How are STR Doing In Orlando

Question

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?

Shawn McCormick · Answer

Hey Michael,

Everyone that doesn't live here says it saturated as a go to response. Do we have 10's of thousands of units available for STR, yes! But my blunt response as an agent that shows these properties to clients all the time is that the bulk of the owners have no idea what they are doing or just don't care. So the ones telling you they aren't doing good either have no experience and bought off the hype of owning one, just don't know how to run a business or thought that it was a passive investment.

I can't tell you how little thought goes into the guest experience, the cleanliness of the units or anything else about the upkeep of the home. If you have a clean, well maintained unit, you communicate well with guests, stay competitive with your pricing ( on a very consistent basis) and theme your home, you can do well. However, that just isn't the case. I've shown about 3 dozen properties just this month and about 10% were actually in good shape and had offerings that went above what you could get at any local hotel. That is sad! Rates have gone down because so many owners didn't understand all the costs it takes to run one of these and didn't plan ahead, so they get desperate and then its a race to the bottom and others are forced to follow suite. If you have something more unique (not a 2/2 condo or a 4 bedroom with out any theming) you can make it through some slow times.

With Universals EPIC opening next year, now is the time to get your house in order, get good reviews and plan for whats coming, it will be hard to miss with all the new tourists this will bring on top of the 70 Million we already get.

Andrew Steffens · Answer

I am a PM based in Tampa but we do manage a few properties in the Kissimmee area.  In my opinion (there are more people who live and work every day in this market) it is still Saturated.  One of our nice condos near parks was empty at $50 a night recently.  If you are looking for an acquisition I would look in other FL markets.

Alex F. · Answer

@Michael Stoyanov - we have a 4 bedroom house in Kissimmee very close to Disney.

Ours is doing good but it's our only property I need to be on top of to make sure it stays in on the top couple of pages.  Universal will be opening their largest park ever in a couple years so plenty of areas are still good investments.

Here is our place:

https://bit.ly/41SAl0C

We purchased the home before the interest rate went up.  In 2023 CoC was 20-23pct so we are happy.  A few items about the area:

--The area does have a billion STRs but also a billion tourists from both the USA and abroad.  We have had guests from all continents.

--The is the only property that sometimes has more bookings with booking.com than Airbnb and VRBO.

--Your house needs to be themed and/or in a good community. Competition is high.

--The wear and tear on our Kissimmee house is higher than the others....I think the hoard of kids. Make sure you have a very good handyman and are affordable.

--We self manage - we don't think we would doing as well with a management company.

--Way before we got into the STR business we had been going to the area on a regular basis so was already familiar with the communities and areas.  This helped a lot rule out some houses right away when we were ready to purchase.

And it's a great place to go once or twice a year.

Good luck.

Andrew Steffens · Answer

Its in Calypso Cay resort, there are daily shuttle times to and from the resort but I do not think it is the official Disney shuttle.

John Underwood · Answer

We have something, not sure which software it was.

Brian Mitchell · Answer

Great topic!  I have been looking steadily the last couple weeks and haven't found anything on market that makes sense given the current interest rate environment.  The cost to borrow, pay someone to manage (10-20% rents... i underwrite at 15%), HOA fee's coupled with an, at best 85% occupancy rate) does not cash flow.

Am I mistaken, or are others seeing this, too in the area?

Josh Luttrell · Answer

@Michael Stoyanov, @Shawn McCormick mentioned the key part to this market. Theming the property. This is a MUST. You have to stand out from the crowd. Clearly the demand is there. So if your property stands out and stays at the top of the market, the cash flow will be hard to beat. When it comes to theming I don't mean going to Rooms To Go and buying their star wars and princess beds. You have to go all in. I own a custom theming company that has themed most of the homes in the area and a property management company that manages them. The difference in returns I see is from custom theming vs amateur theming is night and day.

The proven way to win in this market is the following. Purchase a 6+ 2 story home in a resort community. Go all in on the theming (100,000+ budget, we can finance this for you if needed), and use smart pricing tools. I have done this time and time again for my clients for years. The continued success has lead me to creating my own real estate fund for this. It works.

Shawn also mentioned the most important market mover, Epic Universe. It truly is hard to estimate how big of an effect this will have on the market. We are sitting on a gold mine here and no one is talking about it.  If you don't know much about it, I would google it and watch the video they just released.

John Underwood · Answer

Congratulations!.

Can he design or modify house plans?

We are having a difficult time finding the perfect plan for our new house.

Shawn McCormick · Answer

Well, they are still building more units. There are small niche condo only and townhome only communities popping up and Windsor Cay is coming on line this year along with Evermore Resort.

So I think there is a need for newer, modern units and this will push many of the smaller, older units to LTR possibly. For me, you have to be in a resort that has great amenities, it's like going to Cancun or Bahamas and not staying at an all inclusive resort, it's just what is expected here.

How are STR Doing In Orlando

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