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!
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.
@Aaron May, thanks for the input! I know property management can be expensive, so I'm sure managing that yourself can save a few bucks and improve your bottom line. I don't live in the Orlando area, so I'm a little hesitant to manage that myself from a distance. Any tips on how to best manage an out of state STR property yourself without the help of a PM?
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.
I just want to say that you have put the management strategies and pitfalls of Central FL into words better in 3 paragraphs than i ever could in 100 paragraphs.
You typed out an excellent way of how people should be managing rentals and STR's in Florida (Central FL in particular) with the help of a type of caretaker or assistant, rather than a piece of crap property manager. From my experience most of them are subpar, and its why i manage all of my own rentals here in Florida.
Question for you: From what i gathered in the other posts, you seem to enjoy being in an HOA. I find that almost all of them down here are horrible to the point where i basically pay $100's of dollars a month to follow a set of rules that dont make sense. I actually skew towards cheaper ones because they are always less hassle and of course save me money. What is your experience with them? And would you mind sharing where in Championsgate you own? I have 3 rentals here as well as living here.
I agree with your advice. Every single development has its own set of rules and regulations.
For anyone reading this post who is investing or is going to invest in Central Florida, my advice would be to make sure you have multiple ways of renting a property within the rules of the HOA. The counties themselves are actually pretty lenient on most things. Its the HOA's that govern a lot of rules & regs. Make sure the home is zoned for STR, long term rentals, there are no minimum stay requirements, and there is parking on the street. Some HOA's don't even let you play music on the back pool area.
I have (unfortunately) read through HOA Docs of almost every community in Championsgate and Kissimmee (for my own investments mostly) until i am blue in the face. Some of the things you cannot do in some of the HOA's around my area is actually laughable. If you need any questions answered feel free to ask and ill try to help as best I can.
@Matt Nico Hi Matt- we have two in the Retreat ( www.heiheivilla.com and www.skylanternmanor.com ) and have been happy with their performance so far . I like the HOA from the standpoint that all of the resort amenities are available to the renters. It's clunky in reunion and others that guests only have access to some of the amenities so I like, and guests like, that it's all included . The daily trash service and the HOA handling all lawn and landscape and irrigation means less painful touchpoints along the way and there is also less possible neglect from other owners that would negatively effect my property and my guests experiences . There are issues too of course but I felt like The Retreat and all it had to offer synced up nicely with our offering, which we feel is top tier.
@Matt Nico Hey Matt thanks for sharing. I am looking to purchase my first rental property in Orlando. Do you suggest long term rentals or short term rentals? My Budget for this Home is 200k. I’ve looked in Clermont, Kissimmee and Davenport. Homes under 200k don’t offer a pool, not sure if that will work for Short term rentals. Let me know what you think thanks!
@Matt Nico Hey Matt thanks for sharing. I am looking to purchase my first rental property in Orlando. Do you suggest long term rentals or short term rentals? My Budget for this Home is 200k. I’ve looked in Clermont, Kissimmee and Davenport. Homes under 200k don’t offer a pool, not sure if that will work for Short term rentals. Let me know what you think thanks!
Hey Frank,
Do you mean you are looking for a home to buy cash under 200k or you are looking to get financing for a home for 200k? You are asking for something that doesnt really exist at that pricepoint. Most homes with pools are at least 250k, with majority being in the $275k+
Feel free to connect and I can try to point you in the right direction.
@Matt Nico thanks connecting now! I was pre approved for a 200k conventional loan with a 3 percent down. I was looking in Kissimmee, Davenport, or Clermont. Homes in that price range I think will be better suited for long term rentals. I do see homes with pools close to Disney priced at 240k and up I can come up with extra cash if needed to make a deal happen just not sure about the short term rental market. Let me know your thoughts thanks
Yeah man unfortunately you are in a tight spot. 2 years ago 200k would have been enough to get something good but today theres just nothing even available for that price point in my area.
My advice to you would be to find some other purchasing power somehow by having someone cosign. Or try to find a different kind of deal. The first one is always the hardest.
As someone who used to have a decent presence in the vacationing areas of Florida, I found that most HOAs are run by people that must be related to Hitler as their demands can be mired in minutiae. They can be unrelenting and focused on small and will feel like a swarm of mosquitoes. Out of 14 HOAs, only 2 were fair-minded toward owners and 0 high-rise HOAs were in that category. They just have too much unbridled power and have nothing else to do in their life.
As someone who used to have a decent presence in the vacationing areas of Florida, I found that most HOAs are run by people that must be related to Hitler as their demands can be mired in minutiae. They can be unrelenting and focused on small and will feel like a swarm of mosquitoes. Out of 14 HOAs, only 2 were fair-minded toward owners and 0 high-rise HOAs were in that category. They just have too much unbridled power and have nothing else to do in their life.
Bill P,
I hear what you are saying. I own homes in 3 separate developments. 1 of them are pretty cool and will listen to what the people of the community have to say. The other is a little bit more strict but still reasonable.
The 3rd one is completely insane. They just do whatever they want to do and dont listen to anybody and what they say in the community. I'm actually considering starting to buy every home for sale in there and then I'll just vote them out of the HOA. The community is small so it wouldnt take much.
Does anyone have a list of which resorts/neighborhoods allow both STR's and LTR's?
Also, has anyone heard any projections as to when Disney is going to increase it's capacity? I know there is talk of opening more hotels in Spring 2021...
Adding to this thread. Has anyone purchased a STR in Encore Reunion in Kissimmee? I have stayed there and like it a lot. They only have 2 property management companies to choose form... can't use your own. Great amenities for all guests. Thanks in advance.
Hi al We stayed in champions gate resort recently ( the villas 5 bed 5 bath) and we loved it . Anyone has experience with the champions gate properties ? Do they rent well with high occupancy rates ? What about the hoa ? How much is it ? Is there a good management company there in Orlando that one could recommend ? @Aaron May thanks so much for great advice ! Looks like you own in Champioan Gate... is there a type of property in your opinion in there that works better ? thanks so much !