- Because Orlando is the number 1 tourist destination in United States. Our International Airport is receiving close to 60 MILLION visitors each year (per travel data) and this number is growing steadily.
- Because Disney, Universal Studios, SeaWorld and even Lego Land.
- Because Orlando has excellent shopping, restaurants and amenities. whereas it used to be Miami that had the best shopping, this trend has shifted in past years gradually where Orlando is competing to that “best shopping” spot as well.
- Because of the weather – sunny and warm for the most part of the year!! That will always be a great attraction to tourists.
- Because many see Orlando as the place where they would like to retire. Family friendly atmosphere and number of great schools to choose from.
- Because we have some of the best golf courses, many come here to play year after year. The new soccer field and Orlando Magic arena.
- These are few of the reasons why Orlando is, and will be for a while the number 1 tourist destination.
So, what is needed to generate double a digit annual returns in vacation rental (short term rental) business?
Well, it is actually pretty simple – the right ingredients. As the market and trends are is changing, the criteria is shifting as well. I have created a short list of bullet points to bring out what, how, why and where.
- A resort type of community with plenty of amenities – i.e. Emerald Island, Windsor Hills, Champions Gate, Solterra or Reunion
- Size matters!!
- There are lots of 3,4 & 5 bedroom properties – lots of competition.
- Even 6, 7 & 8 are available in handful of communities now – some competition.
- Now 10 bedroom or larger homes are just newly introduced to market place and in high demand – very little competition. As many families vacation with either friends or extended families, they require bigger homes. Rather than renting 3 or 4 hotel rooms, or 2 houses, many prefer to stay in a bigger home that fits all. Also these 10+ bedroom homes usually come “fully loaded” with game room, movie theater room at least 2 family areas and 3 to 4 master bedrooms. Some even have bowling ally’s.
- In example the 10 bed 10 bath floor plan unit in Reunion Resort is renting for $750 p/night on average (high season well above $1000 p/night) and generating over *$80,000 NET INCOME annually at 60% occupancy – which is the average occupancy rate (*per Jeeves Property Management – contact for details). Whereas the break-even point is at 20% – 22% occupancy.
- Style, color, curb appeal!!! Themed kids bedrooms, game rooms, media rooms – as most homes are rented online nowadays, and statistically by women (with heavy . Additionally homes with lot of great colorful photos get featured more, therefore generate more rentals.
- Amenities – both community and home. Game rooms, pools, spa, movie theater, etc. Both top communities (Reunion and Champions Gate) invested heavily into amenities. Both have their own water parks, golf courses, spas tennis courts and Reunion even is adding a wedding chapel (great idea if you ask me).
- Location of the home within the community and direction of the pool. South and West facing pools get much higher rate due to the all day sun exposure. Water, conservation or golf course view also adds to rental potential and nightly rate.
- Great property management company. Top companies do not even go to “so called” lower end communities – they do not have to.
So what would a property like this cost me?
- Most of the re-sale vacation rental properties (5 bedroom) sell from $225 – $350K. Averaging $250K range. Most of these properties rent $200 – $450 p/night.
- A new construction homes start from $350K and up (average home being $400K-$550K). Average nightly rate $350 – $500 p/night
- A New 9 – 10 bedroom (high demand) property prices at moment are starting from $500K – $700K, average nightly rate $650 – $750
In conclusion – the vacation rental can be very lucrative especially when adding the rental revenues and appreciation together, but it should be the right property, in the right community and managed by the right company
Is Orlando a top vacation rental market, or not? – I say yes! It is up to you to make up your mind. Just do not wait too long, before the train leaves the station and you’ll be left behind.
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