Which STR Strategy Would You Choose? Orlando/Kissimmee

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Which STR Strategy Would You Choose? Orlando/Kissimmee

Alex Boyce
Winter Garden, FL · Member since 2016 · 28 posts · 10 votes

Hey BP,

I'm in the market to purchase my first Short Term Rental. I live in Orlando and want to invest locally. I have $75K to invest and pre-approved for $325K purchase. I've done quite a bit of research but realizing I need to narrow down on my strategy and wanted get some advice between these various paths:

1. 200-250K Townhouse in desirable community like Windsor Hills / Paradise Palms. Well within my budget and could very comfortably carry this if needed, as well as have extra cash to make the rental stand out. However, these tend not to appreciate and have high HOA costs. From what I've seen it looks like these still cash flow well though.

2. 250-275K Single Family 3-4BR house that needs work. I'll be able to customize the house to stand out, however these tend not to be in desirable areas / slightly further away from Disney, and I may not have enough to do much with (50K down + 15K furniture leaves 10K for rehab, excluding any holding costs). Also, communities with no/low HOA's typically have no amenities. However this would be the option with the most appreciation.

3. 325K Single Family 5+BR house. The kind of house I'd expect to perform the best is the huge 2800+ SQFT, 5+BR pool home. The problem is any house like this in a desirable area like Windsor Hills is easily over 400K. There are some for this price in other areas like 27 or Davenport, but I'd be at the very top of my budget, in a further market, with little leftover to make the place unique. 

Looking forward to your thoughts. Thanks!

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Marc RiceBusiness Member
Real Estate Agent · Columbus Cleveland Dayton, OH · Member since 2018 · 2k+ posts · 1k+ votes
5y

@Alex Boyce

I’ve found studio-1-2 beds do the best as STRs in my local market due to high volume off small groups traveling, especially with covid I’m glad we stuck to that strategy.

I’d recommend talking to some other hosts in your area and looking at similar properties on Airbnb that you’d be buying to see numbers.

There’s appreciation, cash flow, rentability to consider. What if that local city prevents STRs, will you have a backup as a LTR?

[email protected]614-363-2787
Marc Rice | Investor Friendly Agent at Reafco Tailwind Team574 Reviews
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  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    5y

    I think long term you will be happiest with performance of option 3.

    1Reply
  • Erik Stenbakken
    Investor · Nortnern Colorado · Member since 2020 · 157 posts · 131 votes
    5y

    @Alex Boyce First question for you to answer is *What's your goal?*

    If your goal is a 10 year equity play, your answer may be vastly different than "cash flow next year." One is not inherently better than the other, just different. Do you want to add another every 3 months (which seems to be all the rage) or pay down equity and purchase once you've banked another $75k?  Clarify your goal and timeline. That may make all the difference in what you do. 

    1Reply
  • Marc RiceBusiness Member
    Real Estate Agent · Columbus Cleveland Dayton, OH · Member since 2018 · 2k+ posts · 1k+ votes
    5y

    @Alex Boyce

    I’ve found studio-1-2 beds do the best as STRs in my local market due to high volume off small groups traveling, especially with covid I’m glad we stuck to that strategy.

    I’d recommend talking to some other hosts in your area and looking at similar properties on Airbnb that you’d be buying to see numbers.

    There’s appreciation, cash flow, rentability to consider. What if that local city prevents STRs, will you have a backup as a LTR?

    [email protected]614-363-2787
    Marc Rice | Investor Friendly Agent at Reafco Tailwind Team574 Reviews
    WebsiteView Page
    3Reply
  • Valentina Naumenko
    Property Manager · Orlando Kissimmee, Daytona Beach & Cocoa Beach · Member since 2016 · 331 posts · 166 votes
    5y

    Hi Alex. I would go with option 2. I am managing vacation homes for 10 years so far. Townhouse can't compete compete with condo hotels Orlando offers and 5+ homes require way to much maintenance. 

