Kissimmee FL - STR Analysis

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Kissimmee FL - STR Analysis

Michael Stokes
Rental Property Investor · Winter Garden, FL · Member since 2013 · 46 posts · 22 votes

Hello everyone, I am VERY new to real estate investment, and tend to be very conservative when it comes to any investing but I am very interested in real estate and have the capital to invest. I live in CT but would like to enter the STR game and of the places that are hot I am most interested in Orlando -- I know the area and find myself already down there multiple times per year.

Since I would be remote, I am likely going to work with a management company (at least year one) so hope to have booking/cleaning/maintenance taken care of by the company.  Since I am not local I am trying to optimize my strategy for looking into and securing a property.  I have spent a few weeks on Realtor, AirBNB, and other sites trying to compare costs with the approximate rent I could expect nightly.

With my conservative nature I was a bit hesitant to move forward with anything yet -- I am seeing a lot of condos in nice areas with amenities (saving me having to get a property with a pool) that are in the $150-$200k price range. I haven't found the exact neighborhoods on on AirBNB, but I am seeing a lot of properties being rented for $60/night. If I assume a 50% occupancy rate, that would be $900/month less the 20% management fee would net me $720/month, with the mortgage and utilities and HOA coming in closer to $1400/month.

I wanted to reach out to see if I am a) looking in the wrong areas of Orlando when evaluating $60/night on an AirBNB rental, b) spending too much on a condo to come in at 1400/month and expecting to turn a profit in Orlando, or c) looking into a condo when I should be looking at a single family home to turn a profit?

Thank you in advance for any guidance or suggestions!

-Mike

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Holly Kurtz
Member since 2018 · 13 posts · 10 votes
7y

Mike, I live near Kissimmee and also recently looked into STRs there. I am also similarly cautious and assess everything related to real estate investing against the much easier alternative of leaving that money parked in mutual funds/index funds. My conclusion was similar to yours in that I just don't think Disney area vacation rentals are a great investment right now. I have looked at the financials of several properties and also toured some places with a Realtor, based on recommendations from a property manager who's been in the business over 20 years. The problem is that the HOA fees and hidden additional fees tacked on by the developments are so high that it's hard to make any money. Yet you need to buy in these specific developments (all relatively close to Disney) with lots of amenities because that's what vacation renters expect. Occupancy is also quite seasonal and tied to school holidays. Some of the properties I looked at were netting $40 a month-or losing money. And I did not see any with 50% occupancy rates. The other wrinkle is that this property manager told me that you need to get a place with its own pool-as renters expect that. (It's a little splash pool.) And the place should also be updated-e.g. granite or better counter tops in the kitchens, bathrooms, etc. All of that adds to the cost. The property manager I spoke to was Stephen Behlor. The Realtor I worked with was Raquel Ells.

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  • Melissa Wesling
    Investor · Chicago, IL · Member since 2020 · 148 posts · 97 votes
    5y

    @Michael Stokes in the Orlando area, anything within a few miles of Disney is considered prime real estate for vacation rentals. If you are concerned with the maintenance factors of a private pool, you may want to consider a resort-like neighborhood that has pool amenities included. However, as mentioned above, be aware of the HOA costs, rules and regulations. There are certain neighborhoods in the Orlando area that are not rental friendly. It is important to have a realtor that is knowledgeable of the short-term vacation rental rules and regulations in the area to help you find the right property that meets your investment goals. I have a recommendation if you are looking! Best of luck with your search.

    1Reply
  • Valentina Naumenko
    Property Manager · Orlando Kissimmee, Daytona Beach & Cocoa Beach · Member since 2016 · 331 posts · 166 votes
    5y

    Greetings. Not every community allows vacation rentals. I my blog, I presented a complete list of the locations zoned for STR. Also, I can help with the analysis of the specific property you may consider. Hopefully it helps.

    0Reply
  • Arthur Neves
    Rental Property Investor · Orlando, FL · Member since 2017 · 56 posts · 33 votes
    5y

    Hi @Kristyn Morgan , 

    I think I can say I had mixed experiences. Mostly the cash flow and occupancy is very good here in Kissimmee, where I own 3 STR right now. Of course, COVID have broke that good flow for me, however, I am assuming this is a once in a life time event, we will probably not got through again. During COVID I took the time to upgrade my units, and actually am just finishing a full renovation in one condo at Windsor Hills. That community is one of the most established around here, and their prices in there didn't fall that much, even during COVID, which is positive.

