All Forum Posts by: Erica Muller

@Rob Dowsett If you're considering Orlando and are worried about occupancy the safest place you can invest in is Windsor Hills. I have seen it time after time after time with all of my investors who purchased there, they are all fully booked and have come back to buy more in there because of how successful they are. Windsor Hills and Oakwater Resort are the two safest because of the fact they are the two closest privately owned VR resorts to Disney World. Basically if you aren't staying in either of them you are staying in a hotel. So anyone who wants to be as close to Disney as possible and doesn't want a hotel is staying at one of those two resorts. They're always fully booked year round. Everywhere else, it takes good marketing but you will still do well. Different management companies have a stronger presence in different communities. It would be hard to recommend one specific one based on numbers because it requires inside knowledge of how this unique VR market works. Numbers are great indicators for a VR here but you also want to consider things like which community will you get the most repeat guests in, which ones will stay booked no matter what you do with marketing etc. There is no shortage of people needing VR's here but it's the 80/20 rule. 20% of the owners are doing 80% of the business. If you need more info feel free to shoot me a message. I'm happy to send you my VR spreadsheet analyzer as well as connect you with current owners whose brains you can pick. 

Good luck! 

@Tobey Porter Welcome to Florida!!! Here is a list of 10 questions you can ask the VR property managers (It's a 20 part list but the other 10 I don't have published so just DM me if you want me to send it to you): http://www.thepinkflamingo.info/10-questions-you-m...

Here is what I can tell you about Florida management companies. 

1. Most of they use tour operators to book their homes so even if they quote you 15-20% commission understand that it could be 15-20% of an already discounted commission. I would negotiate the terms on all tour operator bookings. 

2. Make sure that your bookings stay with YOU if you decide to switch management companies because they will keep any bookings that you put in place if it's not otherwise in the contract. 

3. Only do a month to month contract. Stay away from anyone trying to lock you into a 12 month or longer commitment. It's a bad idea. I've seen and have nightmare stories. 

4. Every part of Florida is seasonal except Orlando so expect your busy months to be Oct-April on the coast and most of Florida and in Orlando it would be year round except for May and Sep. 

5. Find out if they handle the taxes for you. If not you need to get an accountant. Most management companies will do this for you. 

If you need more info just DM me. It's a lot to type. 

Good luck!!

@Monika Haebich Gotcha! Thanks for clearing that up. I know how deceiving management companies can be when representing their rates so I just wanted to find out if that was something that was being broken down in your chart. It's so important for investors to know which questions to ask management companies. 

@Mel Saffold There's so much good advice on this page. Seriously. The only thing I would add is that be mindful of how many local hotels and timeshare are in the location you're purchasing in. Here's a situation that investors have found themselves in, in Orlando because they didn't do the research. 

They buy a condo or a cheap home without doing any rental history research only to find out that they are actually be undercut and priced out by the local hotel and timeshare companies offering a very similar product to theirs with double the amenities. So the owner's are forced to undercut their rates just to keep heads on beds and most are going into the red. In order to compete with local competition in this market many investors have been opting to buy 4+ bedroom homes in resort communities that rent for upwards of $250 per night and falls into a completely different category than timeshares and hotels. It caters to an entirely different base of guests. The upscale crowd. What I've seen happen is that the investor's buying these types of homes are seeing an annual ROI of 8%+ vs. just breaking even or losing money on the lower end stuff. Most people are leveraging their money by taking a mortgage with 20% down vs. paying cash for a less expensive property.

So just be mindful of the market conditions in whatever area you are buying because the one thing about vacation rentals is that every market is SO DIFFERENT! Even within our state, the coastal market is a totally different animal than the central theme park area. Just get a good Realtor where ever you buy that understand this specific niche. Don't use a general real estate agent. 

And everything else mentioned above! Good luck! 

@Monika Haebich on that chart, the commission it's showing, is that for the booking the property manager put in place? The owner puts in place? or both? And on the line for management, is that their monthly expense? 

TIA

@Huiping S. Usually the HOA or the Condo association of the community they are purchasing in has this info. You can also get it from the county zoning department.

@Kristi Bass I'd like to validate what you mentioned about your friends. 90% occupancy is absolutely possible and where I'm at it's completely the norm. As a matter of fact, most of the VR management companies here are so overbooked they're having to borrow homes from other management companies just to be able to host the demand for their vacation rentals. Please don't be discouraged but definitely approach this (as with ANY investment) with caution and research. Here are some expenses you may want to think about and add to your spreadsheet: 

1. Liability insurance. This is a must and is above and beyond a tradition home owner's insurance policy. It's roughly about $500-$800 per year depending on how much coverage you get. I wouldn't get anything less than a million in liability coverage. 

2. Zoning issues. From what I understand, Texas is a pretty VR friendly state, just like Florida where I'm at. Homeaway's main office is there (they own VRBO). I know tons of prople successfully renting vacation homes in Texas but definitely contact Homeaway and considering joining their owner's community to stay updated on any laws and regulations that could affect this. 

3. As for the effort being higher, yes there's more work involved IF you self manage. I've sold over 100 vacation rentals to investors and only about 5% of them opted to self manage and then they ended up hiring a property manager to take over because it's too much work. It makes no sense to buy a property to use as a lifestyle investment, only to take it on a job. If you aren't considering using a vacation rental manager, I would say don't even do it. It's a ton of work. If you do, it's a fantastic investment. VR manager's will usually charge about $120-$150 per month as well as a percentage of the bookings they put in place. If you put the bookings in pace they typically don't take anything from that. You might want to read this article: http://www.thepinkflamingo.info/10-questions-you-m...

Best of luck to you and if you have any further questions don't hesitate to reach out! 

Erica

@Edgar Claudio Sounds great! Shoot me a direct message and we can chat! I'm happy to help. 

I'm not in your area but I'm heavily involved in vacation rentals in Orlando. If you ever have any questions I'm happy to try and help! 

AirDNA has all the rental info you need for finding the vacation rental data in areas. you can also check VRBO and Homeaway to see what the comparable homes are renting for and how booked they are. Also I have an excel spreadsheet that I use for myself and my VR investors, but again, I can't post it here. 

The best way to present it to the bank would be if you have the past few years of income history as well as if those bookings belong to the owner or the management company. If they transfer to you than that's solid. If the deposits have already been places and are being held in escrow that will help your case. No deposits than it's hard to count it as income. 

Be very careful where you pull your rental data from. The best place is to get it directly from Airbnb, Homeaway and VRBO because those are homes already performing. You don't want to supply pure speculation to the bank.