All Forum Posts by: Michael Stoyanov

 Thank you for the update @ Jay Breitlow . Interested to see if the trend continues.

Hi Everyone,
I wanted to get an idea how is the STR market in Orlando going. I hear from multiple places that it is saturated and rates have gone substantially down. If so, what do you do to generate more bookings and what is it that works for you?

Hi Michael,
Airdna is not a good place to get valid numbers unfortunately. I believe they are going to be lower unfortunately. The general rule of thumb is that the property generates about 10% +/- of its value  in terms of annual income. If you can produce $71K off this property, I would say purchase it  immediately, but I am afraid it will be closer to $40K-$50K  annually currently, if it is set up and updated properly.

I would love to hear what others think of these numbers....

HI @Tajinder,

Currently, the vacation rental market in Orlando is not at its peak and a lot of homeowners are not doing as well as expected. This is good and bad news for you - the bad news is obvious, but the good news is that prices are lower and Sellers are more likely to negotiate right now, so you can get a better deal. A lot of Owners are shifting to renting the properties themselves, to save on the management commissions as well as the nickel and diming some property management companies do. You can also do that. I also have a No Commission Marketing Program for Orlando, which markets the units on all the major channels - Airbnb, vrbo, Expedia, Orbitz, Booking, Tripadvisor, Flipkey, HomesToGo, etc - iti si only $49 per reservation - you can find more about it here - ANSWERING YOUR QUESTIONS - Escala Vacation Rentals .

Since you will be doing vacation rentals, you will need to purchase a property in an area, which allows for that , and also make sure you have as many of amenities as possible - the house needs to be themed, you will have to have arcade games in it, foosball / pool table, multiple sleeping areas, private pool, access to fitness, lazy rivers, larger pools, etc. Since there is a lot of inventory of STR, it will be best if you can set yourself apart not only by purchasing with the right amenities, but also the right size. The 3 and 4 bedroom units are the most common, with each being about 22% of the market, followed by 2 bedrooms, 5 bedroom and 1 bedroom. I would suggest you shoot for something larger - 6+ bedroom, ideally over 10 bedrooms, where you can set yourself apart from the competition. If you can not afford something like that, my suggestion would be to be very aggressive with the rates and bank on volume. Once the market improves, the rates will go up and you will also have equity in the house, which will put you in a great position. There are certainly opportunities in the market, you just have to evaluate each and every one of them to make sure it works for you. I would be happy to generate financial projections for you for few properties and let you know what I think about them. I have been in the vacation rental industry for over 20 years and have been involved personally in 100s of thousands of reservations. I recently transitioned to more passive role - investing in real estate and have a portfolio of vacation rentals, long term rentals and commercial buildings across few different states.

My assumption here is that you would like to use the property for vacation rentals yourself so that is why you are looking to purchase it. If you are solely after the Cas Flow - it may be better for you to purchase brand new long term rentals in a different area in FL - possibly duplexes or SFH for about 9% Cap Rate. I have something in mind, so if you are interested - message me and I would be happy to share with you, as I do not people to feel that I am trying to sell them something here.

I hope you find this helpful.

HI Jay,

When you rented the homes, you should have gotten decent ROI - I hope around 10%, which is a substantial benefit. Painting, flooring and appliances after 10 years is expected and it is not a major expense - probably 4 months rent and it takes about a week or 2 to complete it. The idea is to exchange for newer property while there is still substantial useful life left in the old one, so you do not have to incur the expensive CapEx down the road. The appreciation will be irrelevant as you are exchanging it for a similar property, not cashing out. The benefit is the cash flow.

Hi Becca,

I am sorry to hear about  your situation. It seems that it is not working well for you.

I see that with a LOT of  " investors" - buying a property with debt to cash flow $200 per month, banking on appreciation. It rarely works, and unless we get a lalapalooza in the real estate market, like we got in 2020-2022 , when the value of real estate increased dramatically, you will always be struggling.

You should always buy for CASH FLOW  - nothing else. The appreciation will be an added bonus and since you can not predict it and control it, do not account for it. It is nice to have, but you will not be able to pay your property taxes, or replace your roof with appreciation.

Here is what I think you should do - sell all 3 properties ( 1031 them), get the equity out of them and purchase 1 property CASH. Depending on the equity you have in them, you can look at different markets, as some are less expensive than others. Possibly look into FL ( that is where I am currently operating and can give you more inside info if needed), as prices are lower in some areas and there is not State Income Tax on the income generated from Fl. You can expect to get 8-10% CAP RATE here for a brand new property if purchased cash.

