Making a Disney Vacation Rental Work
Hi Everyone,
My wife and I currently own some STR properties in TN and are looking to expand to the Disney area. We have narrowed in on buying in Windsor Hills as we feel like the amenities are a nice bonus for families that may not want to spend every day in the parks.
The issue we are having is that I just can't seem to make the numbers work, so wanting to see if maybe I am doing something wrong in my calculations.
Right now, we are looking at 3bd townhouses in WH w/pool in the 220-240K range. I am estimating a $150/nt rate, ~$1000/month for mortgage costs (20% down, 3% int, including taxes), $1500/month in operating expenses (Utilities, HOA, maintenance, reserves, etc). Also assuming 30% of gross rents for property management since we are out of state investors. Based on some initial analysis, it looks like we would need a 80% occupancy to break even.
Do those numbers/ my assumptions look right to you? Is 80% even a feasible number during or even post COVID? We could be open to going a little bigger and doing a 4-5 bed single family home as well.
As a second question - I have been looking at some properties and rental calendars, and I can't seem to make heads of tails over what is causing high occupancy/ DAR. Seems like some properties with great theming and decorating are staying empty and others with old decor are rented every night. What do you see driving traffic to Disney STRs in particular?
Would love the community's thoughts and advice! Thanks!
Most Popular Reply
I used to own 2 - 3 bed townhomes in WH and I can give you a few pointers. We had the homes for 6 years from 2013-2019. They were very successful and we averaged 70%+ occupancy every year. HOWEVER, we worked our butts off to get that occupancy and to be that successful.
1. Your 80% occupancy is not going to happen right now unless you are renting for $60 a night. The ones that you are seeing that have booked calendars are doing just that. The nice ones that you are seeing sit open are IMO the smart owners who would rather their home sit empty than let someone trash it for bottom basement prices. I do not see rentals going back to high occupancy for a good 2 years. Most of my rentals came from Canada and the UK and unfortunately COVID has reeked havoc on vacation rentals in Florida.
2. Self management is the only way you are going to make any money. Now, we had a PM, but only to take care of the cleaning and repairs that needed to be done immediately. We spent several weeks a year down there just fixing things, replacing broken and worn our items and buying new things to spruce it up. We did all of our own marketing, rentals and everything that comes along with it. If you are thinking that a PM is going to get you quality renters for a good price, they are not.
3. $1500.00 per month in operating expenses seems a little low, especially if you are putting repairs in the category. Off the top of my head you are looking at around $400.00 a month for HOA and your electric bill will be at least $200-250 every month. Water was around $50-60 a month.
4. A lot of the units need new pool heaters, pumps and AC's and pools need to be resurfaced as they are 15 years old now. Look for homes where these things have been replaced.
I am happy to chat more about it. We loved owning our homes and only sold because life got so busy I could not keep up with my full-time job, my kids non-stop activities and trying to manage the rental.