Kissimmee Florida STR advice/property management

[Tim Phillips]

I am a real estate investor in northeast Ohio. I would like honest advice about the current market for STR's in Kissimmee. Our goal is to invest wisely, but to be honest, my wife and I really enjoy traveling to central Florida and would love a place of our own to visit on occasion. Please feel free to give honest thoughts on realistic returns, and if anyone has any recommendations of property management companies that will give honest guidance, that would be greatly appreciated.

I have two main concerns based on what NE Ohio real estate investors have told me so far

1)  Oversaturation in Kissimmee

2)  Expected general decline in Florida RE values

Thanks!

Tim

[Ryan Moyer]

I am both an investor and manager in the Orlando area.  

For a lot of investors Orlando is a really poor choice. For some investors Orlando can be a really good choice. If you have a typical mortgage (80% LTV) It's not a cash flow market unless you are willing to spend extensively on theming/upgrades. With theming, it can be done but you still need to weigh it against the saturation even within the theming submarket, which has exploded.

Regarding your questions

1) Saturation is very real here, and the biggest "problem" for owners by far.  Not just quantity saturation, but quality saturation (the houses are gettting bigger and better, pushing formerly top-end houses down the list into appearing more mediocre by comparison)

This is my property: https://www.airbnb.com/rooms/52612233

Three years ago I would have said it was a 99th percentile property.  Now?  Not even close to that.  But it still makes me good money.  Of course I have a different mortage than you will.  I'm happy to share those numbers.

2) Orlando has already declined quite a bit off of the peak RE values.  The question is where the bottom is.  There's a chance you might be catching it before it bounces back up.  Or a chance it's a falling knife that will keep going.

I bought my property for $568k in 2021. Disregarding the theming (IE just comparing the appraisable size/comps of the home) it probably peaked out at around $900k in value during the RE peak, but is probably worth $650k-$700k now (again disregarding the upgrades). So as you can see, almost back down to where it was before the big RE boom, whereas in most STR markets the homes are still 2x the price they were in early 2021 if not more. So maybe that RE decline that's coming for those markets is already built-in here.

Orlando does offer other major long-term advantages like long term demand (will Broken Bow still be a place people travel to in 10 years?  Maybe.  Will Disney still be a place people travel to in 10 years?  Certainly) and some of the lowest regulation risk in the country so long as you buy in the approved areas.

I'm happy to share real world revenue and theming examples as well.