Disney Short Term Rentals in Soltera Resorts good or not?

Question

I am considering purchasing a Short Term Rental unit in Kissimmee/Davenport.  The nicer resorts seem to have very high fees that, in situations like we are in today, make breaking even very tough.  To pay CDD, HOA, Resort Fees, PM, etc. you can easily be over $1,000 and didn't even get to the mortgage, taxes, insurance, gas, electric and water.  I fully appreciate having to pay some sort of HOA, but the CDD and other fees not as much.  I focused in on Soltera Resorts since it seems they just have HOA fees.  Does anyone have STR units there?  what about another resort that anyone knows about that doesn't have all those fees?  I'm figuring we could buy something, for now, with the hopes of at least breaking even, then when the pandemic is over, we can start to make money with more occupancy.  I'm being told we should be able to get 50% occupancy right now.  I don't know how realistic that is.  When I ask for proof from owners, they are unable to provide.  They say they have lots of weeks rented, but then i find their address, check i I can reserve a week and generally don't have a problem finding available weeks.  So I question what many people are saying.

Keith Courtney · Answer

Hi Mark -

I am not personally involved with any homes in Solterra, but I have created pro forma statements on 5 and 6 bedroom homes in there pre COVID.  I used the rental income of the better homes in there based on the bookings I saw in VRBO and a good estimate of all expenses.  None of the pro forma statements reflected much profit if any.  There may be exceptions to this, but I haven't seen it.  The exceptions may be the bigger homes - 9 or more bedrooms.

Regarding your statement about 50% occupancy currently - I think there are a lot of vacation homes that are struggling to reach that.  I have seen claims by property managers that some of their short term rentals are running 80%.  May be true, but, if it is, I have to believe it's because the nightly rates were cut drastically.

I have often stated in this forum that the most consequential money one spends on a vacation home rental here regarding profit is on upgrades and renovations to make a home fun and very comfortable.  As well as assisting investors with purchasing the best vacation homes for each of them, we handle the short term rental marketing for a select relatively few vacation homes.  They are extremely nice homes.  We are seeing the rental market getting back to normal for them.  We are now getting bookings for 7 days and more from people outside Florida.  Right after COVID the reservations were all 3-4 days weekend stays from Florida residents.  The only thing missing now is the international travelers.

I truly believe this is a great time to buy a vacation home here.  I think by this summer things will be back to better than normal before COVID. I think there are a lot of vacationers who are going to opt for a nice vacation home instead of a hotel because of the social distancing mindset.

I encourage you to keep looking.  The good deals are getting harder to find, but there are still some out there.

Keith

Brian Maloney · Answer

@Mark Vivanco Solterra is a nice community and one of the core resort communities here in the area. It’s a little farther away so rates will be, on average lower but it’s also less expensive to purchase than other communities and HOAs are lower. Most communities have a CDD. Encore is also nice, very high carrying costs and has preferred management so if you don’t choose one of the two companies in there to manage your guests will not have access to the amenities. There’s a lot of info to digest as this is a very congested and competitive market. I’m a local realtor as well as a property manager with Casiola Vacation Homes. I’m happy to talk with you and anyone looking to get some solid numbers. Please message me and I’m happy to chat.

Shawn McCormick · Answer

@Mark Vivanco Lots of good advice here from the others. I am working with a few different buyers considering other communities and we are finding the same thing. Bookings are already seeing an increase in the 3/4th quarter of 2021 and 2022 looks good already. Pent up families from all over the world are eagerly awaiting to travel.

You asked about Windsor Hills, I am under contract on a townhome there now. I found many of the units to be in need of upgrades both mechanical and finishes. The single family generally more amenities and nicer finishes. But as someone pointed out, it is very competitive so your finishes, theming etc have to really stand out in the photos (everyone is shopping with their eyes). Some of the newer communities like Storey Lake have amazing, modern, amenity rich homes that Windsor Hills can't compete with, but Windsor has a great reputation and gets more bookings than many other communities with repeats and good marketing. So keep that in mind too, do you want something turn key that will keep your cap ex down or something more of a bargain that you could update, but not be marketable for awhile.

