buying investment condo in Orlando??

[LauraR]

I was reading an article in a recent issue of Smart Money magazine about buying investment properties in depressed housing markets. They mentioned Detroit, Atlanta, Cleveland and Orlando. According to the article there are condos in Orlando that used to sell for $200,000 now being sold for $50,000, and they currently rent for $900-$1200 a month. So I did some online research and this seemed pretty accurate. Now my husband and I are considering buying one and renting it out. This would pretty far from where we live, Maryland, but we were also thinking of using it for vacations down the road.
Anybody want to render some advice? I'd love any input I could get

 

[Darcy03231]

If you can't pay all the expenses associated with the property without the rent, don't buy it.

We know several people who own rental properties. This is something they all say. No one every has 100% occupancy all the time.

Also, would you be hiring a management company or would you be handling everything yourself? If you're going to do it yourself, what's your plan if something goes wrong? Keep in mind that you have to pay the management company too, if you go that route.

DH and I thought about it and then decided it would be more hassle than it was worth. We already own a 2nd home (that we don't rent out) and its only an hour away from us. Its still a PIA when something goes wrong and someone has to be there for repair people, etc.

 

[LauraR]

Well, we could buy it without a mortgage, so the main overhead would be property taxes and condo fees. For several of the complexes I've seen with condos for sale the condo fees were about $250 a month. I talked to a real estate agent about renting one property and he said the management company typically charges 3/4 of the first month's rent then 10% every month thereafter. So I'm calculating a rent of $900 minus $250 for condo fees, minus $90 for management fees, but I'm not sure what taxes would be.
I'm thinking the profit on our investment would probably only end up being 8-10% a year, but there would also be possible appreciation of the property down the road.
I know what you mean about the PIA part. We used to own a rental and there were times it seemed like more trouble than it was worth. That's why I'm thinking of a condo---at least then there's a company to handle all the exterior stuff.

 

[Skatermom23]

Just wanted to give this a little bump and see if there was any other advice out there. I have long been considering a condo in Orlando, if the price was right. I don't think I would rent it out though. Where online are you researching through?

 

[LauraR]

Hi,
I've mainly been looking on Zillow.com

 

[Tampa Mousekeeter]

I wouldn't touch anything in Orlando now....there is way, way too much inventory out there for any type of appreciation for a long time. Also, it is very hard to have a rental property in one state and live another. We built a home in Mexico and rented it out, it wound up being a huge money pit and not worth the effort....

 

[LauraR]

I wouldn't touch anything in Orlando now....there is way, way too much inventory out there for any type of appreciation for a long time. Also, it is very hard to have a rental property in one state and live another. We built a home in Mexico and rented it out, it wound up being a huge money pit and not worth the effort....

I hear you. It's just that in Maryland you can't get ANYTHING for $50,000. I think the cheapest apartment here in Columbia probably goes for $160,000, and that's in a complex with no amenities.

 

[Grumpy's Gal]

I don't have any advice but I'm interested in what you decide and what people here have to say.

 

[TaraPA]

My in-laws own 2 condos in Orlando that they planned to rent out to vacationers - either short term (weekly) or long term (monthly). Be sure to check the by-laws of the condo association - they jumped in without reading the fine print, and found out after the fact that you can't just rent your condo (even though you own it) as you please. Their complex has strict rules about rentals & subletting (if you rent to someone who then re-rents to someone else). They do not allow "vacation rentals."

In the end they did try to rent their units quietly, but went through 3 managament companies that didn't come through for them when there were problems. She also said it's harder than they thought it would be to find renters - most want to go through a travel agent or resort, not a private renter. They have had it empty more than filled. They also have had a few interim condo assessment fees that they weren't counting on in their budget (if there's a problem in the common areas then every owner has to split the bill). They said it has been a nightmare since the start. They have had to make numerous unscheduled trips (we're in PA) to take care of problems. She never mentioned the taxes, but she said home owners insurance premiums in FL for a condo are double what they are here in PA for a private residence.

Right now both units have been up for sale on & off for 3 years. Another family member has been living in one, and the other they still try to rent out, or stay in themselves when they go to FL (about 5 times a year).

I'm sure there are many successful investment opportunities out there for you in Orlando, this is just one story that didn't work out. Good luck!

