Brother selling his SSR that finally came through!!

[suebeelin]

so, my brother is selling his SSR that just came though after a year of torture. He hasn't even used his points once!

He's buying a 5bd 5bth house in reunion instead for $450-500k, and will rent out the house during prime season.

!!!!!!!

 

[DisneyRegulars]

I've always been curious as to how people who own those rental properties make out. Is there any profit in it if you have to manage it from afar using some sort of vacation rental service and cleaning crews?

 

[suebeelin]

I've always been curious as to how people who own those rental properties make out. Is there any profit in it if you have to manage it from afar using some sort of vacation rental service and cleaning crews?

He said there's a 66% occupancy rate at $250/day. His overhead is expected to be $45k/yr, but expects 60k/yr from rental income. Apparently a professional mgt company takes care of everything.

Then he and his family stays there the other 34% of the time (or whenever it's not rented) for free.

Me? I'm staying walking distance to the parks bc I'm all about bwv and BLT but the concept is intriguing.

 

[malba2366]

I've always been curious as to how people who own those rental properties make out. Is there any profit in it if you have to manage it from afar using some sort of vacation rental service and cleaning crews?

Its very profitable when the economy is good...but you need to be able to pay your mortgage/taxes/upkeep during recessions. I know of people who lost a lot of money playing the rental home game during the last recession, some were forced to sell at a big loss. This is even more true in areas like central florida where there are many such homes for rent. However, if you are smart and have reserves to withstand losses for 2-3 years you should make out pretty well.

 

[piccolopat]

You also need to be aware of the security risks. When a lot of homes are available for rent to tourists, there is an element of people that know those homes will be vacant much of the time. My BIL bought a vacation home for his family to use (and not to rent out). It's been broken into twice already and his pool filter was stolen. Thieves know tourists are usually out for the day and there is no real neighborhood with people keeping an eye on things. Unless there is a gated entrance staffed by real people, it is easy to get around the unmanned gates. Policy told BIL the thieves used a code from someone they knew there. When we visited him, the outgoing gate was broken and anyone could have driven in that way.

 

[suebeelin]

Those are big risks I personally would not want to take.

Now, he's excited but has a ton of DW tickets - he hopes to get the Florida silver pass once he's a FL property owner. Can he use a 5 day ticket to upgrade to a silver AP?!

 

[southerngirl528]

selling his SSR that just came though after a year of torture. He hasn't even used his points once!

Congrats to your brother, but I don't understand your statement above. "Year of torture"??? Did he have issues with the DVC member selling??? Because DVC might be slow at pushing resales through but it sure doesn't take anywhere close to a year on their side. Hope your brother does okay with his rental. I live here in central FL and the market is still pretty scary IMO though I know little about rental property as I own in a community where short term rentals are not allowed. I personally would not live in a community where they were allowed but I hear Reunion is pretty nice.

 

[Dean]

I've always been curious as to how people who own those rental properties make out. Is there any profit in it if you have to manage it from afar using some sort of vacation rental service and cleaning crews?

We own a beach condo that we rent. It does fine but it's not as good as it sounds on paper. Generally these rental projections come from the same people selling which makes them suspect. Upkeep can get you pretty heavy with a significant renovation every few years nickel, dime and hundreds of dollar stuff in between. But if one buys at a great price (roughly 80% of comparables after any renovations) they should do OK.

 

[suebeelin]

Congrats to your brother, but I don't understand your statement above. "Year of torture"??? Did he have issues with the DVC member selling??? Because DVC might be slow at pushing resales through but it sure doesn't take anywhere close to a year on their side. Hope your brother does okay with his rental. I live here in central FL and the market is still pretty scary IMO though I know little about rental property as I own in a community where short term rentals are not allowed. I personally would not live in a community where they were allowed but I hear Reunion is pretty nice.

My brothers dvc took almost a year-- international sellers spanning multiple Asian countries-- difficult to find a notary. Let's just say the process started last April and they just got their member number. They passed rofr by June of last year.

Now brother is looking to purchase a 5bd/5bth house in reunion to rent. He's generally very business savvy but this isn't chump change. I guess the bigger the risk the bigger the reward!

