Vacation Rental profit

[Hector Fuentes]

I wanted to know how much typically from gross income goes to the bottom like after taxes and everything in Florida for vacation rentals I am in Orlando Kissimmee area. I was looking to buy a house and have a mortgage on it to vacation rent. But I need to know what I will be looking at as take home after experience what are margins like 40% 50 % 30%. What should I expect. Thank you 

[Luke Carl]

Could be anything from 5-50% of gross. Tom’s of variables. The biggest one being how it is managed. 

[Valentina Naumenko]

Good question, but it truly depends on variety of factors. Does property have a pool? How much is HOA? And things like that. Make sure your realtor has needed skills. Also, request the owner statements for at least last 12 months.

[Eric Garcia]

I have no experience myself. I just purchased a home that is currently being renovated and will, hopefully, go live in January. Like previously said, there are tons of variables but you can do some simple math. Look at the going nightly rates for similar homes in the immediate area. Low ball your occupancy rate to give yourself some a buffer then minus your overhead. That should be about the low end of your net profit range. Then look at the most successful STRs for that type of home, in that area and that should give you that upper limit of the potential of your home. In the end, it will come down to your management style.  

[Hector Fuentes]

I am looking to self manage I have long term rentals this would be my first vacation Rental. The house has no HOA also pool is that a plus or more expensive than what it is worth. I am looking at 2 one with a pool and one with out a pool. My biggest worry is I am not taking into account something I know taxes for long term rentals and with depression it's not really an issue but with a Vaction I am not sure how much it would cost. But the margins look good I want to try it but I want advice to make sure I don't miss something obvious.

[Ryan Moyer]

Originally posted by @Hector Fuentes:

I wanted to know how much typically from gross income goes to the bottom like after taxes and everything in Florida for vacation rentals I am in Orlando Kissimmee area. I was looking to buy a house and have a mortgage on it to vacation rent. But I need to know what I will be looking at as take home after experience what are margins like 40% 50 % 30%. What should I expect. Thank you 

I own in Kissimmee (well right next door in Davenport).  9br with pool.  I only launched a couple months ago but so far my expenses are roughly...

Mortgage on 568k purchase (including taxes/homeowners/PMI) - $3150

HOA - $460

Electric - $450

Cleaning - $1400

Pool maintenance - $90

Water - $110

Security/Automation - $40

Pest Control - $60

Total: $5760

In November my gross was $10,000, in December I have $16,000 on the books (that is just nightly rate + cleaning fees).  I just launched in late October so didn't have any reviews yet for November.

So in November that's a net of 42% of gross bookings, 62% in December, before maintenance/capex.

Those are both high in this area, as most of these homes were thrown together quickly and are very much builder grade.  I am budgeting out $1000-$1500/mo for maintenance/capex which would bring my gross down to about 37% and 56% for the two months.  I expect to average around 40-45% as expenses in Florida are high.

[Hector Fuentes]

Thank you so much in Davenport what are taxes like do you have to get any special approval from the city or county. Because my numbers are about the same but. I worry if there’s any additional taxes for vacation rentals I am not taking into account. Thank you so much for your answer that makes me feel better is insurance for a house with a pool a lot higher.

[Shawn McCormick]

@Hector Fuentes. As mentioned, there are tons of factors to determine this and there is no blanket answer. Each home and each community are going to be different. You said the home has no HOA, I would caution against that for several reasons if you are doing STR. But property taxes will be different for each property, if the house is in a flood zone, insurance will be more, how old is the roof, does the property have poly plumbing, is there a CDD? is the property currently homesteaded to reduce taxes (yours will be higher if not occupying it).

These are just a few of the things to consider. I would consult a property manager to run realistic numbers, but your personal involvement and how you use it, market it etc will all play apart in your net. Best of luck!

[Bruce Woodruff]

I think 30 - 50% would be the number to strive for. IMO.