Having the benefit of a unit that already has good traction and exposure is something to consider too. If you start with a new unit, you will have to build your ratings to get you in the agorhytm mix high enough to have your occupancy where you need it.

Mark Vivanco · Answer

@Keith Courtney how could your proforma statements, prior to COVID, not show a profit for Solterra?  There is no CDD, no resort fee, etc.  With a $450k home, all expenses should be between $2500- $3000 I'd assume.  With a low daily rate of $200 in worst possible months and dates, you need 50% occupancy to get a profit.  Are you saying my estimates are wrong or they couldn't even get 50% occupancy preCOVID?

What constitutes a better home for your standards?  Is it age, styling, etc?  I struggle a bit with identifying what that would be in my eyes because I don't know if it would reflect everyone's opinion - in general that is.  I would think if the kids rooms had some level of theming, the home looks clean and not dated (modern), a pool and use of the resort's amenities it would be a better home to me.  Is that the criteria I should be looking towards?

Jennifer Reed · Answer

Are you only interested in nicer resorts? If so, Reunion is beautiful and certainly worth considering.

There's a company called AllTheRooms that does analytics on STRs. You can find their channel on YouTube to see if you want to sign up to help you make a data driven decision.

Jennifer Reed · Answer

It sounds like a lot of fixed costs that guarantees Solterra makes money, but owners only make a profit in the best of times. If it were me, I would look for another community with lower monthly fixed costs and higher ROI.

Regarding COVID, I'm part of an international Rotary Club and Europe is still largely on lockdown from what the people in Netherlands, France, Switzerland and Ireland were talking about during a call yesterday. (Not sure about other countries.) Ireland even fines people 2,000 Euros for leaving the country if it's not absolutely necessary. If you drive on 192, the traffic is far from clogged like it used to be pre-COVID. If you install Disney's app you can see wait times for each ride at each park in real time. Rides like Seven Dwarf's Mine Train at Magic Kingdom, Slinky Dog Dash at Hollywood Studios, and Avatar's Flight of Passage at Animal Kingdom give a good indication of how many people are at each park. During peak times pre-COVID, the waits for each of these rides was usually about 3 hours. At this exact moment the wait times for those 3 rides ranges from 40 to 70 minutes.

Additionally, Disney will allow existing annual passholders to renew, but isn't selling annual passes to anyone that isn't already an annual passholder. This is to boost their revenue per attendee while capping attendance during COVID. When they start selling annual passes to everyone again that's when I think they'll feel they're back to normal and you can expect occupancy levels in the area to get back to pre-COVID numbers.

Sandrine Li · Answer

@Mark Vivanco did you end up buying in Solterra? Also heard it wasn’t performing as well as other communities, but the prices there are so much more appealing!

Louis Zameryka · Answer

@Mark Vivanco you have two excellent Orlando are professionals in this chat giving advice. @Brian Maloney and @Keith Courtney

I agree with you that based on some current listing prices it’s tough to get a profit going. Even whe rates get back to pre-Covid.

But.. Keith is right that post Covid a great unit (renovated well) and marketed well will get better than Pre-Covid adr’s (avg daily rates) and better occupancy. So If you can stomach a high down payment and renovation costs coupled with 3-4 months of bleak occupancy (hopefully while yuh are closing an renovating) you could be very happy in late 2021 and2022

Roman Strawa · Answer

@Joy James sure you can PM and we can take over there if that helps !

Joy James · Answer

@Roman Strawa

Hey, how did you get connected to purchase at reunion resort? We’re planning on getting into STR. Could you provide your contact? Thanks!

Disney Short Term Rentals in Soltera Resorts good or not?

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