Orlando Kissimmee Investment Properties What Should You Consider?
Orlando Kissimmee Investment Properties Guide. If you are considering an investment property in Orlando or Kissimmee there are many things to consider. The type of property to invest in. How much will it rent for? Where the property is located? Short or long term? Vacation resort or standard community? Who will it attract? And what help you should have acquiring it.
To start a investor would require the help of other licensed professionals. A home is the most expensive purchase most of us will ever make so it should get the best help for no added cost or small cost.
- Realtor – One that is knowledgeable in various communities, towns and cities. A realtor that has a understanding of the tourist attractions and how they play a role in driving tourists to the location. What times of year are busier at these attractions. Your Realtor should be able to point out pros and cons, and point out pitfalls. The realtor should also recommend the proper professionals required. Please note your Realtor should not do what other professionals are Florida Licensed for such as give tax or legal advice. Think of your realtor like a general practitioner doctor. Has some understanding of many things but needs to refer you to specialists.
- Mortgage broker – For a thorough pre-approval. This is a first step! It make the process easier. Be sure to get a pre-approval that has already gone over all your financial documents and possibly even sent it to underwriting.
- Accountant – A licensed CPA, Or tax attorney is somebody you should contact and have ready to work with you. The licensed CPA can help you with aspects of taxes.
- Florida Real Estate Attorney – Should always be on call to review a purchase contract. The Attorney should specialize in Florida Real Estate. Attorneys are trained to know the law and help you avoid the pitfalls.
- Home inspector – is another essential professional that should also be on call. The home inspector can help you uncover issues in the house. Home inspectors are trained to find damage that is visible in readily accessible areas.
- Licensed home appraiser – is great to have especially if the home is a custom home, or is full of lots of upgrades. The appraiser is trained in knowing the value of components.
All these professionals are licensed and trained to provide a role in the home purchase process.
Property Management Company or do it Yourself?
Property management companies are also the heart of resort-style communities. For example, if you purchase a home in a resort-style community the resort wants to keep the properties in the area up to a certain set of standards.
The resort either creates its own property management team or contracts out to and outside property management team which has to follow the standards of the resort and answer to the resort and the resident in the event of a issue. These communities often have two or more options what property management companies.
Something to ask yourself is if you want have the least amount of responsibilities then potentially a resort community that has their own choices of property management may be right for you.
Now to find an investment property. You have to ask yourself what is your goal?
- Are you looking for a short-term rentals such as Airbnb?
- Are you looking for a longer-term rentals such as a 6-month eight month 1 year term?
- Possibly looking to rent to snowbirds from other states that come to Florida for the 6-month or more time range?
- Or are you interested in the 1 day to 14 days or more, vacationers?
Maintenance on the home should be a factor to consider.
Short-term rentals such as a one day to day three day are going to require cleaning each day unless otherwise stated in the agreement. But a longer term rental such a six month or more would probably not require any cleaning unless it was added on as a service fee.
Should you buy new or used? That is a question depending on how much can you afford to repair in the short term. The picture below shows estimated lifespans of home components. New homes have a warranty and a fresh start with all parts. New homes also have the latest building and safety codes. If purchasing used having a substantial cash reserve to cover things like a new roof, broken air conditioner (HVAC), plumbing leaks and circuit breaker/outlet issues, hot water heater replacement.
How long of a rental investment property you are looking to acquire?
Where to buy it, and who will it attract?
The location would have to accommodate the rental time frame. Many communities will not allow a one-day or two-day rental some communities are 7 months or more. These types of communities are geared towards families and having the same people living in the home.
Shorter term rentals such as 1 Day, 2 days, 3 days minimum or more. Those typically are vacationers. To accommodate those on vacation is there is typically two scenarios.
Scenario number one. You find a community where you can rent short-term and anything goes. What am I getting at here you might be wondering? There are no regulations for what is going on in the community rentals. Compared to communities with set standards and property management.
Scenario number two. Resorts typically do short term but have their own property management groups come into play. The property management groups set standards and regulations that have to be followed within range. This helps to keep property values high and maintain standards while allowing equity to come in.
Let’s picture that you’re home has a rental value of $150 per day. You may attract a type of clientele that is more geared towards moderate or economy hotels. To explain what I mean by moderate there are hotels from Universal Studios Orlando and Walt Disney World. These hotels have rooms such as economy for a budget. Then you have moderate somewhere in between. Last you have your higher-end luxury hotels. Each has a price range right for different budgets. Your property would have to justify the costs per night.
Many vacationing people would rather spend the money on renting out a townhome for $200 a day then stay in a $200 or $300 or $400 Hotel because the town home has much more room, a kitchen, and should be more quiet. If the home has resort amenities that is even better.
Something to consider is how to take the money that you want to spend on homes for sale and divide it up. Are you looking to purchase one home as an investment property or several homes or condos as an investment property.
What is the advantage of only having one Orlando or Kissimmee investment property?
Only purchasing one Orlando/Kissimmee property can reduce costs. For example if you purchase two properties for $150,000 each would be $300,000 total. Purchasing the two $150,000 properties may have HOA fees that are $300 or more each per month. You could only purchase one $300,000 home which has an HOA of $300 per month or less that would be a very big savings per month if the rental price was the same for each. For example if you were renting out the $250,000 homes for $1,000 per month each and each home has a $300 per month HOA would be $600 per month in HOA. Compared to renting out only the $300,000 home for $2,000 a month with a $300 HOA. You can see that you just saved $300 per month by having one home. Other minimum fees may include utilities, internet and cable.
What are the advantages of purchasing several homes for sale?
Purchasing several homes can help in the event a tenant is not paying the rent. Tenants may end up paying rent late or may altogether stop paying rent. in the event the tenant stops paying rent the homeowner still has to pay the mortgage taxes and HOA fee. Hopefully if two homes were purchased the other tenant pays on time. If so that money may cover the other home. If not having 2 homes with no income can be a burden if HOA fees are double.
Purchasing several homes within a reasonable distance of each other can also be good in the event a group has many people. For example your home is being rented to a family of four and the family also has the grandparents. They want to be close but the home your renting is not large enough so the grandparents rent your other home that is a few blocks or few minutes away.
Having multiple properties can also help with short and long-term rentals. One property can be located in a short-term Rental Community and another property can be located in a long-term rental community having long term rental income may provide stability if the tenants pay on time. Short term rental may pull in more income per day if it is in a location that is busy.
Amenities to consider and how they affect the price of your rental property.
There are variations of amenities per community. For example communities that are commonly a long term rental typically will not have as much amenities as a short-term vacation resort-style rental will. There are communities that do have fantastic amenities on the long-term rentals side and those can be weighed against the other communities on the long-term rentals side that do not have any amenities. But resort-style communities that have things like a restaurant, a bar, a pool that is water park style, a gym possibly, a spa, golf, and many things like that.
Those kind of features add a lot to a rental property. Someone who is on vacation that chooses not to stay in a hotel resort is getting all the hotel resort features so this person will get a nice full-size home, or full-size condo, and still have the resort lifestyle for the time being. A 2000 square foot home that rents out in a long-term community may rent for $2,000 per month. the 2000 square foot home that is in the resort Community like Margaritaville Resort Orlando or Reunion Resort with short term rental options May rent for $3,000 or $4,000 per month. While the numbers I am using are made up numbers they are based off of research and facts observed in real estate.