 

[LauraR]

My in-laws own 2 condos in Orlando that they planned to rent out to vacationers - either short term (weekly) or long term (monthly). Be sure to check the by-laws of the condo association - they jumped in without reading the fine print, and found out after the fact that you can't just rent your condo (even though you own it) as you please. Their complex has strict rules about rentals & subletting (if you rent to someone who then re-rents to someone else). They do not allow "vacation rentals."

In the end they did try to rent their units quietly, but went through 3 managament companies that didn't come through for them when there were problems. She also said it's harder than they thought it would be to find renters - most want to go through a travel agent or resort, not a private renter. They have had it empty more than filled. They also have had a few interim condo assessment fees that they weren't counting on in their budget (if there's a problem in the common areas then every owner has to split the bill). They said it has been a nightmare since the start. They have had to make numerous unscheduled trips (we're in PA) to take care of problems. She never mentioned the taxes, but she said home owners insurance premiums in FL for a condo are double what they are here in PA for a private residence.

Right now both units have been up for sale on & off for 3 years. Another family member has been living in one, and the other they still try to rent out, or stay in themselves when they go to FL (about 5 times a year).

I'm sure there are many successful investment opportunities out there for you in Orlando, this is just one story that didn't work out. Good luck!

Thanks for the input. It's good to hear the potential pitfalls (before we buy anything!)

 

[Tampa Mousekeeter]

She also said it's harder than they thought it would be to find renters - most want to go through a travel agent or resort, not a private renter.

That's another thing... I know quite a few people on this coast who purchased homes in Orlando to rent...the last year they have been complaining about lack of renters...at their peak the renters were almost all from Europe, and that market seems to have dried up considerably.

 

[LauraR]

That's another thing... I know quite a few people on this coast who purchased homes in Orlando to rent...the last year they have been complaining about lack of renters...at their peak the renters were almost all from Europe, and that market seems to have dried up considerably.

Do you mean people coming over and renting just for vacations or were they longer term renters?

 

[Tampa Mousekeeter]

Do you mean people coming over and renting just for vacations or were they longer term renters?

People on vacation, but Europeans tend to stay at least 2-3 weeks per trip.

 

[MinneMickey]

I have owned two properties near Disney for the purpose of vacation/renting. I do not own them anymore (I'm one of those that the failed real estate market consumed!)

First, it is true you can purchase forclosures in and around Disney at only 20% of their market value! This in itself is a good thing.

Second, renting in today's market is brutal. Here is what you need to know:

Understand that many subdivisions are zoned short-term, long-term or owner-occupied only. Also, many subdivisions have associations governing the length of rentals. Make sure you know all applicable rules before you decide on a property.

If you are considering using your new property as a vacation home, then you will most likely be wanting a property zoned for short term rentals so you can visit occasionally yourself!

If you are considering long term rentals -- the kind that a family would look to live in -- obviously make sure your property is zoned for this. You wouldn't be staying here on vacation unless your property was vacant.

Let's look at short term vacation rentals.

You have four main choices (or paths) to take:

1) Medium size "boutique" management company generating bookings and performing all management aspects (cleaning, maintenance, filing of taxes, etc) but doing so with very high quality and charging premium rates. You are not blocked from visiting during prime vacation times during the year.

2) Large management company generating bookings and performing all management aspects (cleaning, maintenance, filing of taxes, etc) but doing basic quality and usually charging below market rates. You are blocked from visiting during prime vacation times during the year.

3) Small management company performing basic aspects like cleaning and maintenance. Sometimes generating limited bookings. These companies usually perform very high quality work. You are not block from visiting.

4) A la carte. Spot contracts with private cleaners. Monthly pool and/or lawn contracts with local providers. You perform all bookings. You are not blocked from visiting.

I recommend choice 3. Here's why:

In this case, I advise you look for a "mom & pop" smaller management company that specializes in cleaning and maintaining your property. Do this locally so you can meet and inspect other properties they manage. They might help with bookings, but this would be your primary responsibility. There are websites devoted to helping rental owners achieve bookings.

For me, two main reasons stand out (and I have lots of experience from myself and others to back it up). First, the smaller management companies take really good care of properties. This is your investment and it is after all, a home, so you want it to be kept in good repair. Second, when something does go wrong, and it does, smaller companies tend to be more responsive because they do not have a ton of homes to manage. Often, a fast response means less work, less damage (if something is breaking or broke) and your renter feels better (likely to return).

