Kissimmee FL - STR Analysis

[Michael Stokes]

Hello everyone, I am VERY new to real estate investment, and tend to be very conservative when it comes to any investing but I am very interested in real estate and have the capital to invest. I live in CT but would like to enter the STR game and of the places that are hot I am most interested in Orlando -- I know the area and find myself already down there multiple times per year.

Since I would be remote, I am likely going to work with a management company (at least year one) so hope to have booking/cleaning/maintenance taken care of by the company.  Since I am not local I am trying to optimize my strategy for looking into and securing a property.  I have spent a few weeks on Realtor, AirBNB, and other sites trying to compare costs with the approximate rent I could expect nightly.

With my conservative nature I was a bit hesitant to move forward with anything yet -- I am seeing a lot of condos in nice areas with amenities (saving me having to get a property with a pool) that are in the $150-$200k price range. I haven't found the exact neighborhoods on on AirBNB, but I am seeing a lot of properties being rented for $60/night. If I assume a 50% occupancy rate, that would be $900/month less the 20% management fee would net me $720/month, with the mortgage and utilities and HOA coming in closer to $1400/month.

I wanted to reach out to see if I am a) looking in the wrong areas of Orlando when evaluating $60/night on an AirBNB rental, b) spending too much on a condo to come in at 1400/month and expecting to turn a profit in Orlando, or c) looking into a condo when I should be looking at a single family home to turn a profit?

Thank you in advance for any guidance or suggestions!

-Mike

[Holly Kurtz]

Mike, I live near Kissimmee and also recently looked into STRs there. I am also similarly cautious and assess everything related to real estate investing against the much easier alternative of leaving that money parked in mutual funds/index funds. My conclusion was similar to yours in that I just don't think Disney area vacation rentals are a great investment right now. I have looked at the financials of several properties and also toured some places with a Realtor, based on recommendations from a property manager who's been in the business over 20 years. The problem is that the HOA fees and hidden additional fees tacked on by the developments are so high that it's hard to make any money. Yet you need to buy in these specific developments (all relatively close to Disney) with lots of amenities because that's what vacation renters expect. Occupancy is also quite seasonal and tied to school holidays. Some of the properties I looked at were netting $40 a month-or losing money. And I did not see any with 50% occupancy rates. The other wrinkle is that this property manager told me that you need to get a place with its own pool-as renters expect that. (It's a little splash pool.) And the place should also be updated-e.g. granite or better counter tops in the kitchens, bathrooms, etc. All of that adds to the cost. The property manager I spoke to was Stephen Behlor. The Realtor I worked with was Raquel Ells.