Buying an apartment/condo to rent out.. thoughts?

[DianaMB333]

Hi
I' m just starting to think in the idea of buying something in Orlando that can easily be rented through the year.. do you have recommended resources to look up? Regulations? Property value growth? Associated taxes?

I'd prefer long term rentals rather than airbnb but it depends on the numbers

Thanks!

 

[StitchesGr8Fan]

No specifics for Florida, but a couple of things to factor in if you’ve never had a rental property before. Since you don’t live in the area you are going to need a property manager. You also need to be able to afford any repairs that need to take place. It means maintaining an additional set of appliances and fixtures that could go out. Renters usually don’t take care of places like they would if they owned it.

I’m not saying don’t do it. I’m saying figure these costs in to your analysis and make sure you can afford the upkeep on another property. And the stress.

 

[DisneyTexan]

It seems like this topic has been discussed before on this website, but I couldn't find any threads at the moment. In the past there has been discussions of condo vs. DVC, as well as owning the condo for a mixture of personal use and rental.

Make sure you investigate carefully, but based on your questions it sounds like you already know the risks. There are tons of vacation homes in the Orlando area, so the competition for tenants is fierce.

 

[larissawbb]

My uncle rented his home out after moving in with his girlfriend. The couple that he rented to stopped paying rent after a few months. He had to go through a lengthy process to evict them. They stole all of the appliances and ripped out copper pipes. These were professional people with excellent references!

 

[tvguy]

Watch a weeks worth of Judge Judy, People's Court and Hot Bench. Then decide if you still want to be a landlord. We inherited my MIL's house, and years later my mom's house and debated keeping them as rentals. The debate lasted about 30 seconds. Mind you they were free, fully paid for houses and the potential expenses of keeping up an additional house was terrifying. If we had it to pay a loan on them too, that would have been an unacceptable risk for us.

 

[CarolynFH]

I think there have been similar discussions on the Orlando Hotels & Attractions forum. Try searching there.

 

[MICKIMINI]

We've run the numbers every couple years and never found they work in our favor. The thought of renters trashing the place or never moving out is too risky for us. We are conservative and just add more DVC contracts for our own family use. If we buy a contract with extra points at closing, those get rented. If we need money down the road we'll flip a contract. Minimal risk for us. If we lived in Florida we might feel differently. Good luck whatever you do!

 

[Sleepy425]

Look on common rental sites - they are over saturated with rentals. The chance of yours being rented out enough to make it worth it is slim. I can get a very nice house that sleeps 9 near Disney with it's own pool for less than $200/night because there's so many rentals they have to price them competitively (or when I have looked the last few years I could. Haven't looked lately).

 

[a1tinkfans]

We re in one of the Highest Sellers Market, esp in Fla, and in Height Season, wait till the Dead of Summer, grab a Much Better Price.
a Landlord is not All it’s cracked up to be, lol.

 

[DianaMB333]

My uncle rented his home out after moving in with his girlfriend. The couple that he rented to stopped paying rent after a few months. He had to go through a lengthy process to evict them. They stole all of the appliances and ripped out copper pipes. These were professional people with excellent references!

 

[DianaMB333]

wow..

 

[Eastern]

My relative rents out an apartment and has been in court off and on for months. I had a condo for my family and it just wasn't worth the constant stress of having to manage it when I wasn't there. I sold it and haven't looked back. So I vote no.

 

[_19disnA]

Relatives of ours own a beach condo (East coast, not in Florida) and the math just never seems to make sense. At best they break even by using rental income to help to pay off the mortgage. They certainly don't make any money, so I am not sure what you gain by owning/renting. Trying to manage any service/repair issues from hundreds of miles away take up a LOT of their time. Your time is worth something and you also need to outfit the house with furniture, bedding, kitchen items, etc. General wear/tear on interior items tends to be greater since those renting on vacation probably don't treat it the same as they would their own home. They have never had trouble with renters. Bottom line to me is you are further ahead by investing that money and using the investment income to help pay for your future vacations. That way you are also not tied to always vacationing in the same area.

If you do rent and don't live in the area, you will need to hire someone locally to hand out the keys/sign paperwork and arrange for a cleaning crew when each renter departs. You will also have to hire someone to maintain the exterior (i.e. cutting grass, trimming shrubs, etc.) All of those things are added costs to consider.

 

[jimmymc]

Are you looking to just buy something and make money by leasing it, or are you looking for a vacation home that you pay for by renting it out?

If it's the first option, buy something closer to your house. It's not practical trying to be a landlord in a different state.

If it's the second option, lots of people do this! Most areas in Orlando proper do not allow short term rentals, but areas south or west of Disney usually do. If you buy in a good neighborhood and use the recommended property managers, it's very little work for you and almost always breaks even.

There are some drawbacks:
- High barrier to entry: most banks will require a high down payment, think 40% to 50%, and your interest rate will be higher than a normal mortgage. This means you need at least $80k in cash to get started with a one bedroom or studio
- Higher maintenance costs: homes in Orlando have higher maintenance costs than other parts of the country due to the hot and humid weather

Positives:
- Having your own place on vacation
- Orlando has a good rate of property value growth
- Short term rentals don't have to deal with the same eviction issues that long term landlords do. Limit rentals to 29 days.

 

[OpieDoodle]

So if you're doing long term rentals I'm not sure it'll be worth it. Its not like you'd get to enjoy the place if you were staying there as you'd likely have tenants.

If you're doing rentals and you don't live close you need a property manager which will cost money plus any normal wear and tear plus damage from the tenants. Being a landlord can be a big headache if its not close by.

We have considered becoming a landlord a few times. We'd only do long term if it was local. If we do anything non local we'd likely do a vacation rental somewhere and pay an agency to handle everything

 

[Darcy03231]

I would only do it if I had the finances to afford to pay for everything without needing the rental income, including any repairs. We've rented homes for years in the Orlando and area and have never paid more than $250/night. By the time you factor in paying for a management company, cleaning service, repairs, etc. there's probably not much money to be made, unless you plan to purchase the property outright. Also keep in mind that some repairs can be expensive, especially if there's a private pool.

We have friends that own a condo in Daytona and they will only rent it out to family and friends. They don't make much, but it's usually enough to pay their taxes and condo fees for the year.

 

[Mai Ku Tiki]

There are expenses particular to FLA...Pest control/ AC maintenance & more frequent replacement/ Humidity & mold surveillance...if inside temp is not properly maintained, mold can develop unseen in a very short period of time.

And no matter what state, not sure it's been mentioned, but insurance sufficient to protect you & your personal assets if anyone sues for injury on your rental property.

If you buy in a short-term rental community & they handle the ressies/ check-in-out, etc, their HOA is higher & the contract may require YOU to update your unit decor/appliances, etc according to THEIR timelines.

 

[DianaMB333]

Thanks for the comments!