All Forum Posts by: Keith Courtney

@John Menton

I am very familiar with the vacation home communities and others in the area that you mentioned.  I have pro forma statements  for short term rental homes in your price range, and I will be happy to share them with you.  I am not sure about the timing to buy something now, but we can discuss.

Feel free to private message me.

Keith

A quick comment regarding the above posting by Alice Horn - She said she couldn't agree more with me, but she is advocating to still buy short term rental vacation homes here at the inflated prices.  That's contrary to what I am saying.  In some cases you can pay the higher prices for some vacation homes today and still make money at the moment.  Here is the problem - You pay the inflated prices, and you will also be paying inflated costs to renovate a home, which you must do to maximize profits.  An important part of any investment is an exit strategy.  If prices back down as I think they are going to do, then, when you sell your home, you will most likely lose money on the sale. 

@Nadia Hale
We have had a big increase in prices for vacation homes here in the Disney World area.  A lot of vacation homes have been purchased, and many of the vacation homes have been purchased "blindly" - the buyers have no idea what it takes to make the homes profitable and be a good investment.

It may be that a number of those homes will come back on the market within the next 8-12 months. Therefore, the prudent thing to do may be to be patient unless a deal hits the market between now and then.  My experience recently has been every time a deal hits the market, there is a bidding war for it. 

Good luck with whatever you decide.

Keith

Ana -

I can give you quite a bit of personal feedback about the short term rental market in Kissimmee.  I am involved directly or indirectly with the purchase of vacation homes here, renovations, property management and the short term rental marketing of the homes.  There have been a lot of vacation homes purchased here in the last 6 months especially.  Prices have increased, and it is getting harder to find the good homes that have the most potential from a profit standpoint.

I would not rely too much on Airdna - it's too general.  What I have found is there are certain communities that have homes with great potential, there are many that do not.  I have also found that within these certain communities not every size home is a good investment.  You really need to analyze every home on a case by case basis.

I hope this helps a little.  Feel free to reach out to me if you would like more specific information.  I'll be happy to help you in any way that I can.

Keith

Mark -

Sorry about the confusion.  What I am saying is the pro forma statements on Solterra homes that I created before COVID did not show as much of a profit as comparable homes in other communities. I just looked at one that I did on a 6/5 home.  Using $295 nightly rate and 67% occupancy, the profit % cash on cash was 8.7%, and I may have been being generous with the income projection.  Comparable homes in some other communities yield 13-16%.  Bottom line is I don't think Solterra homes dollar for dollar are as profitable as comparable homes in some of the other communities.  This is just my analysis.  Others may have a completely different viewpoint.

Keith

Mark -

There is a HOA fee of $429/month. My pro forma statements include mortgage payments. Pre-covid, I couldn't find homes that were doing enough rental income to cover all expenses (including property taxes, insurance and mortgage payments) to make a decent profit. I am just stating what I have found. If you have found it to be different, that's great.

Regarding your second paragraph, my point is your home needs to stand out against all of the competition to be highly successful.

Keith

Hi Mark -

I am not personally involved with any homes in Solterra, but I have created pro forma statements on 5 and 6 bedroom homes in there pre COVID.  I used the rental income of the better homes in there based on the bookings I saw in VRBO and a good estimate of all expenses.  None of the pro forma statements reflected much profit if any.  There may be exceptions to this, but I haven't seen it.  The exceptions may be the bigger homes - 9 or more bedrooms.

Regarding your statement about 50% occupancy currently - I think there are a lot of vacation homes that are struggling to reach that.  I have seen claims by property managers that some of their short term rentals are running 80%.  May be true, but, if it is, I have to believe it's because the nightly rates were cut drastically.

I have often stated in this forum that the most consequential money one spends on a vacation home rental here regarding profit is on upgrades and renovations to make a home fun and very comfortable.  As well as assisting investors with purchasing the best vacation homes for each of them, we handle the short term rental marketing for a select relatively few vacation homes.  They are extremely nice homes.  We are seeing the rental market getting back to normal for them.  We are now getting bookings for 7 days and more from people outside Florida.  Right after COVID the reservations were all 3-4 days weekend stays from Florida residents.  The only thing missing now is the international travelers.

I truly believe this is a great time to buy a vacation home here.  I think by this summer things will be back to better than normal before COVID. I think there are a lot of vacationers who are going to opt for a nice vacation home instead of a hotel because of the social distancing mindset.

I encourage you to keep looking.  The good deals are getting harder to find, but there are still some out there.

Keith 

@Robert NA

I respectively disagree with Matt above.

If you look in Solara, Solterra, Encore, Reunion and ChampionsGate to name a few, there are a good bit more than 2 or 3 homes for sale.  I am not a fan of Emerald Island, but I am of Windsor Hills if you can buy a home with the right features at a good price. 

Regarding HOA fees - The HOA fees pay for the guard gates, community amenities, landscape maintenance, cable tv, wifi, and trash pickup usually. The HOA fees do not crush your cash flow. In most cases it is money well spent.

Keith

A couple of quick comments regarding buying a short term rental here in the Orlando area -

I recently helped an investor buy a vacation home here.  It took some digging before we found the right one for him.  I contacted one realtor about a home that in the listing description it stated "excellent rental income".  When he sent me the numbers, they were gross rental income numbers.  They included 13.5% sales tax and damage deposits.  When I deducted those numbers from the gross rental income numbers, the resulting number was not "excellent rental income".  

I have also heard from sellers that their occupancy percentages even during COVID-19 were 70-80%.  I handle the marketing of a select relatively few really nice short term rentals in some of the best resorts here.  The occupancy percentages for these homes are not running that high. When I dug into their numbers, I discovered that their occupancy percentages were 70-80%.  However, I also discovered their nightly rates were drastically reduced.

My point with both of these situations is make sure you know the whole story with the numbers you are given.  They can be deceiving.

My other point is I don't put a lot of faith in AirDNA numbers or general market studies.  I think you have to specifically analyze each specific home you are contemplating buying. A good example of this is in Reunion, which is a beautiful resort. My analysis of homes in it is it's hard to make money with a 5 or 6 bedroom short term rental in Reunion, yet the large 10+ bedroom homes can be very profitable if done correctly.

Keith

Hi Andrew -

I clicked on the Airdna link.  An area that is not listed for the best potential short term rentals in 2021 is Central Florida.  I am a little bit surprised.  As well as helping investors buy investment properties here in the Disney World area, I handle the short term rental marketing for a select few vacation rentals. Based on comments that I hear from renters, there is a tremendous number of vacationers worldwide who are anxious to come here and go to Disney World and the other theme parks. Currently COVID-19 is definitely negatively impacting tourism here and vacation rentals are suffering.  As COVID-19 begins to subside due to the vaccines and other factors, I think the short term rental market here will be better than ever, and the nicer vacation rentals will benefit much more than the hotels here due to social distancing.  Now may be a great time to buy a vacation rental investment property.  It'll take 30 days to close on the property normally, and then renovations (which are almost always needed) can take 30-60 more days.  A home would be ready by Spring for renting, which may be perfect timing.  

Keith