All Forum Posts by: Rachit Puri

1) Orlando is very easy. Huge city with lots of STR (well, Davenport/Kissimmee of course, but people call it "Orlando"). Plenty of PMs more in the 15% range here with all the competition, but if you want to self-manage Orlando is as easy at it gets as there will be a zillion cleaners, handymen, etc to choose from, plenty of big box stores, instacart, same day amazon delivery, etc. Essentially, it's tier 1 in terms of STR infrastructure.

2) Yes, and strongly recommended.  In Orlando, you want to spend your money on theming, not furnishing.  You can spend $60k on furnishing to make your place look like all the 40,000 other rentals, or you can spend $60k on theming to make it stand out and be one of the top 1,000.  The latter is not only the obvious choice, it's the necessary choice if you're working with a budget.

3) No.  You start over. 

4) In Orlando area you're most likely looking at the gated resort communities built specifically for STR. You won't even come close to covering the mortgage as a LTR. People that say you should make sure your property can work as a LTR too are talking about regular cities that aren't tourist destinations. Like in Akron OH you could probably buy a place that will work as a LTR if STR doesn't work out. But in tourist destinations like Orlando, Gatlinburg, Destin, etc it's not realistic. LTR rates in those areas won't even come close to what you need to cover the expensive mortgages that are driven by STR revenue.

5) Both, maybe?  Everywhere is saturated now.  The difference with the Disney area is that there have always been lots of rentals, so it's a different kind of saturation.  In rural Southern Utah "saturation" means that there are 400 rentals now in a city that had 30 rentals 3 years ago.  In Disney it's not that there are more rentals, it's just that there are more GREAT rentals, which means you have to really stand out, and when you do stand out you're still going to have more competition.  That is, there are maybe 40,000 rentals now whereas there were 37,000 3 years ago, which is a negligible difference.  But the major difference is that there may be 2,000 nicely themed properties now where as 3 years ago there were 100 of those.

450k purchase price or cash?  450k isn't really going to get one of the "big" places in Orlando if you're talking purchase price.  "Big" in Orlando is 9+ bedrooms and unlike other markets, there are tons of them even in that size.  That's not to say you can't do well with a 4-5 bedroom place, but just clarifying that's not what people mean when they say "big" in this market.

I'm not affiliated with STS but I know the STS realtor in this market and you're in very good hands.

Hi - we own STR, list and manage a number of priorities in ‘Orlando'.

Depending on your revenue forecast, our property management business model, would save thousands compared to the traditional commission fee model. 

There were plenty of LTR happening in the STR resort communities here during Covid, not so much now. A lot of your questions you'll find the answers to, by knowing the competition, or finding a really good local agent.

For example, STR are zoned in orlando, so having a LTR in a zoned STR areas would not make you competitive on monthly rates compared to a non STR zoned home. The HOA's are huge here in STR zoned areas.

Saturated? For townhouses and condos, yes. Unfortunately, for your budget a 4 bedroom home will likely get you a townhouse or condo (I could be wrong).

Bedroom demand for each STR resort is different, and global demand has always been there for Orlando/Kissimmee/Davenport, given Disney World/Universal. I therefore don’t think it is saturated, you just been to weigh up how big demand is for what you are specifically offering. 
Supply for a 3/4 bedroom in the area is very high, which will limit your passive revenue, and have you competing with condo prices. As condos compete with hotel prices, this will mean your daily rate will end up being a great deal for guest, and not so much for the homeowner. 

If you can stretch your budget to get a 5+ single family home (some nice ones at Windsor island), or create a killer themed townhouse, you could get closer to $75k+ in annual revenue. For a 4 bedroom you’ll struggle to hit $45K+ annual revenue.

All the best, let me know if I can help further….Andy  

Good advice here @Rachit Puri. I can't see you doing well with 450k IMHO. We looked 2 years ago and everything in that budget range was not able to perform, even with us managing it ourselves.

The ones that seem to do really well is in the 1m plus range. Like @Ryan Moyer pointed out, the 9+ bedroom themed places do very well, but the buy in is high.

1. We all do it just jump in :) it’s not easy or passive but can be fun. 

2. Most will come finished in your market. That said it’s a used couch. 

3. You don’t keep the reviews and you don’t want the bookings better to start from scratch. 

4. A good vacation market will not make sense as a long term. I’d forget about this part. 

5. Saturated is a buzz word. Orlando has always had a ton of rentals. You just have to be better than the rest. 450k will probably be a bit out of reach for a large home. 

Hope this helped! 

If you're not meeting the 1% rule (which should really be the 2% rule), and you have to really make a push to raise rents on an existing tenant, you might be getting yourself into a sticky situation especially as a new investor. Just a thought! Looks like you're really thinking ahead though which is a great way to analyze deals! 

I'm in the Houston area so please let me know if I can help in any way! 

@Rachit Puri - Great questions, see my responses below:

1. I do not own in Texas or Houston so I cannot advise.

2. Normally when a tenant is month to month, you have the ability to raise rent within 30-60 days and set them up on a new lease so yes, you can convert them to a year lease.

3. Where interest rates are at, I would not consider a deal that cannot meet the 1% rule in the first 12 month months of ownership. Sometimes it takes time to stabalize a property and get the property to perform at max value, but if that max value does not exceed the 1% rule, I cannot see a property cash flowing at a 6 or 7% interest rate. That is just my buy box, but I do know other people that invest in expensive/highly appeciating markets like Boston and get no where near the 1% rule. Most of their plays are forced appreciation plays though.