Any vacation home owners who could help?

[IluvKingLouis]

We are thinking about buying a condo for rental income and for our enjoyment. I'm seeing prices all over the board, and I'm so curious why this would be. I'd really appreciate some input.

Would love to hear about the good, the bad, and the ugly, of condo ownership as a rental investment.

TIA

 

[CarolA]

I investigated this and walked.

Just a few things I discoved that drove me off.

1. Excessive capacity. There appear to be a lot more rentals then rentors. Driving the price down.

2. Hassle factor. There were a few good agencies. They take a nice cut, but IMHO it was worth it as they dealt with stuff. However, a few of the one's I talked with weren't taking new listings due to #1.

3. Unique. You better dress that place up and add lots of features in that market.

In any event, you do need to be able to meet the bills 100% WITHOUT rentors. In an economic downturn like right now "vacations" and "Fancy rental homes" go quick. My brother got contacted by the person he rents from in HH with a GREAT deal for this summer. Bookings are down and she's looking to move the property. (And she has no mortgage to worry about.....)

I think that's the big deal. If you need the rental income to make the deal work then... I wouldn't do it. If the extra incomes just "nice to have" then maybe.

When I looked the pricing in Orlando was way out of line. It may have dropped back to more realistic pricing. But they were really high for what you bought!

 

[spiceycat]

it is surpose to be 2010 before the Orlando prices go down enough to make buying their profitable.

 

[karriemouse]

We bought our condo nearly 18 months ago when we could get $2/£1, but with NO intention of renting - it was a holiday home for us to enjoy not a money making venture. We decided that by the time we'd paid all our taxes, paid a management company to look after it, paid for the increased repairs renters would create, etc etc it just wouldn't be worthwhile. So we bought 'small'.

Having seen the way the economy has gone since I'm so glad we did it that way - if we were dependant on rentals now I'd be having sleepless nights. (And we didn't mortgage, so we're just paying the running costs.)

Guess what I'm trying to say is that I would NOT buy now AT ALL if you had to depend on rental income to cover any costs. The rental market is huge, people are cancelling vacations, supply is far in excess of demand.

If you can afford to buy and own, and want to buy just for your own fun then go for it, there will be bargains around at the moment. But a bargain is only a bargain if you can afford it!!

 

[tednvon]

HI, we bought in 2002 and sold in 2006...could see the coming glut of homes and the competition for more and more ""stuff." (Flat screen TV's, pool tables, internet in the home, and on and on.)

In my opinion two types of rentals will turn a profit. Super high end rentals like this one http://www.vrbo.com/138898 that has almost a full calender and super low priced condos that would compete with Super 8 motels at about $55 to $60/night and are well marketed on by owner sites.

I also think the low end condo could be rented for January, February, and March to snow birds for about $1100-1300/month.
IMHO, this would fill the condo during slow Disney season, cut back on cleaning and management and have minimal wear and tear with guaranteed income.
If you think about a condo, you MUST investigate the homeowner's association, the neighborhood and the construction of the building.

Here is short list of the costs involved and estimate of what it would take to break even...
3BR/2BA condo at $140,000
20% down 6.75%
PI........................$760
Tax......................$120
Ins.......................$100
Utilities.................$150
Cable...................$ 50
Cleaning...............$200
management.........$120
condo dues...........$200
bugs....................$ 40
advertising............$ 30
Total....................$1650.00/$19,800/year
plus furniture if needed and I would add another $200 for just stuff. Management company charges about $40+/hour to change light bulbs

Rents...any more than 25 weeks/year is pretty good.
$80(very high for a 3/2condo)/nightX180 nights =$14400
This is the simple math...so you can figure a lower priced condo, more down payment, higher occupancy, but as you can see breaking even is not an easy task...
Go to www.vrbo.com search the Kissimmee and Davenport listings for 2 and 3 bedroom units and check out the availability calendars to see how they doing with rentals. It is a great indicator of the market....and NEVER believe any real estate agent or management company who says you can fill your home more than 30 weeks a year unless they take all your profit and fill it with package rentors from overseas. A sure prescription for trouble.

Some on the board may help you with differenent figures and I hope they are more positive. IMHO, if you are really wanting to do this AND have some extra time (like a couple of weeks) and do not mind sweat equity, you might be able to find a forclosure or condo that is a bit run down for closer to 100k or less. Just do your homework on the area...You must be close to Disney and have a pretty nice place to compete.


Good luck...Ted

 

[IluvKingLouis]

Thank you for all the info. I think we will do a bit of exploring when we visit in Jan. I'm not a risk taker, but DH is, so we balance each other out.

We can afford a condo with no rental income, but ideally I'd like to see it eventually pay for itself.

 

[tednvon]

Hi...do the math, and always add a little extra to the costs...good luck...ted

 

[deejay-55]

We are thinking about buying a condo for rental income and for our enjoyment. I'm seeing prices all over the board, and I'm so curious why this would be. I'd really appreciate some input.

Would love to hear about the good, the bad, and the ugly, of condo ownership as a rental investment.

TIA

There are some great deals out there on distressed sales - unlucky people who bought at the top of the market with huge mortgages to repay. Many commentators think now is a good time to buy.
Also, for successful renting, choose a popular resort community.

