All Forum Posts by: Chris Rich

@Petronella Kerssens I'd agree with a lot of what Josh said.  I don't think you can go wrong with either market... both Tampa and Orlando are top 10 growing cities.  We are a Orlando based LTR PM company, but we manage properties throughout Central Florida.  Orlando itself is a little tough to find well cashing flowing without BRRRRing.  A lot of our investors are looking at new builds in Ocala and Palm Bay because of the growth an appreciation, but they are getting a little saturated.  Within the immediate Orlando metro, you can see a pretty wide range of rental rates depending on neighborhood and property class. Are you looking more for cash flow or appreciation?  

There have been a lot of good replies above, and I would echo their sentiment - the answer is "It depends"

I know quite a few people with own LTR or STR, some with both. In our market (Orlando) STR CAN be quite lucrative, but most of the people I know with STR here are not seeing the ROI that people boast when they say STR is more profitable. My lender friend owns 8 rentals, 6 LTR and 2 STR (house in Kissimmee and a condo in Miami), and only recently started doing STR after his LTR portfolio could support the STRs. His occupancy is around 65-70%, which is above national average, but the ROI has not been all that is hyped up to be. He said he is likely to sell the Kissimmee house early next year because it has not been more profitable than his LTRs and he has no personal use for it like he does with his Miami condo.

My friend who has the best success with STR self-manages and is VERY active with it. It takes up a lot of her time, but she reaps the rewards. Her occupancy is usually 90% and has strong nightly averages. She also does most of the repairs herself, which cuts down on her costs.

Professionally, I have received 10 sales calls in the last 8 business days from clients wanting to transition their STR to LTR because they are not performing well enough to barely cover the expenses. With that said, after talking to them many did not do sufficient and adequate research before buying. They drank the "STR is the best investment" Kool-aid and bought a decent property, but not one that stood out from the other 20,000+ STRs in the area and did not want to invest money to theme it.

Like others have said, I think it comes down to your goals. Are you more concerned about appreciation or cash flow? Do you want a passive investment or one that may require more work? Are you hiring a manager or self-managing? What is your overall financial situation and what kind of reserves will you have for the property? One mistake I've seen with some STR owners is not saving enough money when the property is performing well, and then when the seasonality kicks in and things slow down, they do not have enough money to cover the expenses, which puts them in a bind.

Personally, I like LTR because you can largely "set it and forget."  Spend the work up front to prepare the house to show well, find good tenants, and then sit back and collect rent.  I pay for preventative maintenance plans and rarely have maintenance calls.  I like the passive nature of LTRs. 

My biggest piece of advice is this--- Tenant screening and selection is VITAL.

Do not let them send you money or sign a lease without first properly vetting the prospective tenants.  Establish your criteria (income, credit score, etc) and apply it evenly so you are not opening yourself to liability and a potential discrimination lawsuit.  If you let them move in after accepting funds or signing a lease, you will have to evict them.  

I recently had a client who was self-managing let a tenant sign a lease and move in July 1st with the rent and security deposit check "in the mail" because he was living out of state.  Needless to say, the check never arrived and the excuses began.  The eviction was finalized in late October, but not after losing 4 months of rental income and getting countersued for $4,600 for "painting" the tenant allegedly had completed. 

Most of the self-managing landlords I know that have problems did minimal, if any, tenant screening.  Those same owners often experience evictions and problematic tenants.  Conversely, the ones that do rarely have issues. Additionally, my company's eviction rate for 2022 was 03.% with over 1,600 properties under management.  Remember that it is a business and an investment, and treat it accordingly.  

Hey John,

I've had quite a few sales calls lately with that exact scenario, and each time the owner wants to keep it furnished. None of them actually wanted to LTR, but were only doing it to generate revenue because it is not performing as well as expected as a STR. They all said they would go back to STR at some point once the market improved, which is why they did not want to remove the furniture and put it in storage or sell it.

I know that doesn't really answer your question, but we are seeing it a lot recently.

 Marcela, are you looking for the immediate Orlando area or are you considering areas within a certain radius of Orlando?

Hey Jordan, we do LTR property management and service that area.  I'd love to connect and discuss our company and services to see if we are good fit for your needs. 

 Marc with Home Theme Orlando does some really impressive work (https://www.homethemeorlando.com/) if you are looking for higher end theming.  They are not cheap, $10-15K per room, but the quality is top notch and they are really cool. 

There have already been some great replies covering the NEEDS, so I won't comment on the LLC, insurance, or lender variables.

But I do have a few pieces of advice:

1) Prepare the house to be listed and have it reflect the type of tenants you want.

Far too often you see owners transition their property to a rental and don't properly prep the residence for renters, which leads to longer vacancy periods, lower rental rates, and sometimes less desirable tenants.

When we transitioned our primary to a rental, we patched all the holes, painted most of the walls and touched up the baseboards, cleaned the tile and grout, deep cleaned the appliances, and manicured the landscaping.  Then I had a friend come in and walk the house with fresh eyes and evaluate the property and he said it looked good.

We spent about $500 in supplies and it took a sweat, but the result was approved tenants in 4 days at the top of the rental range for the area. 

2) Get a good CPA who is experienced in real estate investing.  There are a lot of tax advantages to owning a rental property.  Also, look into a cost segregation study once the property is in service as a rental. 

Good luck with the transition!

Hey Alex,

Yes, there are a lot of both STR and LTR in the Kissimmee / Davenport area, but that doesn't mean necessarily mean it's not a good area to invest. The key is finding the areas / neighborhoods with strong rental rates that are not saturated with too many LTRs. I would not be too concerned about the STRs because from what I am seeing with the STR owners transitioning to LTR, most of them want to rent it furnished as a LTR and charge more than market rent. The bigger concern is the saturation of existing LTR rentals.

If you are looking at any specific properties and want me to do a rental analysis, feel free to DM me.