buying a house

[craftfairy]

hi all wondering if u can help me an my oh are coming to orlando in oct to look at houses to buy the areas we are looking at are sandy ridge, calabay parc cumbrian lakes,highland reserves,b/water crossing and pinewood estates any info would be great thanx in advance xx

 

[kilee]

Welcome to the DIS!! Is this for rental/vacation property or a permanent residence? If you're looking for a permanent residence you may want to try asking on the Community Board.

 

[ducklite]

If you aren't going to be living in the house full time, you won't be able to homestead, and your taxes will keep rising.

Right now expect to pay $5K a year or more on a $450K house in that area. And what the current owners are paying is less than what you'll pay, unles they've moved in within the past year or so.

We expected our taxes to be about $5K. Were we ever surprised when teh tax bill came and it was almost $11K!

Your homeowners could very likely be over $2K a year as well.

If you won't be living in the home you'll need to have weekly lawn care and pool care done, this will run you about $200, maybe a bit more. Most homeowners associations also require that you leave a key with someone local who agrees to take responsibility for any emergency situations, or hire a property management company.

Anne

 

[JANNYANS]

If you are looking to buy with a view to renting it out -and the areas you list are all STR -do your costings very carefully - listen to the realtors then basically ignore what they say regards renting it out.It is a VERY tough market and the costs as already stated keep rising .If you are unable to keep it empty for 6 months and still keep up the bills on 2 homes then maybe it is not for you .You will need to pay all the utilities ,pool lawn and management costs regardless.Most of the good listing sites are full so where you advertise will be a factor .Owning long distance is not for the faint hearted - having been doing it for 9 years I have learnt a lot along the way and am still learning .

 

[craftfairy]

hi thanx for replies, we are looking to buy as a long term investment we would use it ourselves twice a year and hopefully rent out the property for the rest of the time, the houses we have seen are resale propertys and some come with bookings with management companys in place already,this will be our first ever trip to orlando so to say im a bit scared is an understatement lol, as i say any info on the communities ive listed would be great both good and bad views, also if anyone knows of a villa we could rent for a week in oct its only the two of us so a 3/4 bed would be fine, thanx once again for your help if anyone wants to email me directly with any advice they can, its heavensce196948@aol.com

 

[tednvon]

Hi...first of all, some great comments from the folks above me.

A little history. We bought a 7 bedroom home in Emerald Island shortly after 9/11 and sold it about a year ago. We aggressively rented it out by owner and through a management company that was average at best.
We have been through the euphoria of buying, the costs of set up, the long evenings answering emails from "by owner" sites, then the long evenings of getting no emails and sweating the payments. We sold because the market has become saturated and the price of the home skyrocketed. This was not a "dream home" that would one day retire in. This was a home we loved as an investment, but only an investment. We now winter 3 months in a home in Indian Ridge that we rent from an owner who is more than happy to have a guaranteed rentor for 3 months.
You must run these numbers to make sure you can afford to do this...OR if you happen to be financially in a postion to fund this home with rents that do not meet costs and hope for long term appreciation, then you will be able to sleep nights. In other words if you can eat $2000 to $10,000 a year and not worry, you are in an enviable position.

Here are the numbers:

300,000 home furnished...20% down (these are my best guesses based on costs two years ago...some may be low or high, but not off by much.)

P/I...............$1516
Ins...............$150
Tax..............$500
Elec..............$350
Management..$300
Pool.............$50
Bugs............$30
HOA.............$150
Cable...........$50
advertise......$40
cleaning........$200
monthly main..$100
Total............$3036...appx...$36,332/year
Income....20 weeks at $1000/week is $20K/year
25/weeks at $1000/week is $25K/year...do the math...

Now look on www.vrbo.com at 4-5 bedroom homes...look at the availability calendars and see how many look like they are on pace to do over 25 weeks/year. This is a quick gut check on whether to take the plunge or not.
When we started, our PITI on a 7 bedroom was under $1500, and we would average $270/night and do about 24 weeks...But when the 7 bedrooms went from about 8 total in the whole area to over 120 just 7 bedrooms, the handwriting was on the wall....plus we had to look at upgrading to game rooms, High Def TVs just to keep up with Jone's.

It can be exciting, fun and quite a trip...but like Jannyanns said, DO NOT listen the realtors...they are realtors and goal is to make money and they will stretch the rental potential to any length to get a sale...And never never believe a managment company that will promise you a high number of bookings...either it will never happen or they will wholesale your home to any travel company they can and your cut of the week rent is not enough to meet costs even if it over 30 weeks/year....not to mention the wear and tear that 30 plus weeks will do to a rental home...

