All Forum Posts by: Shawn McCormick

 @Matt Kalish You can certainly enter the market at $350, but you will be limited to mostly condos and townhomes that aren't in the high performing communities. So the competition for nightly rates and occupancy get higher. Those types of properties can and do make money, especially if you are purchasing to offset vacation time with family or use it for corporate spiffs etc. But purely as a cash flow investment, it will be much harder. Also in that price range especially, there are cash buyers that you won't be able to compete with. I've submitted dozens of 20% down offers on homes in this price range, waiving appraisal, going 20k+ over asking and still can't win offers.

With the bigger homes, there is still stiff competition from hungry buyers, but the rewards are bigger if you land one. But even with the bigger homes, you still have to make your property stand out and manage it well or you will fade into the masses. In regards to occupancy rates, they are as high as I've ever seen them. Noting that I have many clients that bought the bigger homes (7-9 beds), they are all seeing 60% or more for the year already and we are only two months in. Imagine what they will be at in 2 more months. And we still don't have the International travel back yet. I just closed on a 7 bedroom yesterday in Storey Lake, they have $12,000 in bookings already by pre listing it. Plenty of cash flow in this market.

@Matthew Nadel I'm in Orlando and can get you some great information on what this city has to offer in regards to home types, communities that perform the best and help with some projections too. If you are outside of Orlando, I can still help with a great referral, but wouldn't have as much direct knowledge. Let me know if there is something specific that you are looking to know to help get you going.

 Yes, I have a 'top 10' or so that do very well (depending on size and community), but it is still up to you to manage it well and get good reviews etc. I have several under contract right now.

@Sharonda Frazier I'm in Orlando and could help with the ins and outs here with regards to the STR market, but I don't know the Carolinas at all other than vacationing there a few times over a couple of decades.

With the market the way it is, finding a distressed property is hard enough, finding one that is in a good STR area is next to impossible. $350 won't get a townhouse here, let alone a single family in a decent neighborhood with the amenities needed to be successful as a short term rental. Not trying to be harsh, that is just the reality we are all in right now.

You could do, as others have suggested a second home loan at 10% and not have to worry about rehabbing it (okay, maybe some painting and cleaning and a little theming). Not sure about other markets, but 99% of the homes in good communities will come fully furnished and with future bookings in place. So you are getting a 'turn key business' basically. And with Spring break almost upon us and the summer season right behind, that is a big benefit to buying now. Inventory is incredibly low, prices are high, interest rates are climbing (DSCR will be even higher).

Best of luck to you! Keep us posted

@Gabe Nazario are you planning to self-manage? If you find the right PM and build that cost into your proforma (even if you want to self-manage, you should build that in) they can help with all of those other pieces. Some PM's will nickel and dime you, but finding a consistently available cleaner, handyman etc could make this a full time job for you and you'll wish someone else was doing that piece for you. I can recommend @Jay Breitlow to you for a very hands on PM.

As for the arbitrage piece, I just went under contract on a home that the seller has been allowing this from his tenant and there are a few others out there doing the same in some of the better communities. Most of those contracted during the height of the pandemic as a safety net to make sure the bills were paid. Now that the demand is higher than ever, it will be tough to find someone that will let you do that. And if you are in Jersey City and don't have the local knowledge/contacts of making a STR very successful in Orlando, that would be risky for me.

Best of luck to you!

@Saurabh Gupta I was just in that area today, not as far as Harmony..I don't know enough about it and it's really too far out of my scope. I don't think you will have the demographics you will want that far out. There is a new area being developed near Lake Nona called Sunbridge, prices are already steep, but the demand will be there and quality tenants too.

@Mateo Arias Gómez, valid questions. That is why picking the right market and understanding why it exists should be a starting point. If you buy in an area that depends on skiing and they have a couple mild winters, you aren't going to last. If you buy near a beach and flooding, insurance, hurricanes, local ordinance changes or a combination of all of those, you will lose. 

I'm in Orlando and believe me, Disney, Universal, Seaworld and all the things that feed it aren't going to vanish in our lifetime, so to me, it is one of the safest bets out there long term. Orlando was built for STR and as others have mentioned, do your job, stand out and you will do great.

Good luck!

@Saurabh Gupta Lake Nona is going to cost you, new construction is in the high $400's to start. Resales get gobbled up instantly. Since the majority of the area is new/newer, much less chance of getting something distressed, therefore values will hold for some time. 

What is your primary goal and are you stuck on Lake Nona? 

There are several other areas that are doing well and haven't reached the prices of Nona. So if you are looking for well qualified tenants stick closer to Orlando and bigger/newer areas (lake nona, winter garden etc) If you are looking for price point and new construction is an option, I would recommend getting in early on a bigger development so the builder will force appreciation for you and you'll still have plenty of tenant options. Deltona, Haines City, Davenport, Minneola, Groveland, Mascotte, Apopka are all big growth areas with a ton of new construction opportunities.

Best of luck!

@Mariam Dao I have some great contacts for theming/furniture/design that have done some great work for my clients. I sent you a PM.

@Mateo Arias Gómez Lots of questions to answer and reply to. I'm in and out of these homes alot. Damage is part of the game, that's why the profits are more attractive than a long term rental. You or your PM need to really keep up on all aspects of maintenance, I can't tell you how many sellers sell because they get 'bad reviews' and it's 'too much work'. These are a small businesses and have to be treated like such, you are reviewed and rated based on many factors. Most of your guests have saved for years to come to Disney, they want perfection and as a business person, you should give it.

Furniture gets dinged, walls get dirty, plates and glasses get broken or stolen. Build that into your pro forma just like you would vacancy rates, capex expenses for other rentals and you'll be fine. Theming will definitely play a big role in your revenue as Ryan has proven easily. I have walk-thru videos of some of the bigger homes in Storey Lake, Solterra, Solara, Championsgate etc. Some look great, some need work, but they could give you insight into what to think about.

Hope this helps a bit, always happy to help.