All Forum Posts by: Levi Bennett

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@Rod Witmond Yes, it's an interesting business model. There are two very successful Property Managers for Vacation Rentals near Disney that use this model.

One will guarantee a nightly rate, and a minimum number of nights, but no more. If they book the home for over their promised rate to the owner, they keep the profit. If they book more frequently, the owner keeps the amount promised. If they don't book enough, they still pay out their promised amount. 

Another simply guarantees a monthly revenue. If they beat it, they keep a higher percentage. If not, you still get the promised amount. It seems to be working very well for them. However, one common trait both of these property managers have, is that they're VERY selective about the homes they allow into their program... most homes for sale on the market would not qualify until a sizable cash investment got the interiors up to their standard. 

I'd be curious if you find even ONE multi-family in central Florida that has a potential ROI over 8%

From what I have discovered, this is one of the most competitive markets out there in Florida. There are literally thousands of investors lined up to buy a small multi-family. I know a hard money lender generating 30% to builders who can't build them fast enough, and even with the steep lending rate, they're still making money. I can't imagine how this is good for the end-buyer. 

Hi @Vicki Moraes, thank you for the nice comment! I work hard in this area and I love VR's in the area. 

The "best investment" will vary considerably based on your goals, your price range, and whether or not you're financing or paying cash. 

There are a few points you bring up, so I'll address them as I see them: 

No. of Bedrooms: The basic rule of thumb here is that the more bedrooms the better. With each additional bedroom, there is a new plateau of price that you can charge for a VR. People are traveling in larger groups more than ever, and the more bedrooms you can afford, the better. So, yes, a 5 bedroom (in general) would be better than a 4 bed if all other things were equal. The problem is, it rarely is equal. Every neighborhood is different. Proximity to Disney is key, and so is interior furnishings. But, as a baseline, the more bedrooms the better. But, if you asked me if a 6, 7, or 11 bedroom is better, I would say the 11 bed is better. The more bedrooms the better, there doesn't seem to be a ceiling on this. 

Higher Earning Potential: Vacation Rentals ALWAYS have a higher earning potential than a long term. But it's higher risk, and more volatile. The nature of it is different. Let's take a basic two bedroom condo in Windsor Palms for instance. This is a nice neighborhood that has some long term residents, but is also a popular short term rental community. A 2 bed there in a long term rental can generate about $1100-$1200/month at 100% occupancy. The exact same home can generate about $2200-2400/month at 100% occupancy as a Vacation Rental. So literally double the revenue. However, you'll never have 100% occupancy in a short term rental. Not even busy hotels have 100% occupancy. You may get 60%, or 70% or 80%... all depending how you market it, and what type of an owner you are. This is why, when it comes to investing, I need to get to know the clients.. how invested are they in running the home as a business, investing cash to improve interiors, etc... this will determine what kind of property I recommend, and your earning potential. This isn't like the stock market, where all 5 beds generate a certain average income, and all 4 beds are similar... it varies a LOT.. and it's almost completely dependent on the owner, or the decisions the owner makes about their investment. I can recommend smart decisions to maximize your occupancy, that's part of my job as a person who caters to investors.. but also part of my job is breaking the mindset that it's so cut and dry. There is no baseline, I know the potential, and I can help you gain the most out of a property, but at the end of the day, it's up to the owner catering to the market, and using the investment as a business. I hope this makes sense. I know I'm long-winded, I just want you to have an accurate picture of what you're looking at. 

Price Point: At the price point of $125,000, you can definitely buy a vacation rental, but this is VERY entry level... consider that almost all the homes for sale that are zoned for short term will need a cash investment after purchase to get the furnishings up to par with the market, etc.. this will afford you a 2 bed, maybe a 3 bed if you're lucky, but not leave a lot of room for closing costs and furnishings, etc... At this price point, understand that it's a high risk investment, and that buying something to use for a long term lease will be much more predictable, just not quite as high of an earning potential. 