Below is a map of the rental communities. You will find all of the developements you listed....IMHO, please note that none of these are in the "closest to Disney" catagory and all are either out on Highway 27, or way south off the end of Old Lake Wilson Road....not the kiss of death, but these are areas that are a longer drive to Disney than those located immediately south of 192 around Formosa Gardens Blvd and the far north part of Old Lake Wilson Road.

http://www.thedibb.co.uk/villa/map.htm

Good Luck, keep and open mind and let us know if we can be of help...Ted

 

[CarolA]

Maybe it's just me, but you have never even been to Orlando and you want to buy a home on your first trip? I would slow down and plan on a couple of trips.

Personally I think the "bottom" has not yet been reached in the US housing market and I would not buy right now, I think things will go lower!

I looked into this. I think my money is better invested in mutual funds. They don't require "renting" "maintenace" etc LOL!

 

[5mins2disney]

Hi...first of all, some great comments from the folks above me.

A little history. We bought a 7 bedroom home in Emerald Island shortly after 9/11 and sold it about a year ago. We aggressively rented it out by owner and through a management company that was average at best.
We have been through the euphoria of buying, the costs of set up, the long evenings answering emails from "by owner" sites, then the long evenings of getting no emails and sweating the payments. We sold because the market has become saturated and the price of the home skyrocketed. This was not a "dream home" that would one day retire in. This was a home we loved as an investment, but only an investment. We now winter 3 months in a home in Indian Ridge that we rent from an owner who is more than happy to have a guaranteed rentor for 3 months.
You must run these numbers to make sure you can afford to do this...OR if you happen to be financially in a postion to fund this home with rents that do not meet costs and hope for long term appreciation, then you will be able to sleep nights. In other words if you can eat $2000 to $10,000 a year and not worry, you are in an enviable position.

Here are the numbers:

300,000 home furnished...20% down (these are my best guesses based on costs two years ago...some may be low or high, but not off by much.)

P/I...............$1516
Ins...............$150
Tax..............$500
Elec..............$350
Management..$300
Pool.............$50
Bugs............$30
HOA.............$150
Cable...........$50
advertise......$40
cleaning........$200
monthly main..$100
Total............$3036...appx...$36,332/year
Income....20 weeks at $1000/week is $20K/year
25/weeks at $1000/week is $25K/year...do the math...

Now look on www.vrbo.com at 4-5 bedroom homes...look at the availability calendars and see how many look like they are on pace to do over 25 weeks/year. This is a quick gut check on whether to take the plunge or not.
When we started, our PITI on a 7 bedroom was under $1500, and we would average $270/night and do about 24 weeks...But when the 7 bedrooms went from about 8 total in the whole area to over 120 just 7 bedrooms, the handwriting was on the wall....plus we had to look at upgrading to game rooms, High Def TVs just to keep up with Jone's.

It can be exciting, fun and quite a trip...but like Jannyanns said, DO NOT listen the realtors...they are realtors and goal is to make money and they will stretch the rental potential to any length to get a sale...And never never believe a managment company that will promise you a high number of bookings...either it will never happen or they will wholesale your home to any travel company they can and your cut of the week rent is not enough to meet costs even if it over 30 weeks/year....not to mention the wear and tear that 30 plus weeks will do to a rental home...

Below is a map of the rental communities. You will find all of the developements you listed....IMHO, please note that none of these are in the "closest to Disney" catagory and all are either out on Highway 27, or way south off the end of Old Lake Wilson Road....not the kiss of death, but these are areas that are a longer drive to Disney than those located immediately south of 192 around Formosa Gardens Blvd and the far north part of Old Lake Wilson Road.

http://www.thedibb.co.uk/villa/map.htm

Good Luck, keep and open mind and let us know if we can be of help...Ted

I second what Ted said...but I calculate our costs to be even higher than that. The HOA in Windsor Hills, for instance, at least for a townhome, is $330/month. I put the costs closer to $40-41k a year, and I'd be very careful in the communities you're looking at. It's a LOT tougher to get quantity and quality rentals when you're further out (I'm on a lot of homeowner's boards). I also went into this with a healthy dose of skepticism and chose to ignore our first realtor's advice entirely...she told us things like "most owners break even at 25 weeks a year" (not true)... and "electric bills aren't that bad in Florida, the homes are well insulated!"...hehe....try running an AC all year round and a pool heater!!

Some say taxes are bad too, personally they're low compared to what we pay in Chicagoland but it's all relative I suppose.

Bottom line though, most people lose $$ doing this... how much loss can you afford to carry? The profit (if any) is in the long term appreciation of the real estate, and it's a very soft market right now.

