Disney World Arbitrage Deal - $63K Revenue Projection - Thoughts?

Question

I just finished underwriting a potential STR arbitrage deal near Orlando and wanted to share the numbers to see what the community thinks.

It’s a 4-bedroom in a gated community, just minutes from Disney and SeaWorld. The landlord is open to corporate housing/STR, which is the hardest part of the battle in this market.

The Numbers:

• Monthly Rent: $3,000
• Projected Revenue (AirDNA): $63.4K
• Expected ADR: $225
• Projected Occupancy: 77%

The layout is an open floor plan and it has a private heated pool, which is a huge driver for families in this area. I’m looking to move on this quickly since the landlord is ready to sign.

If anyone is looking for more boots-on-the-ground info or wants to see the full breakdown, feel free to reach out.

Andrew Steffens · Answer

well...

Youre basically at $5k gross per month.  Back out utilities, maintenance, etc you will be lucky to cashflow $5k per year.  It will cost a minimum $15k to properly outfit that house, and at that price you are likely using used items.

I would not want to work 3 years to own a bunch of used furniture.

Michael Baum · Answer

@Shawn McCormick! Come on in and comment!

And just to be consistent...

Mike Grudzien · Answer

Arbitrage is for "YouTube Gurus" selling courses......

John Underwood · Answer

I agree with Andrew.

Then add that Arbitrage has no extra tax benefits as it is just a job. The owner captures appreciation, depreciation and other tax write offs.

JD Martin · Answer

Exactly. Anyone who thinks that income is reasonable based on the product has no concept of the market here at all.

Ryan Moyer · Answer

A 4br unthemed in Kissimmee they won't even make that much. Not close, honestly.

Shawn McCormick · Answer

Thanks @Michael Baum...I'll join the consensus that arbitrage is not a viable option. I've had two STR owners reach out to me in the past 6 months after the leasee's bailed and now they have a damaged shell of a house and I couldn't list it until they refurnished and made costly repairs.

Also, I see that you have the home listed in the classifieds, but no real information. Need to know what community it is in, photos etc. You say it's near SeaWorld (thats in Orange county that doesn't allow STR) If you are just using an algorithm to get $225 ADR and $63k in revenue and 77% occupancy, thats misleading. What are the real numbers that its' been doing and what does the home need to get it to that point. If its sat empty with no reviews and history...no way it's hitting those numbers.

Laura Winters · Answer

Arbitrage works but very difficult class to make it work. Also, how come you are only making that much with 4 beds near Disney? Your issue is revenue here

Collin Hays · Answer

I was in the Disney area with my wife a couple of months ago. We stayed at a very fine "vacation home" (time share) community for nearly nothing. Couldn't believe it. I don't see how anyone is making any money there.

JD Martin · Answer

This is just crazy talk. Open floor plans and private heated pools are everywhere here. No one is going to convince me of 77% occupancy because you've essentially got 3 months of dead zone anyway (Sep/Oct and parts of May & Nov), one month that's becoming a dead zone (August) which means if you were 100% booked the rest of the year (impossible) you'd still be hitting 75% at the top end. Only unicorns and bottom-bucket prices are going to meet those barriers.

Something I don't follow is: what do you mean by "you just finished underwriting"? What is your level of expertise in the market that gives you credentials such that someone could confidently make a reasonable decision (since I think arbitrage is largely unreasonable anyway)?

Disney World Arbitrage Deal - $63K Revenue Projection - Thoughts?

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