Quick question- if he buys this house and is the owner can he upgrade his 4/5 day base and park hopper tickets to a silver annual pass?

 

[bumbershoot]

I'm sure he can upgrade from a ticket to an AP.

FL proof of residence...

Florida Resident Tickets:
Proof of a Florida residential address is required. For each ticket purchased for an adult, you may provide any of the following:

• Valid Florida driver's license
• Valid Florida state-issued ID card (must have a Florida address)
• Valid Florida-based military ID

If you do not have one of the IDs indicated above, then for each adult ticket purchased you must provide one of the following, dated within the past two (2) months evidencing a Florida residential address together with a corresponding picture ID (passport, driver's license, state identification card):

Proof of Current Mortgage
Monthly mortgage statement not older than two (2) months old
Deeds, Mortgage Contracts, Mortgage Payment Booklets and leases are not accepted.
Photocopies and fax copies are not accepted.

Bills, Policies or Registration
Current homeowner's insurance policy or bill
Current automobile registration, insurance policy or bill
Current Utility bill (Power / Phone / Cable / Water)
Bills can be no more than two (2) months old (PO Boxes are not accepted as proof of residency).
Current bills printed from electronic versions are accepted.
Photocopies and fax copies are not accepted.

Mail
Mail from financial institutions; including checking, savings or investment account statements
Mail from Federal, State, County or City government agencies
Mail can be no more than two (2) months old (PO Boxes are not accepted as proof of residency)
Photocopies and fax copies are not accepted.

 

[DVC Doctor]

This is a potential disaster in the making.

Reunion is about 12-15 miles from WDW MK and is more of a golf and tennis resort - this would not be my first choice if I was wanting a family vacation in Disney or Universal

Why buy a 5 bedroom vacation home instead of a 3-4 bedroom

You can check realtor.com and the lowest 5 bedroom is $320,000

VRBO lists 553 rental for Reunion and something tells me that 66% occupancy is a pipe dream

His overhead is expected to be $45k/yr = $123 per day

You said he can rent at $250/day

You said he expects $60k/yr from rental income and at 50% occupancy he would need to net $333/day

The professional mgt company takes care of everything = they probably will also want to take a 20% or more commission = $50 per $250 rental = leaves only $200/day profit

You said he and his family stays there the other 34% of the time (or whenever it's not rented) for free = BUT this is definitely NOT FREE

My guess is that at the end of the year he will lose about $20,000 on this deal. In other words, I think he will only make $25,000 per year from rentals after he pays all the commissions, fees, etc. Not to mention that he has to pay $45,000 per year to maintain this home and that probably assumes $0 in repairs or upgrades due to damage. This assumes he can rent for 125 days per year at a net revenue average of $200/day

 

[suebeelin]

This is a potential disaster in the making.

Reunion is about 12-15 miles from WDW MK and is more of a golf and tennis resort - this would not be my first choice if I was wanting a family vacation in Disney or Universal

Why buy a 5 bedroom vacation home instead of a 3-4 bedroom

You can check realtor.com and the lowest 5 bedroom is $320,000

VRBO lists 553 rental for Reunion and something tells me that 66% occupancy is a pipe dream

His overhead is expected to be $45k/yr = $123 per day

You said he can rent at $250/day

You said he expects $60k/yr from rental income and at 50% occupancy he would need to net $333/day

The professional mgt company takes care of everything = they probably will also want to take a 20% or more commission = $50 per $250 rental = leaves only $200/day profit

You said he and his family stays there the other 34% of the time (or whenever it's not rented) for free = BUT this is definitely NOT FREE

My guess is that at the end of the year he will lose about $20,000 on this deal. In other words, I think he will only make $25,000 per year from rentals after he pays all the commissions, fees, etc. Not to mention that he has to pay $45,000 per year to maintain this home and that probably assumes $0 in repairs or upgrades due to damage. This assumes he can rent for 125 days per year at a net revenue average of $200/day

It doesn't seem that great when you break it down, huh? It's almost 500k, not in the 300's. He has the money but losing that kinda money would hurt, especially bc he's all about money!

