Purchasing a STR in the Kissimmee/Championsgate Disney area

[Tony Plumb]

We are looking to purchase an STR in the next month or two in the Kissimmee/Davenport/Disney area. After a ton of research we are starting to hone in on some specific areas and types of properties. I would like some input about typical occupancy rates and typical average pricing. We've done a ton of research on airbnb to see the typical rates but it's hard to judge accurately. Here is our current plan:

Purchase at minimum a furnished 4br townhouse with splash pool in a gated resort with amenities - purchase price around $330-$390k

We would put about 10-15k into setting it up for STR, theming the rooms (my wife is an interior decorator and already has a plan)/automating the property for remote management/adjusting furnishing if needed etc.

We plan to self manage remotely with a little help locally. We've had rental properties in the past, but this is our first STR, so I know the game is totally different.

It seems that these types of properties are not just going up on a monthly basis but they are going very fast as well.  We have looked at properties in ChampionshipGate, Paradise Palms, Storey Lakes as well as few others that fit within our plan.

I'd like to connect with a few of you that are experienced with self management with these types of properties to get your opinion about realistic rates, occupancy, cash flow and revenue.

Tony  

[Talen C Honeck]

Hey Tony,

I am a real estate agent that works in that area, I grew up around there, and my parents owned 6 STRs at one point in that zone. I have also managed a 150 rental portfolio remotely. So I am pretty familiar with what you are discussing. 

First off, I think taking the step toward exploring different kinds of investing is great. It is always good to expand your horizons. On top of that, if you do things right there is definitely money to be made on STRs. 

However, STRs are also way more work and more expensive to operate than you would guess. Many of them are newer which means you have fewer that struggle with the issues of just being worn out. Unfortunately, you deal with people breaking things way more often and you deal with tenant turnover once or twice or even 3 times a week instead of once every 1-3 years. It’s annoying when you turn a rental property after 2 years and their kids have wrecked the carpet. It is a whole different level of rage when a family reunion rents out your house for 2 days and ruins 1 year old carpet, smashes have the dishes, and breaks the door off a cabinet (I speak from experience).

After experiencing the industry, I find that people do far better when they think of it like buying a small business more than like a typical rental. This is not something you are going to want to be doing on a daily basis forever. I have not seen anyone self manage for an indefinite amount of time without getting burned out. Make sure the model doesn’t rely on you to do the work or you will come to hate it. If you feel like the numbers are at least break even with someone else taking care of it so you can take a break that should be fine.

As far as pricing and occupancy, those two go hand in hand. People have vastly differing products for different prices. They also differ for times of the year. Many of the communities have sites they use to market the community as a whole so you can do some research on those to get a feel for pricing.

No matter what happens it will be a growing experience. Let me know if you have something specific you need to know.