I think it's going to be 5 years or more before we start working through the level of inventory here such that there's any real profit to be made, outside of some real specialty niches. I have a really nice house, on a lake, big (3000sf), with some great amenities, but at the end of the day it's just a house like 5000 other houses. For people who don't care about the lake view or having a fenced yard for their kid, or nice decorating and high-level management service, they're not going to pay my higher prices. We really need the housing market to pick back up and a lot of these cheapo houses to leave the rental market and move into the residential market before we really see a strong enough shift in prices to make things make sense.
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- Matt JamiesonPro Member
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  Realtor · Sorrento, FL (NW of Orlando) · Member since 2015 · 27 posts · 1 vote
  10mo
  Thank you JD, Chris, Mike and Andrew! This is very helpful real world info and I'll be sure to proceed with caution. Have you seen any strategies that have been working for you or other investors you know in Central Florida currently? I'm specifically looking in the Mount Dora/Sorrento area for a fixer and also looking in Davenport/Kissimmee for STR. Looking at both with caution, and just trying to find things that make sense right now. In any case, appreciate all the feedback you gave here, very helpful! If you are seeing any strategies that are working, any thoughts on those would be welcomed as well for sure. Thanks again!
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Matt JamiesonPro Member
OP
Realtor · Sorrento, FL (NW of Orlando) · Member since 2015 · 27 posts · 1 vote
10mo
Leaning away from the STR idea, based on the difficulty in market right now. Unless we find something very niche like you had noted.
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Chris Grenzig
Property Manager · Orlando, FL · Member since 2016 · 479 posts · 277 votes
10mo
@Matt Jamieson you're welcome.
I like the Mt dora and Sorrento areas, I'm not sure how much deal flow there is out there but I think it's a solid area. There is a lot of development in the north Apopka area and into the Sorrento area from what I can see, but I'm not tracking that too carefully also.
Honestly, there is a chance you might be able to buy something new construction with great incentives and get a better deal after accounting for the time and headaches with a fixer upper plus the extra risk of missing things during inspections. We've bought fixer uppers and almost always there is something we miss, sometimes small sometimes large. If there's builders struggling to sell out and they can offer better financing, or upgrades or something else, it might make better sense long term.
And even if the cash flow on paper is worse, your less likely to have the surprises you get with older, fixer upper type properties.
It's definitely not as sexy, but if you're focused on being a realtor or other things and this is a nest egg for retirement, I wouldn't discount it out of hand
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