Orlando: Short term rental market: Timing / Funding / Strategy

[Pankaj Aurora]

Hello all,

Is the Orlando, FL short term rental market still a good bet? There is a lot of new construction going on - specifically targeting this market.

I am based in NY and have some funds available to invest. I visited Orlando and saw a few options last month. I have a good real estate agent who specializes in this market. The thought process is to buy a new condo or a town home, furnish with a high-end package, go with an established marketing / booking agency - and command higher rents. I have seen similar sized / aged properties command different rents based on how they are furnished and presented. Presentation is the key..... In addition, of course to location (proximlty to all the attractions), size, age, service, amenities ..

In October 2016, I used my HELOC to buy a long term rental property in Palm Bay, FL which is currently leased out (yearly) starting March 2017 (and renewed last month). I then refinanced my primary mortgage (in NY) with a cash out, and paid off the HELOC last month. The full HELOC is available again to invest now.

I am looking for better returns on my next investment - so thinking about the short term rental market. And which place is better than Orlando? (Right?? Wrong ??). All expenses including HELOC payments (principal + interest) will need to come out of the rental income on a month-to-month basis.

I am aware of the recent Orlando ordinance allowing home sharing (http://www.orlandosentinel.com/news/orange/os-orla...), but will not be competing with them.

Is this a good time to invest? Saturation of the market is one concern. And what are the strategies to maximize the rental income potential?

Thoughts / Comments / Feedback welcome !!

Thanks,

Pankaj Aurora

[Courtney Bass]

Remember that the Orlando short term rental market is centered in Kissimmee and Davenport areas and many communities are set up for this and allow it. As you edge in to dr. Phillips, Windermere and Orlando in general, it is not permitted, though some people get away with it as Airbnb. The safest bet is to pick up something already zoned Str. I'm an agent who's been heavily investigating that particular market for a foreign investor recently and I'm leaning towards either new construction or picking up a unit (townhomes) that is already updated. Otherwise you may wait a while to find something undervalue that is ready to go or by the time you remodel (30k for TH) and furnish, you've wasted time and money.

The second piece, and the part that really determines your net profit, is Property Management and marketing. There are many out there and I suppose some  owners are happy to  make  8 to 10K a year after  expenses and utilizing  the home for their personal vacations, but the investors getting 10%+ seem to be splitting it- one company does just the bookings for roughly 15% Commission (per night or per stay) and property manager does just Property Management. I did just find a company who does both and I think it's around 20% total, but I have not had a chance to speak with them to verify. 

If you are willing and have the time to manage your bookings, that's more money in your pocket. One pm I spoke with works in sync with owners who Self book and have software that compiles all the bookings into a single calendar to avoid double booking.

If you're aware of one company that does everything, does it well and still leaves 10% + Roi for you, I'd love to hear about it. Likewise, feel free to message me if you want the names of the PMs I mentioned.