Long Term Rental in Orlando. Thoughts on these areas?

Question

Hi there! I am looking for a Long Term rental property in Orlando to buy and hold, my goal is long-term appreciation, but of course, also looking for some cash flow. I have been focusing on Townhouses, 2 or 3 hab, built >2000 as I am a long-distance investor and def want to avoid frequent repairs and maintenance. My budget is 250K.

I have been analyzing deals for about 3 months now in areas served by good schools: Windermere, Winter Garden, Lake Nona, Celebration, Avalon and Meadow Woods. Most of the properties I have analyzed are showing between 2% and 3% Cash on Cash Return. Am I being too ambitious on trying to find something >3%? is that even possible in the Orlando market right now?

Every day fewer properties are meeting the 250K criteria. When I started my search there were many properties <250 and now it is rare.

So I started looking at Harmony. I have been able to find some 3 bedrooms townhouses that seem to generate some cash flow and 5% COCR. This is considering a rent of $1700 (I am using Rentometer). Does this number look right to you?

My understanding is that Harmony is a good community but is far away from everything. Would that mean it is going to be difficult to find tenants quickly? Does anyone know this market?

My preferred areas are still Windermere, Winter Garden, Lake Nona, Celebration, Avalon and Meadow Woods (in that order), but I am afraid I am not going to find my unicorn any time soon, so I am open to suggestions.Any thoughts on the areas I mentioned are highly appreciated. If there is any other area you think might meet my criteria, feel free to drop a comment.  By the way, the reasons I choose Orlando: following other friends who are investing there plus have family in the area (potential to build a team and build a network), projected job and population growth, people living in New York and other expensive cities moving to Orlando to WFH, companies opening new offices in the area, including the company I work for, ability to travel for free to Orlando in the near future. Thank you so much!

Shawn McCormick · Answer

Hi @Erika Pucciarelli you definitely picked some of the most attractive areas of Orlando. Winter Garden is growing like crazy and still has quite a bit of land, but prices continue to rise based on such high demand. Windermere has always been at a higher price point and is also very sought after (watch out for taxes there). Overall, everywhere you listed are great areas, but if your biggest criteria is schools, than you certainly have some other areas to consider.

You mentioned not wanting frequent repairs (that is something you have to build into your analysis of any property) If you don't have local contacts, a good, proactive property manager etc, perhaps you should consider new construction. You will get a brand new unit with warranties from the builder. This will reduce (not eliminate) cap-ex expenses and give you some piece of mind.

You will have to be further from the areas you mentioned to get even a townhome under $250. Think places like Sanford, Davenport/Haines City, Leesburg, Kissimmee and some others. I have some contacts that I can reach out to to see what inventory they have and price points if you like.

Happy to have a call about the market here and see if I can help you out.

Valentina Naumenko · Answer

Hi. In the preferred areas you outlined it is hard to get more than 5% return. However in other areas of Orlando return still is attractive. However, the higher is return, the higher is the risk

Patrick O'Sullivan · Answer

I live in New Smyrna. Lots of snowbirds come down, Orlando invades on the weekend.  The beach is constantly packed.  Things do not stay on the market long and it's a bit of a struggle to find anything halfway decent without over paying.

Lynne Smith · Answer

@Shawn McCormick ok sounds good. I also  heard it's the shark bite capital ah well can't have it all lol. I originally thought of Orlando but I want to be able to see the beach. Thx for your reply I will look into the local renting rules.

Shawn McCormick · Answer

@Lynne Smith New Smyrna is a popular destination, especially for locals as it is one of the closet to those living North of Orlando. I am not familiar with the local ordinances as they just change too often in these beach towns. I don't like that uncertainty as it could disrupt exit strategies. If you want to rent a room while you are there, that should be fine. And going longer term 7 months or more when you aren't there should be a viable option too. But if you are taking the winter months, it will be tougher to get someone to rent for just the summer months (unless you do nightly/weekly.

Lynne Smith · Answer

Do you have any insight on new Smyrna? I'm looking to snow bird but also possibly do some room rentals while I stay there. I know some towns are limiting short term stays and would need to look into that but i really don't know much about the area at all . Is that considered a nice area?

Scott Esmail · Answer

I like to invest in Volusia county. Deltona, Debary, Deland and Orange city areas. There is some good value still to be found but not as easy as back in the good old days.

Brandon Lilly · Answer

@Valentina Naumenko would you mind to point to some of these areas that can still hold some water?

Erika Pucciarelli · Answer

Thank you both @Shawn McCormick @Valentina Naumenko

Long Term Rental in Orlando. Thoughts on these areas?

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