One other thing, and this is the part I didn't really appreciate until we've been doing this for a while, it's a LOT of work to run your rental home!! You HAVE to do the marketings and bookings yourself, the mgmt companies pretty much all don't do a good job of this for you (ours gets us exactly zero bookings, and does just home maintenance and takes care of guests). Those who were "sold" on the promise of lots of bookings by many of the big MCs are losing money in a major way...so don't believe for a second you're going to buy some existing home with bookings and a ManCo in place and it's going to just continue to be fully booked.

Go sign up for www.top-forums.com (Florida / Orlando homeowner's boards...) and ask some of these same questions there... they will give you lots of advice before you take the plunge.

 

[tednvon]

Carol...could not agree more...for some of us the BUZZ from this short term rental stuff was to addictive...Now I am the one in mutual funds, now that my addiction was fed and satisfied...

Yes, make a few trips to the area, check out the 30 or so developements, do hours and hours of research on the internet as that is where many folks are going for their information about how and where to rent...

It is not for the faint of heart...and looks like I was really low in my figures...how things have gone up in two years!!!

All the best...Ted

 

[G8RFAN]

Even with the downturn, market rents are still far below home sales and resales. You can never make the economics work for a limited vacation home unless you pay cash and are ok with a cap rate of 5 or less. While they are proposing reforms with R/E taxes, they will most likely impact primary residences and not income property. Unless you are smitten over a home and plan to retire there shortly and find a highly motivated seller, I would seek better returns with a safer investment vehicle and just rent when you are down. We had planned to buy a couple years back in Orlando and no matter how I sliced it, it wasn't going to make financial sense, unless I was banking on making appreciable equity and flipping it.

 

[CarolA]

When I read the "rates" some homes go for I am just shocked. People posting 7 bedroom homes for less then $1,000 a week? IMHO unless you are full all the time.... it's hard for the math to add up. Plus when I looked at housing in Orlando a few years ago in conjunction with a job I was interviewing for, it's not exactly a cheap market to buy in!

I have also looked at this at Hilton Head Island, SC and I actually found the "model" there to be somewhat more sustainable. There were a couple of MAJOR differences.

1. IF (and that's a big IF) you could get with a couple of the rental agencies that was a big help, they howver can be very picky LOL!

2. It's a seasonal resort and the "rates" just stay high during the season. There aren't as many "cut throat" deals as I see on Orlando homes.

3. Less need for "fancy" custom features to make your villa stand out. Folks don't seem to expect a "Mickey" room or a Game room LOL! I guess they go for the beach.

And even with that my Brother and I (who were doing this together) walked away. It's just a lot of "little things" He rents from an owner who we spent a long time with. HOA keeps going up, every year there are assessments for "repairs" on the community, since it's a hurricane zone insurance has increased (not as bad as Florida, but still.....)

I would like to move to Florida at least part time when I retire, but I can see me doing what Grandpa Ted is doing or "buying" a park model farther out. (My Dad has a nice one I think he paid less then $50,000 total LOL!)

 

[craftfairy]

hi thanx for all your comments,they are a great help,at least we know to look, research and look again in all areas when we come for our visit in oct, btw we arnt planning to buy on our first visit well not unless we really fall in love and figures all add up, for me its more about a fact finding mission, can i ask what made some of u take the plunge to buy a house in orlando rather than elsewhere and would u do it again.

 

[PortieOwner]

It seems to me that right now you would still be buying into a bubble. I spoke to an economist two days ago who expects 20 percent price drop in the DC area and considerably higher price drops in more inflated markets like California and Florida.

 

[ducklite]

hi thanx for all your comments,they are a great help,at least we know to look, research and look again in all areas when we come for our visit in oct, btw we arnt planning to buy on our first visit well not unless we really fall in love and figures all add up, for me its more about a fact finding mission, can i ask what made some of u take the plunge to buy a house in orlando rather than elsewhere and would u do it again.

When we bought the home we currently live in, it was purcahsed as a vacation home that would someday be a retirement home. We had no plans on renting it, and purposely bought in a community that doesn't allow short term rentals. We bought about 30 minutes from WDW to be further away from tourist hell, but still close enough to go down for a meal. When I retire I want the security of knowing my neighbors, not having a different group next door each week--or perhaps worse yet, being one of only a few homes occupied out of 100 during the off season. Of the 15 houses closest to mine in my neighborhood, one is vacant and for sale, two are vacation homes--each used 12 weeks a year or so buy their owners, and the rest are owner occupied full time. It's nice to know my neighbors, and it's easy to spot the people who don't live there and keep a watchful eye.

We researched many areas of Florida, Vero, Tampa, Fort Lauderdale, St Augustine, Naples, and we decided on Orlando for a multitude of reasons. Retirement employment options, lack of hurricanes (of course we moved in the day Frances hit in 2004--really!), and recreation/shopping that met our wants and needs.

