Orlando short term vacation rentals - advice

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Orlando short term vacation rentals - advice

Tyler Erickson
Investor · Farmington, UT · Member since 2016 · 17 posts · 8 votes

Hi everyone, 

I'm considering purchasing a property in Orlando close to Disney World for both personal use and also for investment purposes.  Looking to connect with anyone who already has a vacation rental in Orlando, to get some advice.  Thanks in advance for your help!   

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Aaron May
Rental Property Investor · Grand Rapids, MI · Member since 2019 · 22 posts · 19 votes
5y

Hi Tyler - I understand your hesitation, but the Orlando market lends itself to self managing from a distance better than just about anywhere else. The reason is simple, there are more hospitality professionals in Orlando than anywhere in the country, perhaps the world. Meaning, you can piece together a great ground team, while not paying for services you don't need or want. I have a "Property Manager" who coordinates all cleanings and maintenance, handles ALL renter issue response, 7 days a week, and handles all of the upkeep needed with the property (preventive maintenance, pool care, pest control etc) . In our case, the HOA handles lawn care, trash removal, etc.

This means I get all of the renter response, and all property function coordination, for a few hundred bucks a month and I really just handle the bookings from a distance (i'm based in Michigan). This saves $10,000 - $15,000 a year per property (I have 3 in Florida), and I just have to manage the channels and handle financials and paperwork, which i'd just assume have control of anyways. I would estimate that I have 2-3 hours a week into my side. That's $30,000 - $40,000 net, more, for my little portfolio and well worth the time investment. 

Additionally, the management in the Orlando market usually falls into one of two categories; terrible, inexpensive management that will do anything they have to do to fill up your calendars to jam your property full of guests so they can make their commissions, while allowing your property to fall into disrepair. These companies have very low retention, for obvious reasons, so their model is to essentially milk it for whatever they can before they get fired. The second category would be the good or even great management companies who will take great care of your property and will do a much better job with the guest experience. However, they charge 20-25% commissions on gross rent, and nickel and dime you with fees every step of the way. In the first scenario, you make a gross profit but it will most likely disappear when you consider the wear and tear and the replacement costs associated with that aggressive and reckless approach. In the second scenario, your house is in better hands so the asset is cared for but the management company soaks up all of the profit. 

Either way, these types of purchases should be for a lifestyle investment (somewhere to escape to a few times a year, and pays its own bills when you aren't there), or a cash flow investment (in which case, you need to consider self management, in my opinion).. You cannot buy these properties with any assumption made for appreciation. They don't float up and down with the rest of the real estate market, they feel more like businesses than they do homes in that regard. 

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  • Elizabeth Shelby
    Investor · Kissimmee, FL · Member since 2016 · 42 posts · 24 votes
    7y

    Thank you @Ola Dantis.  

    @Tyler Erickson the way you stand out is by having a well furnished home, plenty of extra amenities, for instance a games room with heat and air so it can be used all year round in comfort by your guests, most homes have put a pool table, a foosball and maybe a couple of other things in the garage.  The problem with that is in the summer its too hot in the winter its too cold.  

    The furnishings need to be good quality not the typical vacation rental furniture.  Comfortable beds. Updated appliances, yes guests on a budget do want to be able to cook and especially if you get snowbirds who descend any time between October and March and stay for weeks at a time, they don't want to eat out a lot during their stay.

    Xbox and lots of games to keep the children (big and small) amused, there will be times when they are having a day off from the parks, or the weather is bad and parents still need to keep their children entertained without too much effort.  

    Computer, printer, walkie-talkies to take the parks (not everyone wants to use their phone when abroad because of the cost), efficient ac units, large washing machine and dryer (will save you money on electricity and water).  

    Basic provisions such as soap, shampoo, toilet tissue, kitchen roll, dishwasher soap, detergent, even in small quantities should be available upon arrival (that said you need to make it clear they are booking a self catering vacation.  Offer them a welcome with coffee, bread, butter, etc, for a fee.

    Above all it needs to be clean and well maintained.

    As @Melissa Jolley stated the home she stayed in was dirty, a dirty home does not get you repeat guests. Your aim should be to get as many repeat guests as possible and if your home has what they want they will use their damage deposit as rental deposit for their next trip.

    An absolute must is professional photographs, pictures sell your home to those overseas or out of state.

    These are just some of the things you can do to make yourself stand out from the others.




    6Reply
  • Paul Sandhu
    Investor · The worst town to live in, KS · Member since 2016 · 4k+ posts · 4k+ votes
    7y

    @Melissa Jolley Sorry your Airbnb experience wasn't that great. In the ad for my STRs, it says "All supplies such as towels, linens, soap, detergent, t.p. & cleaning supplies are stocked. You just need to bring your clothes and groceries, everything else is there."

    2Reply
  • Tyler Erickson
    OP
    Investor · Farmington, UT · Member since 2016 · 17 posts · 8 votes
    7y

    Thanks @Elizabeth Shelby, and @Erik Kuhi,very helpful.  