When you purchase the property cash, please get BRAND NEW construction, with warranty and do not buy anything with HOA. That way you will insure you have warranty on the property, it is nice and desirable and built up to the new codes and has what the consumers like nowadays. It will be also highly unlikely that in the next 10 years, you will have to worry about roofs, AC issues, etc, so your cash flow will be substantial. Keep the home for 7-12 years, then sell it ( 1031) and get another brand new home after that. You will save yourself a lot of headaches, it will be easier for you to find tenants and will not have to deal with renovations and expensive repairs. You will also be able to generate substantial cash flow , which you can use to purchase another property after that. Remember - it s not about the quantity of properties you have, it is about the quality.

Let me know if I  can answer more questions for you.

HI @Sun Zari,

Currently, the vacation rental market in Orlando is not at its peak and a lot of homeowners are not doing as well as expected. This is good and bad news for you - the bad news is obvious, but the good news is that prices are lower and Sellers are more likely to negotiate right now, so you can get a better deal. A lot of Owners are shifting to renting the properties themselves, to save on the management commissions as well as the nickel and diming  some property management companies do. You can also do that.  I also have a No Commission Marketing Program for  Orlando, which markets the units on all the major channels - Airbnb, vrbo, Expedia, Orbitz, Booking, Tripadvisor, Flipkey, HomesToGo, etc - iti si only $49 per reservation - you can find more about it  here  -  ANSWERING YOUR QUESTIONS - Escala Vacation Rentals .

Since you will be doing vacation rentals, you will need to purchase a property in an area, which allows for that , and also make sure you have as many of amenities as possible - the house needs to be themed, you will have to have arcade games in it, foosball / pool table, multiple sleeping areas, private pool, access to fitness, lazy rivers, larger pools, etc. Since there is a lot of inventory of STR, it will be best if you can set yourself apart not only by purchasing with the right amenities, but also the right size. The 3 and 4 bedroom units are the most common, with each being about 22% of the market, followed by 2 bedrooms, 5 bedroom and 1 bedroom. I would suggest you shoot for something larger - 6+ bedroom, ideally over 10 bedrooms, where you can set yourself apart from the competition. If you can not afford something like that, my suggestion would be to be very aggressive with the rates and bank on volume. Once the market improves, the rates will go up and you will also have equity in the house, which will put you in a great position. There are certainly opportunities in the market, you just have to evaluate each and every one of them to make sure it works for you. I would be happy to generate financial projections for you for few properties and let you know what I think about them. I have been in the vacation rental industry for over 20 years and have been involved personally in 100s of thousands of reservations. I recently transitioned to more passive role - investing in real estate and have a portfolio of vacation rentals, long term rentals and commercial buildings across few different states.

My assumption here is that you would like to use the property for vacation rentals yourself so that is why you are looking to purchase it. If you are solely after the Cas Flow - it may be better for you to purchase brand new long term rentals in a different area in FL - possibly duplexes or SFH for about 9% Cap Rate. I have something in mind, so if you are interested - message me and I would be happy to share with you, as I do not people to feel that I am trying to sell them something here.

I hope you find this helpful.

Hi Andrew,

Airbnb boosts your listing at the top of the searches for few weeks since it is new, so you will see instant traction at the beginning.

Vrbo takes longer to build up. We have transitioned out of airbnb about 2 years ago and do not list there any longer.

Which channel will be more beneficial for you, will depend on the market you are in ( your clientele - if they are younger crowd, using airbnb or family folks likely to use  vrbo booking for their extended family - kids and grandkids).

It will also depend on your minimum night stays and time of the year as well as the price point for your property. The longer, more expensive reservations tend to come through vrbo.

I would advise you to focus on 1channel and build up your placing there, while supplementing your rentals from other sources as well. It will be difficult to have great performance on all of them due to the placing.

Hello Everyone,
I saw this post and wanted to put my 2 cents in...

First - here are my credentials - I have been in the vacation rental industry for abut 20 years now and have started, built and sold multiple vacation rental companies during this time frame and have dealt with hundreds of properties and hundreds of thousands of reservations.

Let me start by addressing Airdna - I have looked at it couple of times and would not recommend it to anyone who is serious about investing - their numbers a lot of time make no sense whatsoever. Please take the info provided there with a HUUUGE grain of salt - this is just my experience ...

Now let's get to the point ...