    1Reply
  • Piero Millares
    Property Manager · Greater Orlando Area · Member since 2020 · 4 posts · 1 vote
    5y

    Hey Alex, 

    Short Term Rental Property Manager of over 5 years in Orlando here.

    I've ran numbers on all 3 of these scenarios and in terms of cash on cash your best option here is the Windsor Hills townhome. Historically the units there perform great (mainly due to the waterpark and distance to Disney) and at the price they list you'll find the best return through those. 

    I would avoid homes that are further from Disney (Davenport, 27) because they tend to perform lower unless they're very high end and in a great community. I would also avoid low and no HOA communities, HOA's are there for a reason and help preserve as much property value. You should see the condition these homes with no HOA's are in at times, you'll be spending more on repairs from bad guests that HOA's can turn down at the gate.

    I can share the numbers I've ran before with you if you'd like just send me a PM!
     

    0Reply
  • Alice Horn
    Property Manager · Kissimmee, FL · Member since 2019 · 445 posts · 266 votes
    5y

    Good morning @Alex Boyce!

    We are property managers with 85 properties in Kissimmee, Davenport and Orlando so we have a good perspective on these markets. You're on the right track with your questions. In general, we recommend homes in gated amenitized communities because they are more desirable with most travelers and also provide better security and services. I would suggest you start be analyzing Option 1, the townhouse as compared to Option 3, 4-5 B/R home in a slightly less expensive community. In both cases, a pool is a must, especially now during the pandemic. Take a look at Windsor Palms, Emerald Islands, Paradise Palms, Bella Vida as well as Windsor Hills. In the older resorts, you will be able to find appreciation by purchasing a home in need of upgrades and decorating to a high standard. 

    We are happy to provide analytics and projections on any of these options once you have narrowed your search. Enjoy the search!

    2Reply
  • Keith Courtney
    Real Estate Brokerage/Vacation Homes/Short Term Vacation Home Rental Marketing · Orlando, FL · Member since 2013 · 159 posts · 127 votes
    5y

    @Alex Boyce

    I don't think you should buy anything now based on your financials. You should not buy a SFH now because, after paying the 20% down on your loan, you are not going to have enough cash left to adequately upgrade and renovate a single family vacation rental that has good investment potential. Regarding townhouses and condos - I have witnessed condos and townhouses here taking a bigger hit on their rentals than SFHs due to COVID-19. I think one of the main reasons for that is a lot of SFH owners have cut their rental rates so that they are not too much higher than the rates for a condo or townhouse. The prices on condos and townhouses have softened quite a bit, and I think that will continue for a while.

    There is a lot more potential income in a single family vacation rental than a condo or townhouse.  I would be patient until you have more cash to finance your loan and adequately renovate a home.  The right renovations or lack of are a major factor effecting whether a vacation rental is profitable or not.

    Keith

    0Reply
  • Luke Rorech
    Real Estate Agent · Greater Tampa Bay · Member since 2017 · 392 posts · 290 votes
    5y

    @Alex Boyce Nothing wrong with holding onto your cash for the time being in order to make sure you're making the best choice for your own goals. If you do decide to move forward, @Alice Horn has been extremely helpful on questions that I've had and has extensive knowledge in the area.

    Best of luck.

    0Reply
  • Alice Horn
    Property Manager · Kissimmee, FL · Member since 2019 · 445 posts · 266 votes
    5y

    @Luke Rorech thanks for the shout out! Timing the market is always tricky in real estate, as it is with any investment strategy. With sufficient due diligence and careful projections based on booking history for similar properties, there are always opportunities. Happy to be of assistance.

    1Reply
  • Katharine G.
    New York, NY · Member since 2018 · 30 posts · 25 votes
    5y

    Hey @Alex Boyce--in a similar position with a similar budget and curious to know where you landed/what else you discovered?