    Anyone have analytics that show market saturation numbers? something like total STR capacity, STR vacancy rates, etc.? ........or know where I could obtain something like that?

    0Reply
  • Melissa Jolley
    Rental Property Investor · Niceville, FL · Member since 2019 · 89 posts · 62 votes
    7y

    @Tyler Erickson If you have a Realtor® where you are hoping to buy- have them request that information if the property is listed. You can ask for NOI, and to see all reservations. I recommend going back to 2018. ****Take these with a grain of salt....or two. Some agents or owners will try to fluff numbers. If the property is off market and you are dealing directly with the owner- don't be shy about asking for all of this. In my area of NWFL it is common for STR's to be listed during off season....the good agents go ahead and post this information on the MLS.

    As mentioned previously, marketing/photos/furnishings have a HUGE impact on bookings. Don't be afraid to lower the price a little when you see a break in the calendar. That is the most effective method to make sure you stay booked. Observe when the slow times are and make sure you are priced right. Check out the podcasts that mention STR....there are some awesome strategies discussed by folks who have been in the business for a long time and newbies.

    2Reply
  • Kyle MccawBusiness Member
    Property Manager · Keller, TX · Member since 2011 · 1k+ posts · 1k+ votes
    6y

    @tyler erickson As for data....I have been using Airdna to research. I've been looking to invest in the Disney World area. Specifically Windsor Hills area. 5-6 bedroom single family house. Please keep this chain going.

    McCaw Property Management4.4900 Reviews
    WebsiteView Page
    3Reply
  • Melissa Wesling
    Investor · Chicago, IL · Member since 2020 · 148 posts · 97 votes
    6y

    Lots of good advice already mentioned here.  I agree that it is important to have an agent knowledgeable in the vacation rental market to make sure you are looking in a desirable neighborhood with rental friendly regulations.  Let me know if you'd like a referral for an agent.  The Orlando area is destination that brings in multigenerational travelers, so anything above a 5 bedroom home is desirable within a few miles of Disney and is considered prime real estate for vacation rentals.  To compete, make sure your property is updated and has a pool.

    2Reply
  • Alice Horn
    Property Manager · Kissimmee, FL · Member since 2019 · 446 posts · 266 votes
    6y

    @Kyle Mccaw you are absolutely on the right track with Windsor Hills. Your best bet is a well run and maintained community close in to Disney. If you can scoop up a property at a good value and renovate it to a high standard so it photographs well, you will have a very solid investment.

    1Reply
  • Tyler Erickson
    OP
    Investor · Farmington, UT · Member since 2016 · 17 posts · 8 votes
    6y

    thanks!  Why Windsor Hills?  Obviously a short drive to the parks is best, but there are a lot of places that have that.  Anything in particular that makes Windsor Hills better than other areas?   

    0Reply
  • Alice Horn
    Property Manager · Kissimmee, FL · Member since 2019 · 446 posts · 266 votes
    6y

    Windsor Hills has kept their amenities up to date.  Some of the older communities have great buys and these homes can book well also, if they are renovated to a high standard. But WH has the whole package, nice amenities with a waterslide and plenty of play areas for the kids, lovely landscaping and top-notch security at the gate. Happy to provide some community comparisons if you're interested!

    1Reply
  • Alice Horn
    Property Manager · Kissimmee, FL · Member since 2019 · 446 posts · 266 votes
    6y

    @Tyler Erickson just saw your earlier post:  Anyone have analytics that show market saturation numbers? something like total STR capacity, STR vacancy rates, etc.? ........or know where I could obtain something like that?

    Yes. We can help with that. Just let us know exactly what you are wondering about and for which areas. 

    0Reply
  • Julian Sage
    Property Manager · FL · Member since 2018 · 104 posts · 36 votes
    6y

    @Alice Horn Pricelabs Market Report

    0Reply
  • Alice Horn
    Property Manager · Kissimmee, FL · Member since 2019 · 446 posts · 266 votes
    6y

    @Julian Sage will look in to that!

    1Reply
  • Kristyn Morgan
    Investor · Utah County Area · Member since 2020 · 11 posts · 4 votes
    5y

    Tyler--I am curious if you have invested in the area? We are considering buying our next investment property in the Orlando area as well, however the STR situation seems more complex. Obviously the last year has been atypical but I'm curious if you are moving forward.

    1Reply
  • Thomas Wang
    Rental Property Investor · Broomfield, CO · Member since 2017 · 64 posts · 40 votes
    5y

    @Elizabeth Shelby

    Can we talk sometime?

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

    Any Orlando Real Estate Agents on this board that specialize in STR in the area(s)? Would love to connect if so.

    0Reply
  • Amit Desai
    Member since 2020 · 56 posts · 22 votes
    5y

    @Michael Stokes please contact @SerenaKim she is great. She just helped me to get one SFG in Windsor Hills.