The vacation rental industry had a couple of exceptional years during COVID, which I am sure you all know, but they are behind it. Currently things are slowing down, but I am sure a rebound will happen at some point.

When you are looking for a short-term investment, I have seen time and time again, people are looking for something to cash flow, but also use and enjoy and something that works for their family. That is a mistake, so please treat it as an investment only - it will make your life much easier.

LOCATION - this is the key to vacation rentals. It makes a big difference in the performance. If you are looking at a beach resort - please look at ocean front property, or the least - right across the street from the beach, if you are looking at ski resort - try to be ski in, ski out, or across the street from the slopes. If you are looking at a big city - you need to be close to local attraction. I know it make sense, but very often people will go further out, just because of the price point, but it will hurt the income. The one notable exception with location is possibly Gatlinburg/ Pigeon Forge area, where location is not that important. 

Considering that you will be holding the property for a while, you will encounter good and bad economic times. During the downturns (and slower times of the year), the properties that are exceptionally located will still have rentals/income, and the rest will struggle much more significantly.

Under this paragraph, I think we should also discuss location relative to population centers - it is important to be near major concertation of population. If you look at the map of the US - 75% of the population lives east of great plains. It significantly increases your customer base. Please also do your research and look for a population within 300- or 400-miles radius, which where your customers are going to come from most likely. If you do that, you will understand why Gatlinburg, The Panhandle, Myrtle Beach, etc. are doing well and other places are destination resorts with VERY strong seasonality, including CO, WY, South Florida.

I would encourage you to look for a location with decent number of other rentals as well, versus some place with only handful of properties. Although the competition will be less, there is a reason for that. Look at it this way - if you would like to go to a restaurant, you will likely choose one, which is located on a plaza or downtown, along with a lot of other restaurants, less likely to drive to a standalone place somewhere. That way they feed off each other. Of course, there is such thing as too many properties...

AMENITIES - you will need something to stand out from the rest. It could be the amenities that the house or complex has, the way the unit is set up and things for the guests to do not just in the resort, but inside the unit as well. Some notable features are private pool, hot tub, large beds (please do not have 2 queen beds in a 2-bedroom unit), arcade games, themed properties (this is highly recommended), decor, perks like snow machines in ski resort coming with the property, jet skis, etc, but above all - ALLOW PETS! Vast majority of units do not allow pets and at the same time vast majority of families have them and would love to travel with them. That will have you stand out. From what I have seen properties which allow pets can generate up to 30% more income than similar properties which do not.

VENDORS - you will need someone to take care of the property, so you will need vendors and when you need them, you need them right away. I can share a lot of stories I have experienced myself in a ski resort, where there were 2 appliances guys, 3 plumbers and 2 electricians in town and all of them were 2-3 weeks out, just to come and take a look at things. Then they have to order parts, which made an appliance repair last for months in some cases. We ended up buying a new appliance every time something went wrong - we had no other option. Same with your cleaners. Vendors are the backbone of the industry and to be blunt - you cannot operate without them. They are the most valuable asset for you, and it will determine if you make it or not. Do your research in the area and see if there are enough reliable vendors before you invest anywhere. Generally smaller towns in remote areas will be more difficult to operate, versus more mainstream locations. 

MARKETING - you will need to be able to market your property. it is not just the outreach you have (the numbers of outlets you are on) , but also how you advertise on them. Your placing will be the most important thing for your marketing. Almost all of the outlets will have the same criteria in placing your property - longevity of the account, number of reservations, number of reviews, review score, response rate, etc. Generally, it is better to do well on 1 outlet, versus trying to do well on all of them - it is simply not possible. Here I will say something, that will probably rub a lot of people the wrong way, but I would not recommend using airbnb. We have transitioned away from them for about 2 years now - a lot of different reasons for that decision, which I will not bother you with, but try the rest and see how it goes - vrbo, expedia, hotels, google, etc - please keep in mind that a property management company will have much deeper outreach than a single owner.

All this is aimed at someone who would like to do it themselves. If you do not have the time, I would highly encourage you to hire a reputable property management company, which you trust - there a plenty of great management companies out there.

The bottom line is - look for a location that has a durable competitive advantage and then find the right property for you there. I would not recommend going after the hot commodity of the day - it is a marathon, not a sprint.

I hope that helps.

Please let me know if I can answer more questions for you or clarify some items. I would be happy to look into the properties you are considering and give you my 2 cents, or even partner with you on some of them - message me directly.