All Forum Posts by: Talen C Honeck

Hey Tony,

I am a real estate agent that works in that area, I grew up around there, and my parents owned 6 STRs at one point in that zone. I have also managed a 150 rental portfolio remotely. So I am pretty familiar with what you are discussing. 

First off, I think taking the step toward exploring different kinds of investing is great. It is always good to expand your horizons. On top of that, if you do things right there is definitely money to be made on STRs. 

However, STRs are also way more work and more expensive to operate than you would guess. Many of them are newer which means you have fewer that struggle with the issues of just being worn out. Unfortunately, you deal with people breaking things way more often and you deal with tenant turnover once or twice or even 3 times a week instead of once every 1-3 years. It’s annoying when you turn a rental property after 2 years and their kids have wrecked the carpet. It is a whole different level of rage when a family reunion rents out your house for 2 days and ruins 1 year old carpet, smashes have the dishes, and breaks the door off a cabinet (I speak from experience).

After experiencing the industry, I find that people do far better when they think of it like buying a small business more than like a typical rental. This is not something you are going to want to be doing on a daily basis forever. I have not seen anyone self manage for an indefinite amount of time without getting burned out. Make sure the model doesn’t rely on you to do the work or you will come to hate it. If you feel like the numbers are at least break even with someone else taking care of it so you can take a break that should be fine.

As far as pricing and occupancy, those two go hand in hand. People have vastly differing products for different prices. They also differ for times of the year. Many of the communities have sites they use to market the community as a whole so you can do some research on those to get a feel for pricing.

No matter what happens it will be a growing experience. Let me know if you have something specific you need to know.

@Wayne Brooks

I wasn’t looking for any incredible steals right now.

Where the investor I work for operates now we cover a fairly large area and comp every single auction that goes on in about a 2 hour radius from our office. By the end of the year we usually buy around 3-4 a week resulting in around 200 houses a year from that source (which is his largest source) with an average of 21k profit after repairs and transactional fees are taken out. He operates on a volume model rather than looking for home runs.

I was hoping to copy his model on a smaller scale. Buying 10 houses that way would be plenty for me. Since Orlando is so populous, if I cover an area 1/2 the size I can find about as many sales at the auctions for 2 counties.

When I was doing research to see how the sales turned out it looked like there was enough margin for that. Obviously that calculation would change if I was regularly running into 25k in fees that weren’t obvious and I wasn’t used to dealing with up north like the ones you talked about.

Should I take your advice to mean that model won’t work in Florida?

@Wayne Brooks

Just to be clear, there is no way to judge what outstanding HOA debts, code violations, or water liens might be applied to the property without being recorded yet and there is no time limit on what I might be responsible for?

If that is the case, how does anyone buy foreclosures in the state of Florida?

That seems so far into the risky spectrum that foreclosures would always have to have huge margins to account for that level of risk. That seems especially odd since the banks are actively trying to facilitate the sale. The only way I can see that not being a huge impediment to the whole process is if their was some way of generally quantifying a maximum value that they could be.

I must be missing something.

@Ron S.

Thank you for the response and referral. The information provided is very helpful.

@Wayne Brooks

Thanks for the great information. That is basically in line with the research I have done. Seems like there is a lot more to worry about there than there is in Virginia.

Aside from the standard steps like getting title info, are there any due diligence steps you take to make sure you have no surprises as far as extra expenses?

Are there any good resources out there to familiarize yourself with the unique ways different states handle foreclosures and what to look out for in those states? Specifically, I would love to know the risks of buying foreclosures in Florida and how to avoid them.

I currently work for a very large real estate investor in Virginia who flips hundreds of houses a year and would love to replicate his model in Florida (to be closer to family). I am involved in the buying side on comping and repair plans but not as much on the legal aspect just yet. Although I am getting exposed to the risks of bidding on them in Virginia, I will have to learn a lot more about how Florida handles that. It puts me in an awkward position because I am not a newbie but my knowledge is deficient in an area I need to be an expert in if I want to put the rest of my experience to work.

Anyone out there who can help me and others like me close this knowledge gap?