    3Reply
  • Ezra Benjamin Harris
    Investor · Orlando, FL · Member since 2020 · 17 posts · 3 votes
    5y

    @Michael Stokes Try Irene Morgan at Market Connect Realty; she's a bit newer but works crazy hard

    http://irenemorgan.marketconne...

    0Reply
  • Tyler Erickson
    OP
    Investor · Farmington, UT · Member since 2016 · 17 posts · 8 votes
    5y

    Kristyn, I haven't purchased a property in Orlando yet, mostly due to the crazy year we've had, but I do intend to move forward with it.  I'll likely stay there myself for vacations, while also renting it out.  I've been talking with @Alice Horn about different areas, options, pricing, fees, what to look for etc. if you're interested in connecting with her.  :) 

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

    Happy to chat, @Kristyn Morgan! Just let us know how we can help for Orlando vacation rentals.

    Have a fantastic holiday season!

    0Reply
  • Valentina Naumenko
    Property Manager · Orlando Kissimmee, Daytona Beach & Cocoa Beach · Member since 2016 · 331 posts · 166 votes
    5y

    @Tyler Erickson? My vacation home

    In Kissimmee always had less that 5% vacancy. As an owner I am more flexible in adjusting the rates to fill the gaps and etc. all other homes we manage are at 70% occupancy rate in average in the covid year. 

    1Reply
  • Keith Courtney
    Real Estate Brokerage/Vacation Homes/Short Term Vacation Home Rental Marketing · Orlando, FL · Member since 2013 · 159 posts · 127 votes
    5y

    A couple of quick comments regarding buying a short term rental here in the Orlando area -

    I recently helped an investor buy a vacation home here.  It took some digging before we found the right one for him.  I contacted one realtor about a home that in the listing description it stated "excellent rental income".  When he sent me the numbers, they were gross rental income numbers.  They included 13.5% sales tax and damage deposits.  When I deducted those numbers from the gross rental income numbers, the resulting number was not "excellent rental income".  

    I have also heard from sellers that their occupancy percentages even during COVID-19 were 70-80%.  I handle the marketing of a select relatively few really nice short term rentals in some of the best resorts here.  The occupancy percentages for these homes are not running that high. When I dug into their numbers, I discovered that their occupancy percentages were 70-80%.  However, I also discovered their nightly rates were drastically reduced.

    My point with both of these situations is make sure you know the whole story with the numbers you are given.  They can be deceiving.

    My other point is I don't put a lot of faith in AirDNA numbers or general market studies.  I think you have to specifically analyze each specific home you are contemplating buying. A good example of this is in Reunion, which is a beautiful resort. My analysis of homes in it is it's hard to make money with a 5 or 6 bedroom short term rental in Reunion, yet the large 10+ bedroom homes can be very profitable if done correctly.

    Keith

    4Reply
  • Aaron May
    Rental Property Investor · Grand Rapids, MI · Member since 2019 · 22 posts · 19 votes
    5y

    I own and self manage two homes in Champions Gate and intend to buy a few more over the next 5 years or so . I agree that self managing with the help of a local care taker is the best way to maximize return on investment and cash flow . I also believe most full service management companies in the area just look at the homes they manage as commodities and will do just about anything to sell the inventory, meaning sketchy guests, parties, and rates that are so low they welcome trouble . I’ve been pleased with the performance so far and look forward to seeing what happens when the theme park crowd is back in full force . I feel that these investments are a great hedge against the inflation period we’re probably entering as well.

    3Reply
  • Melissa Wesling
    Investor · Chicago, IL · Member since 2020 · 148 posts · 97 votes
    5y

    @Kristyn Morgan @Michael Stokes searching for a property to use as a short-term vacation rental property in the Disney area can be complex, so it is recommended to use a Realtor that is experienced and knowledgeable about the rental rules and regulations in the area to help you find a property in a rental friendly neighborhood.  You have requested Realtor contacts, and I have a recommendation so reach out if you are still looking!  To compete, you'll need a property that has updated amenities and located within a few miles from the parks and a property with a south facing lot seems to book at a higher rate :) 

    0Reply
  • Tyler Erickson
    OP
    Investor · Farmington, UT · Member since 2016 · 17 posts · 8 votes
    5y

    @Keith Courtney, thanks for the tip. That makes a lot of sense to me. I've heard from many that STR property occupancy rates are still high, but I've been kind of skeptical when I heard that given the economic climate we're in and considering both Disney and Universal have dropped park occupancy rates to around 25% or so. I know many on property Disney hotels are still closed as well. There are definitely many input numbers to consider, and at the end of the day, the bottom line number is what really matters.

    0Reply
  • Tyler Erickson
    OP
    Investor · Farmington, UT · Member since 2016 · 17 posts · 8 votes
    5y

    @Valentina Naumenko, thanks for the input!  Have you had to drop your nightly rate to keep your occupancy rate high? 

    1Reply
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