    Let me know if you have specific questions. I know some good PM in the area and cleaners too to send your way if you want. 

    2Reply
  • Courtney Bass
    Realtor · Orlando, FL · Member since 2018 · 56 posts · 28 votes
    5y

    @Arthur Neves (and anyone who cares to respond) I too would appreciate hearing more about your experience w STR's around Disney. Every time I analyze for potential buyers/investors, it's most appealing to those who are happy getting a vaca property that pays for itself. I've spoken to many PM's, small to large- some do partial svc while others do it all (mktg/tour mgmt too) and by the time you pay all the expenses & fees- there's nothing left. Or at least not the CASH FLOW most investors seek.

    I get that the ones making money are self-managing to some degree, but that's not an option for many (or undesirable). 

    I frequently hear Storey Lake, Windsor Hills and the (new/upcoming) Windsor Island are solid. There are SO many communities. I have buyers wanting new construction in Margaritaville- and they've sold out (new phs coming- but units don't have private pools). The 2 "preferred" (use them or give up amenities) PM groups won't share numbers to help investors determine whether it makes sense.  

    Anyway, I'd love to hear from those creating cash flow in this STR market- the where, what, who & how.

    1Reply
  • Sandrine Li
    Member since 2021 · 12 posts · 0 votes
    5y

    @Courtney Bass like you, I would like to hear some of people's experience with STR around Disney nowadays. I also hear great things about the new Windsor Island Resort!

    0Reply
  • Tyler GibsonBusiness Member
    Real Estate Agent · Orlando, FL · Member since 2017 · 1k+ posts · 2k+ votes
    5y

    @Courtney Bass @Sandrine Li Right now there is so much pent-up demand that it is like shooting fish in a barrel for STR owners. Bookings are crazy right now. You are right Storey lake is a good community but inventory is really low. Windsor communities are really good too but again low inventory. MY perspective on Margaritaville is that it is for people that want to own in Margaritaville and offset the cost of ownership. It is not for Investors.

    People that are truly turning a profit are self-managing. or they have their marketing on point and are able to get direct bookings and not pay our AirBnB or VRBO. I feel that most buyers do not fall into the self-manage or direct booking category so often times they will need to be content with a property that pays for itself. 

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    2Reply
  • Sandrine Li
    Member since 2021 · 12 posts · 0 votes
    5y

    @Tyler Gibson Thank you! 

    0Reply
  • Arthur Neves
    Rental Property Investor · Orlando, FL · Member since 2017 · 56 posts · 33 votes
    5y

    My strategy has being to manage the bookings myself only on Airbnb, which I have lots of automation around.

    And hire a PM, that I pay a flat fee, so they do the Check-in and out inspections, and manage the cleaning schedule, and call outs.

    They charge me about $125 flat fee per month

    2Reply
  • Sandrine Li
    Member since 2021 · 12 posts · 0 votes
    5y

    @Michael Stokes did you end up finding your investment in Orlando? I’m now starting there, so interested in hearing your experience!

    0Reply
  • Sandrine Li
    Member since 2021 · 12 posts · 0 votes
    5y

    @Arthur Neves can you tell me how much you pay per cleaning and how big your STR are? I had a PM quote me $350/month for partial management flat fee (no bookings, just check ins/check outs) and cleaning fee for 5 beds. Is this a good deal?

    0Reply
  • Michael Stokes
    OP
    Rental Property Investor · Winter Garden, FL · Member since 2013 · 46 posts · 22 votes
    5y

    @Sandrine Li I never ended up investing in Orlando. A lot changed since I first wrote this post actually. I ended up with properties in TN and AL and I am 100% self managing. I couldn’t find anything in Orlando that had returns that were comparable to those other markets.

    With that said the appreciation and bidding wars in those markets is insane right now, and I did start lightly looking into Orlando again. I am trying to focus on larger properties in STR friendly neighborhoods and ideally want it to be rent ready (or very close) when I close.

    Have you found any specific communities that you are researching?

    0Reply
  • Arthur Neves
    Rental Property Investor · Orlando, FL · Member since 2017 · 56 posts · 33 votes
    5y

    @Sandrine Li $350 is very expensive.

    Mine is a good value I think, not the perfect PM, but they never are.

    Cleaning they charge me 95$ in my condo 3bed2bath

    I charge the guests $100, as I include some extra amenities like shampoo, etc.

    Overall, I think my opinion is that if you have a property in Windsor Hills or Storey lake, which is where I have mines, it is hard to lose money.

    Unless you pay 20% for a PM.