    0Reply
  • Katty Espinoza
    Homeowner · Valdosta, GA · Member since 2020 · 2 posts · 2 votes
    5y

    I'm in a very similar position. Do any of you have any numbers to share with me on a townhome and condo in Windsor Hills? They're both asking for about $15-20K over what's been selling recently. It most likely won't appraise at the asking price, I have the funds to cover most of the difference for the townhouse and all of the difference for the condo after putting 20% down. This will be my first STR investment. Any data on making this decision will be greatly appreciated!!!

    0Reply
  • Flavio Zanetti
    Investor · Andover, MA · Member since 2015 · 269 posts · 67 votes
    5y
    Originally posted by @Katty Espinoza:

    I'm in a very similar position. Do any of you have any numbers to share with me on a townhome and condo in Windsor Hills? They're both asking for about $15-20K over what's been selling recently. It most likely won't appraise at the asking price, I have the funds to cover most of the difference for the townhouse and all of the difference for the condo after putting 20% down. This will be my first STR investment. Any data on making this decision will be greatly appreciated!!!

    Katty,


    This is a byproduct of the market being super hot but some folks are having challenges appraising condo's at Windsor Hills and Paradise Palms for the exact same reason. Time will tell how the market reacts I guess...  

    0Reply
  • Jeff TumbarelloPro Member
    Real Estate Broker · Fort Myers, FL · Member since 2008 · 1k+ posts · 323 votes
    2y

    Which one did you choose?

    0Reply
  • Melissa Nash
    Rental Property Investor · Orange County, CA · Member since 2016 · 740 posts · 529 votes
    2y

    You didn't mention the demand or amenities. That is the first thing to find out. What amenities can you offer to charge more and which location and size has the most demand to make more?? 

    Start there, then work backwards. 

    0Reply
  • Travis Rasmussen
    Realtor · Murrieta, CA · Member since 2016 · 373 posts · 203 votes
    2y
    Quote from @Alex Boyce:

    Hey BP,

    I'm in the market to purchase my first Short Term Rental. I live in Orlando and want to invest locally. I have $75K to invest and pre-approved for $325K purchase. I've done quite a bit of research but realizing I need to narrow down on my strategy and wanted get some advice between these various paths:

    1. 200-250K Townhouse in desirable community like Windsor Hills / Paradise Palms. Well within my budget and could very comfortably carry this if needed, as well as have extra cash to make the rental stand out. However, these tend not to appreciate and have high HOA costs. From what I've seen it looks like these still cash flow well though.

    2. 250-275K Single Family 3-4BR house that needs work. I'll be able to customize the house to stand out, however these tend not to be in desirable areas / slightly further away from Disney, and I may not have enough to do much with (50K down + 15K furniture leaves 10K for rehab, excluding any holding costs). Also, communities with no/low HOA's typically have no amenities. However this would be the option with the most appreciation.

    3. 325K Single Family 5+BR house. The kind of house I'd expect to perform the best is the huge 2800+ SQFT, 5+BR pool home. The problem is any house like this in a desirable area like Windsor Hills is easily over 400K. There are some for this price in other areas like 27 or Davenport, but I'd be at the very top of my budget, in a further market, with little leftover to make the place unique. 

    Looking forward to your thoughts. Thanks!


     I can't say this enough, GET AS CLOSE TO THE PARKS AS YOU CAN! 
    It SIGNIFICANTLY effects the price you can get per night. We personally buy in Lucaya Village.

    0Reply
  • Travis Rasmussen
    Realtor · Murrieta, CA · Member since 2016 · 373 posts · 203 votes
    2y
    Quote from @Katty Espinoza:

    I'm in a very similar position. Do any of you have any numbers to share with me on a townhome and condo in Windsor Hills? They're both asking for about $15-20K over what's been selling recently. It most likely won't appraise at the asking price, I have the funds to cover most of the difference for the townhouse and all of the difference for the condo after putting 20% down. This will be my first STR investment. Any data on making this decision will be greatly appreciated!!!


     What did you end up getting? Did you go for it?

    0Reply
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