About six months after living in the house p/t, I decided I wanted to go to Florida f/t. The market was super hot in NJ, and we sold our home there for a massive profit and relocated into the Florida home f/t. I changed jobs, DH is able to work from home about half the month, and travels to NJ where he stays with a friend the other half. We're watching the market cool there as well, and will probably take advantage of it in the future to buy him a condo.

IMHO we haven't hit the bottom of the market here yet. I see another 10-15% slide over the next 12-18 months. (In some parts of Florida I see taht number being closer to 25-30%, but not the greater Orlando area which ahs always been a little more stable.) We were able to sustain both homes when without rental income. There's no way in this market today that I'd buy a vacation home here and expect a dime of rent to pay for the cost of ownership.

Anne

 

[isla bonita]

We had a rental property local to us that was our first starter home and prices had gone up. We then sold and bought in Florida in Emerald Island Resort. At the time we purchased our home the prices in Florida had not gone thru the roof so for us it was a win win situation. We sold high and bought relativly low.

Would I do it again yes if the same circumstances existed. Would I buy now. No way we could afford it. We have owned our home for 3 years and it took 22 months to build don't ask thats a whole story in it self. So we were in contract for almost two years. Since then the prices for homes has gone up in our case 40%. We were offered 3 months ago over $200,00.00 more then our purchase price.

Owning a home is a lot of work and $$. I love our home and it is the price I pay for having it. WE need updates always. Advertising is $$. Our vacations involve lots of work. The market is not only saturated with homes but with prices that I could and would not let our home out for. SOme one mentioned a 7 bed for $1,00. a week. I truly can not compete with that for sure.

The best advice I can give any one is do your home work. Know what you are getting into. There is no easy way. Our pay off.

6 Bed Vacation Home $$$$$$
Tickets To Disney $$$$
Airplane tickets $$$
Rental Vehicle $$$

Family and Friends and All our Wonderful Memories Pricless!!!!!!!

 

[CarolA]

IMHO we haven't hit the bottom of the market here yet. I see another 10-15% slide over the next 12-18 months. (In some parts of Florida I see taht number being closer to 25-30%, but not the greater Orlando area which ahs always been a little more stable.) We were able to sustain both homes when without rental income. There's no way in this market today that I'd buy a vacation home here and expect a dime of rent to pay for the cost of ownership.

Anne

It's interesting that today's USAToday had an article on the "mortgage crisis" Two of the examples they used were in Florida. People who had purchased homes using "interest only" mortgages assuming the "appreciation" would allow them to refi when those mortgages came "due" in a few years. In the cases discussed both of the homes were NOW appraising under the mortgage amounts. One family had also spent $20,000 on improvements. They could lose it all (one wonders why they didn't put the $20,000 on the mortgage, but.....) And the amounts of decrease were not inconsequential.

 

[ducklite]

It's interesting that today's USAToday had an article on the "mortgage crisis" Two of the examples they used were in Florida. People who had purchased homes using "interest only" mortgages assuming the "appreciation" would allow them to refi when those mortgages came "due" in a few years. In the cases discussed both of the homes were NOW appraising under the mortgage amounts. One family had also spent $20,000 on improvements. They could lose it all (one wonders why they didn't put the $20,000 on the mortgage, but.....) And the amounts of decrease were not inconsequential.

Florida is a big state, and the real estate bubble was larger in some areas than others.

I paid $400K for my house in early 2003. In late 2004 it was "worth" $800K (we had someone offer to buy it--cash--for that). A year ago a full (conservative) appraisal was done and it was $695K. Realistically right now I could get $650K-ish. I fully expect that before this is over it could be down to $590K-ish. (I put 15% down, did an 85/5/15 and have since paid off the 5% second, and have a conventional 30 year fixed at an attractive rate.)

But the people who bought in 2004 and 2005 are hosed--especially those who did those crazy 0% down, interst only loans. It all depends on when they bought and how it was done. South Florida is where the HUGE losses are being seen. People that bought homes for $1 million that aren't worth $500K right now. Seriously.

On the otherhand, in many areas that there just wasn't a boom, prices have remained fairly stable. Lake City and Okechobee for example.

It's not just Florida. I bought my NJ townhome in 1996 for 120K, and sold it nine years to the day later for $314K. The buyers would be lucky right now to get $280K for it.

Anne

 

[MikeKV]

Gee, I'm so glad that I fell upon this thread. My wife and I were seriously considering purchasing a vacation/rental home in Windsor Hills but after reading Tednvon's post I have decided against it. Too many unpredictable costs.

 

[swilshire]

Maybe it's just me, but you have never even been to Orlando and you want to buy a home on your first trip? I would slow down and plan on a couple of trips.

That was my thought exactly. What makes you think you would even WANT to buy a house there. You might hate the place!

Sheila

 

[Princess Disney Mom]

Thanks for the info. I will stay a renter.