Can anyone comment on this florida turnkey as an investment?

[Sneha Patel Campanella]

Can anyone comment on these type of turnkeys as investment: Sycamore resort, Kissimmee, Florida.

https://primelandusa.com/

Would one make a profit if it was held for several years? Location is Kissimmee, Florida. My understanding is that during Non-covid times this is a prime area for Vacation rentals due to Disney.

You're guaranteed a 7-10% net return for the first two years.

Any advice for a hesitant newbie?

Thank you

[Keith Courtney]

Sneha -

I recently inquired about Sycamore Resort as a short term rental investment for a vacation rental investor.  If I understood them correctly, here is the breakdown.

You first will have to pay 25% of your unit's price until you close, which will be at least 1 year from now.

After closing on your unit, you will be paid monthly 10% of the purchase price/12. Your expenses will be the HOA fee, insurance, property taxes and mortgage payments.

If you bought a 2 bedroom unit for $340K, you will be paid monthly $340K X .1 = $34K/12 = $2833.
$480 (HOA-includes utilities) + $150 (Insurance) + $500 (property taxes) = $1130
If you borrowed 75% of $340K = $255K, your mortgage payments will be ~$1145/month at 3.5% over 30 years.

$2833 - $1130 - $1145 = $558 cash flow/month with nothing being put in reserve for future repairs and replacements

Then, when the 2 years are up, you have to allow them to manage it, and your split with them will be 65/35.
Your breakeven rental income/month based on the above will be about $2500 (putting aside ~$225/month as reserves)
Based on that your unit will have to generate at least ~$3900/month in income to break even from a cash flow standpoint.

I think I am close on the numbers above, and I don't think I missed something (but it's possible!).  I approximated the insurance and property taxes.  

My opinion - I wouldn't do it for 2 reasons:
1) With the leaseback for 2 years, your cash flow will be ~$300/month after reserves.  That is only a 4% return on the $85,000 you put down on the loan.  And, keep in mind your unit has had some wear and tear during the 2 years.  Then, once the leaseback is up, your 2 bedroom unit has to generate ~$48K/year to break even. That is a very good rental income on a 2 bedroom condo in the Disney World area.
2) I don't like the fact that you have to use them for property management, which includes the marketing of your unit. A huge part of the operation of your unit is basically out of your control.

I hope this helps. Again, I may be missing something in my analysis, but I don't think I am.

Keith