All Forum Posts by: Shawn McCormick

@Alex Schroeder Hi Alex. The brokerage I work for is Global. I would be happy to put you in our system to get a referral for you in Dayton. I can personally vet the agent to make sure they understand your needs as an investor. I live in Orlando and currently also buying in Ohio (Toledo). Reach out if you would like to connect.

Hi @Chris Collins. I see a few holes in your calculations right off the bat. No Vacancy? No Cap ex? For that purchase price are there rehab costs that will need to be considered, where is that money coming from, are there loan costs involved for the rehab money? Taxes are quite low. Closing costs?What type of property is this for that price with no HOA (not a condo or townhome I assume..)

Happy to talk thru some of this if you like, feel free to reach out.

Hi @Ana Plasencia I work with many investors in this area. I have two STR under contract and just closed another....all BP members!! These are in 3 different communities that will all perform well.

There are a lot of variables when considering this. I would be happy to have a chat with you to discuss my experience and see how else I can help you. Reach out anytime!

Hey @Troy Anderson. Just a couple of years ago, the 'rule of thumb' was 65% of ARV minus repairs. Depending on the area, you could get away with 70-75. With the market so good and sellers being more educated about cash offers (because they are getting offers from so many wholesalers, I-buyers and realtors and now know they can bid them up). The margins have decreased and wholesalers are often putting out deals at 85%.

IMO, that is not enough room for error, let alone profit. Even if you are a contractor or it is more of a lipstick flip, 15% margin just isn't attractive. That doesn't mean people are buying those up like crazy, they are counting on appreciation during the flip.

I am a realtor and on my last flip, I had the absolute max ARV at 190-193,000 when I started the project. It took four months and I listed it at $229,000 and got it and it appraised. I was blown away and I was 100% sure of my comps. So I won on that deal because the market changed that quick while I was flipping.

My advice would be to build your buyers list and lock up deals as low as you can, add your fee and test the buyers to see what they think. There are motivated buyers needing to put money to work and if they are willing to overpay, than you win. I don't think that will work in the long run, you need to build your reputation as a wholesaler that puts out good deals with good margins so your buyers have confidence that if you bring them something, they could make money from it. If you always put out deals that your comps are not accurate and your repair estimates are out of wack, you won't sell deals.

Good luck out there, it's a tough time to be strictly a wholesaler.

@Michael Baum. So I don't work for the PM, but the way the structure it is if you want to book a stay for your friends or family and block off holidays or whatever..instead of the PM taking 20%, they only charge $50.

The 20% is for them to do everything, market, manage, maintain, book, clean etc. And if you get the right one, they should be able to get you more $ per night, more nights per month, keep on top of regular maintenance issues by doing spot inspections to watch for wear and tear etc that would be missed or unreported if you self managed..causing bad reviews...causing lower bookings. IMO the 20% more than covers itself, even with one unit.

Yes, the tour operators will generally go for 7-9 bedroom homes. If they have a group of 300 cheerleaders or tourists, they want them all to stay in the same community and deal with one company that manages enough homes there to accommodate them all. They will usually pay a premium to make sure that happens. they don't want to be dropping off guests at 3 or 4 different resorts and trying to keep track of all that and dealing with several PM companies with all different rules, pricing etc. 

Hi @Matt Brazis. Money is easier to come by these days and no offense, but with 55k, you will likely be lending on a flip and only for the rehab portion. This means that you will probably be in Second position and won't have much protection. Just a thought

Hi @Jon H. IMO, there are pros and cons to both, of which others have already mentioned. Some PM companies will set up websites and landing pages for your properties and that will help with your marketing. I would be willing to bet that most anything that has to do with Disney/Universal will be hard to find a unique and memorable name that don't already have tags and ad spend that may put you so far down in the searches/algorithms that it may not be worth it.

The fact that you mentioned these will be condos makes it even more difficult to brand and stand out, there is much more competition in that space as the units are really tough to make special/unique from all of the others. You are competing with other condos, townhomes and even hotels at that point.

I also don't necessarily think that travelers are looking to connect with hosts if they are traveling here or the parks, most owners of these live out of the area and will never meet the guests and there is no expectation of that. If you were in other areas of Orlando and they were coming in for a funeral, sporting event, to see family, go to the beaches..that is really where the connection is made if you get a chance to meet them.

I'm quite familiar with many of these communities, some perform much better than others and there are many factors in deciding other than purchase price. I'm happy to have a call with you if it would help. 

Good Luck!

@Shawn Green  First off...Happy St. Patricks Day to you sir!

I have clients under contract or just closed in 3 different communities and I've seen so many of these homes lately including new construction community that is going up, so I have some first hand knowledge of them. 

There are really so many variable that go into your questions. First off, IMO, for a home that size, you will get much better returns going with a larger PM. I have an awesome one that does direct to tour operators and that means more bookings, longer stays and premium rates..you won't be competing with mom and pop or self managing that really only have access to airbnb, VRBO etc. The rate is 20%, but you can use the unit yourself and book and only pay $50, rather than 20% and still get the advantage of the PM, cleaning etc. Bookings are getting much better right now (spring break, easter and more planes are flying!) 2022 is filling up well also in anticipation of everything being open.

Theming is a huge deal, it can really separate you from the crowd. Tour operators will require you have at least two themed rooms and a game room (usually garage). The 3/4 bedroom homes and townhomes can't compete with that either. I have a great contact that does the high end themes, wraps, game rooms and garage conversions, they do a fantastic job.

Let me know if I can help in any way or if you have other questions.

Hi @Gerald Lunetta. I just went under contract on a condo near Kissimmee and have clients that closed on a townhome in Windsor Hills (a short term rental community). With smaller units, there is plenty of inventory and competition, not only with similar properties, but with hotels. There are many factors to consider if you plan to do STR. Look at airdna.com for some metrics or just browse airbnb for similar properties in your area and look at the calanders and pricing. smaller units and individual owners still aren't fully booked and many are still keeping prices below market to keep them full, this will affect what you can charge too.

What amenities does your community have, what are your expenses, are you self managing (do you have the time?), the learning curve could cost you a lot of rentals and you've already missed the spring break and easter business. What is the mix of owner occupied/rentals, what is the condo's policy?

By the time you get up and running and get your review status up, you'll miss much of the spring/summer season. Although STR can seem sexy and the potential to make more than a long term rental, you also have to consider the start up costs...furnishing, linens, plateware, small appliances, washer/dryer, baby gear, decor, pictures, curtains, televisions, games, routers, professional photos etc etc.

Hope this helps a bit, not trying to talk you out of it, just food for thought.

Hi @Erika Pucciarelli you definitely picked some of the most attractive areas of Orlando. Winter Garden is growing like crazy and still has quite a bit of land, but prices continue to rise based on such high demand. Windermere has always been at a higher price point and is also very sought after (watch out for taxes there). Overall, everywhere you listed are great areas, but if your biggest criteria is schools, than you certainly have some other areas to consider.

You mentioned not wanting frequent repairs (that is something you have to build into your analysis of any property) If you don't have local contacts, a good, proactive property manager etc, perhaps you should consider new construction. You will get a brand new unit with warranties from the builder. This will reduce (not eliminate) cap-ex expenses and give you some piece of mind. 

You will have to be further from the areas you mentioned to get even a townhome under $250. Think places like Sanford, Davenport/Haines City, Leesburg, Kissimmee and some others. I have some contacts that I can reach out to to see what inventory they have and price points if you like.

Happy to have a call about the market here and see if I can help you out.