All Forum Posts by: Chris Rich

 What were the pros / cons for you that made you prefer Tampa?

I work for a PM company in the Orlando area and I can tell you Zillow almost always overestimates the rates by at least $100+. When I do my analysis I start with the MLS data because it will give you days on market (DOM) data. You can then analyze how long properties took to rent at certain price points and after price reductions.

I will then look at Z-rent because many self-managing landlords will list on Zillow.  I will then search the properties that APPEAR to have rented on Z-rent. Problem relying on Z-rent solely is that vacant properties that didn't rent will appear as rented just because the listing was pulled down despite not renting, and by doing that it is inflating the rental rates. You may also see the same property listed as "off market" and have an active listing at a lower rate.

When I present my analysis to my clients I will give them a rental range with a DOM to rent at that rate because vacant days are lost revenue and I want the client to make an informed decision.  

In my opinion, too many people don't learn from other people's listings. For example, in the first week of September I had a lead that wanted to list at $2,800 because, "It would be cool to make $1000 over the mortgage" despite the market being $2,200-$2,300 (We rented her neighbor's property at $2,250 in 11 DOM which is why she called up).  Well, I explained how most of the comps showed $2,200-$2,300, with $2,400 being possible, but with a longer DOM.  Most of the comps were originally listed at $2,700-$2,800 before renting $2,200-$2,400.  She chose not to work with us and instead hired an agent and listed at $2,700.... the property at this moment is still vacant and listed at $2,500.  If it rents at $2,300, that's $77 a day.  Even if it took 30 days to rent, she's lost over $5,000 in rental income.

My recommendation is to call a few PM companies and ask for an analysis, or ask your agent if they have a PM company they work with that can provide an analysis (I do for my referral partners).  Most PM companies will offer a free analysis.  Ask what process they use for their analysis and see what they say.  Some agents are well-versed in the rental market, but many are not.  If using an agent, ask them how often they lease properties because some will do it often for their clients who self-manage.  

Feel free to DM me if you have any questions.  Good luck!

@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.