Single Family Unit Feedback-Am I doing this right?

Question

I'm just starting out and I want to know if I'm doing this correctly and I would like feedback on a SFR condo in Kissimmee, Florida near Disney World. The purchase price is $68,500 with a 15% Cap Rate. The owner has the choice to rent it out yearly which would bring in a NOI of $10,275. The other choice would be to rent it out daily, weekly, or monthly from $89-$119. I don't know if there are any HOA fees involved but I think that If I choose to rent it out daily at a rate of at least $100 per night to tourists visiting Disney World, that would bring in a yearly gross income of $36,000 per year which would bring in a NOI of $18,000(50% Rule). And my mortgage payment would be $364.59/month (30 Yr @ 7%) which would leave me with a cash flow of $1135.41/month or $13,624.92.

Am I doing this correctly or did I forget something Or is the mortgage too small or too big of a debt for this property? Thank you very much in advance for your help.

Account Closed · Answer

I agree with Jeffrey that a SFR would be better and also that there are a lot of expenses for this type of property.  There are always HOA fees and they can range from $75/month to $600 (look at Reunion and Celebration - you almost can't GIVE away a nice house there because of the HOA fees and the fact that it's like a ghost town in Reunion..  Also, the house will have to be managed, cleaned, pool serviced (have to have a pool).  I am no expert but have wanted to do the same thing you want to do but cannot bring myself to do it because of the expenses and also the declining values in the Kissimmee area.  There is a very good website that is specifically designed for people interested in this market that I refer to often.  I am in no way related to the site and they don't sell anything - just an informational site about buying and selling Kissimmee area vacation properties.  Best of luck to you.    Here's the site - http://www.thepinkflamingo.info/

Jeffrey K. · Answer

This is wrong and prob nob a good deal.  There are always HOA fees.  How do you plan to find these tenants?  Use a service?  That costs you.  If you rent it out by the day, you have to pay to have it cleaned every time someone moves out.  Your $100 might only work during the "season" also.  Stay away from condos.  You can get a house in that area for that price.  I keep getting these spam emails from Harper Realty out that way so I know there is cheap stuff in the area.

Jerrmarco Rhodes · Answer

Jeffrey,

thanks very much for that.  i thought some condos were a good option but I understand what you're saying. There is a lot involved with this one.