He's made some killer buys, including a 3bd in Hoboken during the recession, a 1bd loft in midtown (which he sold 2yrs ago), and a gorgeous house on the jersey shore. Perhaps his streak is gonna end with reunion.

Maybe he plans on retiring in Florida someday, although he's barely 40. I dunno-- I was just so surprised he is turning around and selling his SSR as soon as they finally got their member number!!

 

[DVC Doctor]

It doesn't seem that great when you break it down, huh? It's almost 500k, not in the 300's. He has the money but losing that kinda money would hurt, especially bc he's all about money!

He's made some killer buys, including a 3bd in Hoboken during the recession, a 1bd loft in midtown (which he sold 2yrs ago), and a gorgeous house on the jersey shore. Perhaps his streak is gonna end with reunion.

Maybe he plans on retiring in Florida someday, although he's barely 40. I dunno-- I was just so surprised he is turning around and selling his SSR as soon as they finally got their member number!!

Just check Realtor.com yourself and search "Reunion, FL"

I would suggest renting a home from the management company for a week to test it out first. That way, you can determine if you like Reunion (some people do not) and can test the management company. I would also use a local Realtor that knows that area well to determine value and rentability.

There are many people that retire in this area and if he is 40, he will get bored there very quickly.

Flipping a SSR resale is very easy and painless compared to flipping an overpriced home in an area with a glut of homes in a less than desirable location with large HOA fees.

 

[DVC Doctor]

Scott McGillivray, real estate expert and host of HGTV's "Income Property," his tips for first-time vacation homebuyers who plan to rent out their second homes.

One piece of advice he mentioned was following a precise financial equation before deciding to purchase the home.

To determine whether what you'll be paying for the home will ultimately be worth it in terms of the money you'll be getting back, calculate the total monthly costs of the property by adding together the following factors:

• The price of utilities
• Any costs of renovation (a step that McGillivray recommends you take)
• The mortgage cost
• Any taxes that will apply

If you can rent the property for one week at the same amount you'd spend on the total monthly costs, the home is likely to be a profitable endeavor for you.

The reason for this is that there are roughly 12 weeks of a high renting season, which means you want to be making enough in that time to cover lower renting periods throughout the year.

 

[MakiraMarlena]

wow, he could have done better with a cheaper house as far as a rental investment, but I'm sure he's getting the house he wants. Hope it works out for him and there are enough customers for high-end rentals for awhile.

 

[DVC Doctor]

wow, he could have done better with a cheaper house as far as a rental investment, but I'm sure he's getting the house he wants. Hope it works out for him and there are enough customers for high-end rentals for awhile.

That is the real problem as I can see that the competition for renters is very high there.

VRBO lists 553 rental for Reunion, FL

HomeAway lists 1,199 rentals in Reunion of which 187 are 4+ bedrooms

Also, there are several management companies that also have hundreds of homes for rent

 

[suebeelin]

I'll tell my brother that he should stick with the SSR that he picked up last year (and finally closed two months ago). He may or may not listen to me-- I don't have a good track record on investment picks

I personally agree a 5bd/5bth half a mill home 12 miles from DW isn't the best rental property. I think he's gotten a bit cocky with his lucky real estate investments thus far....

Thank you for your advice!

 

[DVC Doctor]

I'll tell my brother that he should stick with the SSR that he picked up last year (and finally closed two months ago). He may or may not listen to me-- I don't have a good track record on investment picks

I personally agree a 5bd/5bth half a mill home 12 miles from DW isn't the best rental property. I think he's gotten a bit cocky with his lucky real estate investments thus far....

Thank you for your advice!

Any updates?

 

[suebeelin]

He says he's going through with it- that a person would be more likely to rent a 5bd 10 miles away for less than the price of a deluxe, or the same price as a moderate.

I responded, but what if there's a downturn?

His response? Buy more homes.

He can afford a loss-- it would just hurt. Guess he's taking that chance....

 

[bumbershoot]

It would be interesting if he could do both and compare his success.

If the home is in the direction of universal he might want to market that. 10 miles from WDW could get you nearly to uni if it's the right direction.