 

[IWANNAGOTODISNEY]

I stayed at a beautiful home that is up for sale. I called the realtor for information. She said, it was $605,000 and reduced to $434,900. The neighbor who had the same house was at $550,000. It had 6 bedrooms, 5 full baths, heated pool, and was on a lake, down the street from Disney. I rented a condo before off of 192E and prefer staying on the other side-192w. I know the further down on 192E, the area is not as nice. The prices will probably go lower. This home included all rentals, income, furniture etc. I would check the rentals on homes 3-6 bedrooms versus buying a condo and see what rents more. I stayed at a condo and the downstairs unit smoked inside and it was coming up into the bedroom. They also grilled outside of the front door. I liked having the private pool too-not community. The owners site is rentalatdisneyarea.com

 

[CarolA]

I stayed at a beautiful home that is up for sale. I called the realtor for information. She said, it was $605,000 and reduced to $434,900. The neighbor who had the same house was at $550,000. It had 6 bedrooms, 5 full baths, heated pool, and was on a lake, down the street from Disney. I rented a condo before off of 192E and prefer staying on the other side-192w. I know the further down on 192E, the area is not as nice. The prices will probably go lower. This home included all rentals, income, furniture etc. I would check the rentals on homes 3-6 bedrooms versus buying a condo and see what rents more. I stayed at a condo and the downstairs unit smoked inside and it was coming up into the bedroom. They also grilled outside of the front door. I liked having the private pool too-not community. The owners site is rentalatdisneyarea.com

If this is the same house you are adverstising all over this board, it's a prime example of why NOT to buy.

It appears not to be renting well.... Figure payments of $2,000 a month (Assuming 20% down, remember 2nd homes don't get the same good rates as primary homes)

So you need to rent 16 nights a month to cover the note.

Between now and April this home has CONFIRMED rentals on thier webpage for 14 nights with one other "on hold" reservation!

We haven't even added, property management, utlilities, insurance, taxes.... (And remember that FL taxes are probably higher then what the real estate agent quotes you. Florida has a homestead expemption for people that LIVE in the home. I know someone who got caught bad on that one!)

 

[jdvm]

I live in Celebration and offer the following. Price differentials are largely a function of location. Even with price having come down a LOT, buying a property as an investment just won't work under any circumstances I can see. There is such a glut of properties that have been bought as investments--banking on a rise in value instead of looking solely at rental revenue--that it will be quite some time before the market is back in balance.
Having said that, it's a great time to buy...just don't assume you'll cover your cost by renting.

Good luck

John

 

[deejay-55]

Thank you for all the info. I think we will do a bit of exploring when we visit in Jan. I'm not a risk taker, but DH is, so we balance each other out. We can afford a condo with no rental income, but ideally I'd like to see it eventually pay for itself.

There are some great deals out there right now for cash buyers.

 

[sjanus]

Grandpa Ted--Great Advice!

If you buy a condo/townhouse/home, and you are willing to work hard at it, and gain personal enjoyment yourself, it could be very rewarding.

Because the economy right now is a great concern, it means that you have to work even harder with all of the competition out there.

I agree, being close to Disney, in a 5 star resort, and loading your place with amenities--along with very hard work and not just depending on the management company--will be beneficial.

Also, do not be cheap on advertisement. Things that will help: having your home professionally decorated; getting a professional picture tour--virtual tours, video, etc.; developing a professional website; and DO NOT BE CHEAP ON ADVERTISEMENT--if nobody knows about it, they cannot rent it! Also, make sure you obtain a great management company who really takes care of your place and your guests once they arrive, even if you rent it out mostly yourself--which is often the case (very important).

Good luck in your decision making. There are more up front costs than you may think! Be prepared to be able to pay all of the bills for up to six months.

Sandy J.

 

[isla bonita]

Because the economy right now is a great concern, it means that you have to work even harder with all of the competition out there.
I agree, being close to Disney, in a 5 star resort, and loading your place with amenities--along with very hard work and not just depending on the management company--will be beneficial.
Good luck in your decision making. There are more up front costs than you may think! Be prepared to be able to pay all of the bills for up to six months.
Sandy J.

With this economy make sure you have at the least 6 months. Personally I would not want under 3 years. That is the least amount of time it will take you to get your business up and running. Also for all those items that are unexpected.

In 4 years a brand new home needed a new refridgerator, roof fixed 2 seperate times, pool blanket, new TV and in addition a garage door opener was installed a safe bought. These are not inexpensive items. Just food for thought.

 

[IluvKingLouis]

Since we're looking at condo's, we won't be able to "trick" them out with garage game rooms, and of course the pool will be in the common area.

I do websites for a living, so I think I can put up a nice looking site. DH is also a techie so I will ask him to look into virtual tours.

We can survive without any rental income, but I'd like to see a few dollars trickle in now and then.

Some of these condo's come pre-furnished and look like they have been professionally decorated.

I need to find out if HOA fees cover hurricane insurance, and if not, what that will run us.

 

[KayR]

If you plan to rent, don't under estimate all the time it takes in setting up your systems / websites / advertising and then answering inquiries.

-Kay