    Another tip, I use beyondpricing for the nightly rates, they only charge 2%, and it is very worth it, as they adjust prices per day. I always get more than the 2% I pay them.

    I also use hostools for message automation. So I have a very little overhead on my side.

    3Reply
  • Sandrine Li
    Member since 2021 · 12 posts · 0 votes
    5y

    @Michael Stokes i am just starting to look in both resort and non-resort communities. Emerald Island, Windsor Hills, Paradise Palms... I also heard about Windsor Island (new development), but honestly still looking at what my options are. Definitely looking for something that would cash flow more than break even.

    0Reply
  • Sandrine Li
    Member since 2021 · 12 posts · 0 votes
    5y

    @Arthur Neves thank you for sharing your experience! I hear Storey Lake and Windsor Hills are nice. I was wondering though, with so many rentals around you and in the same great resorts, don’t you find it hard to compete against others and make sure your vacancy is low? 

    0Reply
  • Jason Buxx
    Rental Property Investor · Phoenix, AZ · Member since 2018 · 6 posts · 7 votes
    5y

    What kind of permitting does one need to run an STR exclusively using Airbnb and VRBO in Kissimmee? Is it just the DBPR license and the city use tax license??

    0Reply
  • Alice Horn
    Property Manager · Kissimmee, FL · Member since 2019 · 446 posts · 266 votes
    5y

    @Sandrine Li great to see your post! You are correct that competition is strong, however both of the resorts are close to Disney and that is a plus! Location, location comes first. Additionally, getting strong occupancy and revenue will depend on a few key factors:

    1. Pricing - must be watched closely to ensure you are maximizing revenue for the unit. We use dynamic (demand based) pricing, and check in on rates at least several times a week and sometimes daily. Sometimes just a few dollars will make a difference in driving bookings to your unit.

    2. Decor - does your unit stand out? Themed bedrooms, splashy game rooms, accent colors and more make a huge difference. Additionally, furniture should look current and new, both in photos and in person. No one wants to go on vacation and feel like they are in Grandma's house (except maybe Grandma).

    3. Pool homes - always book better than homes with no pools.

    4. Photography - must be extremely professional and polished. 

    There are many other factors that drive bookings but these are a great start. Frankly the biggest challenge right now is the intense demand for homes with investors. Feel free to reach out anytime for creative ideas to identify a home and resort community.

    0Reply
  • Tiffany Kho
    New to Real Estate · San Francisco · Member since 2021 · 27 posts · 16 votes
    4y

    Is there a way to see if a community/neighborhood allows STRs without a realtor? Is there a website or zoning map you can check out? Do all STRs still require a special permit even if they're properly zoned? 

    I'm in the beginning stages of researching Florida, and am curious about the STR regulations there.

    0Reply
  • Melissa Wesling
    Investor · Chicago, IL · Member since 2020 · 148 posts · 97 votes
    4y

    @Tiffany Kho Typically the city government website will describe their short-term rental regulations. You can type in "short-term rentals" in the search bar or look under "departments" for the "planning" or "zoning" departments. If you are looking near Disney World, you'll want to look into Kissimmee and Davenport as they are STR friendly.
    Often you will need a permit or registration when an area is zoned for legal STRs. 
    There are many areas of Florida that are STR friendly, and if you do work with a realtor who is knowledgeable about their vacation rental market, they can help you find a profitable property in the "sweet spot" of that market.   

    0Reply
  • Chai Xiong
    Investor · Orlando, FL · Member since 2012 · 312 posts · 165 votes
    4y

    I have about 5 STR here.. the market shows 45k STR in this area just FYI lol

    1Reply
  • Tiffany Kho
    New to Real Estate · San Francisco · Member since 2021 · 27 posts · 16 votes
    4y

    I see. I was considering Kissimmee because it seems somewhat hurricane safe. So you still need a permit even in areas zoned for legal STRs? Are they difficult to get? Is there a cap on them?

    1Reply
  • Valentina Naumenko
    Property Manager · Orlando Kissimmee, Daytona Beach & Cocoa Beach · Member since 2016 · 331 posts · 166 votes
    4y
    If property is zoned for STR, obtaining a business license is super simple and it costs $30 per year. Don’t forget about a hotel license that is required by the state of FL. Originally posted by @Tiffany Kho:

    I see. I was considering Kissimmee because it seems somewhat hurricane safe. So you still need a permit even in areas zoned for legal STRs? Are they difficult to get? Is there a cap on them?

    0Reply
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