Property Management: This is the most important aspect to your vacation rental. You MUST have a stellar PM company. This is the manager of your business. They are the face to your guests as their concierge, as their problem solver and customer service. They're also coordinating all the finances, from utilities, business licenses, taxes, HOA, etc.. They're also able to do all the bookings for you. Basically, this is how you put your business on auto-pilot. But you need an excellent PM. After everything is done and everyone is paid, it's possible to make more in a Vacation Rental than a long term rental. Just be aware that the risk is much higher, and it takes more of a capital investment and time on the front end to get it on auto-pilot. If you're more risk-averse, I would recommend getting a long term rental as an investment. They're more predictable, and easier to keep high occupancy, and easier to manage. If you want to take some risks, hustle, invest some money up front and make some money while owning a vacation rental that you can enjoy every now again, then it might be for you.

People who want a very hands off experience while owning a VR can do it, but you need to be in the $500,000 range to get everything lined up properly. You can get a killer return at the higher dollar marks. It's harder to do at the lower marks. Very possible, but it's just more involved. If you want something hands off, maybe invest in a mutual fund or something. I heard the US stock market is on sale this week :) 

I hope this helps!! Feel free to PM me or contact me anytime if you have more questions or want to learn more about it :)

Obviously being seasonal, does the weather demand a higher rate? What type of occupancy are they getting annually? Is most of it at the higher rate or a different rate?

I love vacation rentals, I have a similar goal, but in the Disney area. As a realtor, I talk to investors every day who are trying to accomplish what you are doing, and these are questions that they end up having to sort out. 

I'd be curious to know!! Thanks!

You'd be crazy not to get your license if you're thinking of becoming an investor. I'm an aspiring investor and represent hundreds of clients, and I have never once had the door "slammed in my face" when I was interested in purchasing a home for myself. What I learned through the licensing process is invaluable. In addition, why would you NOT want 3% in bargaining power right out of the gate?

There is literally no downside. Get your license. I got my prelicensing done in 2 weeks, and passed the state exam 2 weeks later on my first try. And I suck at school.

Well I have one client that definitely want to buy multi-family. They're cash buyers and want to be in 1.8M - 2.5M range. They also have the management options standing by to take over PM if they need to. Obviously the Cap Rate is the main thing they're going after.. but as a residential guy, I wouldn't know where to start. 

The reviews I've seen on loopnet are mediocre at best. With a $2M+ capital investment, they need to be able to have access to a cap rate that is higher than my 150k options... and Loopnet does not provide that. 

Hey guys,

Currently I'm a realtor in the Orlando area catering to investors who want to buy a vacation homes near Disney. Most of my client base are investors, and occasionally I find one that is looking to do invest in multi-family, apartments, etc... Where do I begin with this? I started at Loopnet, but at $244/month, it seems a bit excessive, and nothing there really impressed me. Most of my vacation rentals have better Cap rates than what is on there.

Our MLS doesn't have much in the way of commercial listings. Most of the advice I read is partner with a commercial agent locally... is there a place to start on the web? Or should I start googling and pounding the phone book with interviews until I find someone I like? Any advice on the matter would be helpful. I have a feeling what I am looking for is out there, but won't be listed anywhere easy to find, if it at all.

Thank you!!

I would be a broker, but I would never want to have my own firm. That's way too much responsibility.

This a great forum! Very encouraging for me. I've wanted to invest in real estate since I was 14 years old. I moved to Orlando to get started as I had a soft spot for vacation rentals, and figured this was the best place in the US for that, and now I'm here with a real estate license, an active business that is booming, tons of great deals rolling across my desk every day (none that I'm an investor in) and no time to really develop my game plan... meanwhile, after long and hectic days working with clients who are buying, and having learned a LOT about the vacation market here, I'm wanting to invest, with no money laying around. I just need someone to trust me I guess so I can get leveraged and put all this knowledge to work. Anyway... thanks for the forum post, I feel better already :D