AVOID WITH ALL COST the one option you will be tempted to go the most: DO NOT CHOOSE OPTION #2!!!!

The ugly truth is option #2 does cost the least, but they make their money by not properly taking care of your property (they often lack employees for the number of homes they manage) and they often SELL your property to DISCOUNT WHOLESALERS. What does that mean??? It means during the prime seasons, when you are blocked out of your home, the large management companies will "sell" your home to wholsale rental companies who then steeply discount your home at "unbelievable" rates that the wrong kind of vacationers invade your home. All too often, the result is damage beyond belief and everything that is not bolted down, stolen. This may sound "classist" but I have personally seen way too many of these trashed out homes and my heart goes out to every owner when they finally "visit" their vacation home only to find it looking like a first year frat house.

It also took me about three months to recover from similar damage myself.

In the end, one of my homes used option #1 and the other used option #3. I ended up selling (not foreclosing) because the economy dried up rentals and I couldn't afford both upkeep of two vacation properties plus primary one back home. Option #1 handled and charged a lot per booking but this was okay as the clients really treated the home with respect. I did not have to do anything when I put the houses on the market, they were already in perfect show condition. Plus, whenever I stayed there, it was so nice to stay in what my wife called a "Better Homes & Garden" style home. Definitely a vacation!

Okay, got off on a rant there... Sorry about that but I get pretty worked up over the vacation rental market in and around Disney. Good luck with your search!!!

 

[mrsklamc]

My dream would be to purchase a Windsor Hills townhome for rental purposes. It's very close and I know it could be rented because many owners there do. (They have condos there too OP.)

The owner I rented from was a disser, but they made him change his screen name because it was the same as the website he used for his rental property.

I know the property management company was good because they had to fix an issue while we were there. If you want I can PM you his info, maybe he would be willing to speak with you. He was a very friendly guy.

 

[LauraR]

My dream would be to purchase a Windsor Hills townhome for rental purposes. It's very close and I know it could be rented because many owners there do. (They have condos there too OP.)

The owner I rented from was a disser, but they made him change his screen name because it was the same as the website he used for his rental property.

I know the property management company was good because they had to fix an issue while we were there. If you want I can PM you his info, maybe he would be willing to speak with you. He was a very friendly guy.

Thanks, I'd appreciate it!

 

[LauraR]

Minnemickey---
Thanks for all the information about the different kinds of management companies! That's just the kind of thing I need to know about.

 

[mrsklamc]

Actually I found their property management company freely listed under the FAQs on their rental website. They list Oasis Vacation Homes http://www.ovhfl.com/ as their property manager.

 

[TinkOhio]

I have owned two properties near Disney for the purpose of vacation/renting. I do not own them anymore (I'm one of those that the failed real estate market consumed!)

First, it is true you can purchase forclosures in and around Disney at only 20% of their market value! This in itself is a good thing.

Second, renting in today's market is brutal. Here is what you need to know:

Understand that many subdivisions are zoned short-term, long-term or owner-occupied only. Also, many subdivisions have associations governing the length of rentals. Make sure you know all applicable rules before you decide on a property.

If you are considering using your new property as a vacation home, then you will most likely be wanting a property zoned for short term rentals so you can visit occasionally yourself!

If you are considering long term rentals -- the kind that a family would look to live in -- obviously make sure your property is zoned for this. You wouldn't be staying here on vacation unless your property was vacant.

Let's look at short term vacation rentals.

You have four main choices (or paths) to take:

1) Medium size "boutique" management company generating bookings and performing all management aspects (cleaning, maintenance, filing of taxes, etc) but doing so with very high quality and charging premium rates. You are not blocked from visiting during prime vacation times during the year.

2) Large management company generating bookings and performing all management aspects (cleaning, maintenance, filing of taxes, etc) but doing basic quality and usually charging below market rates. You are blocked from visiting during prime vacation times during the year.

3) Small management company performing basic aspects like cleaning and maintenance. Sometimes generating limited bookings. These companies usually perform very high quality work. You are not block from visiting.

4) A la carte. Spot contracts with private cleaners. Monthly pool and/or lawn contracts with local providers. You perform all bookings. You are not blocked from visiting.

I recommend choice 3. Here's why:

In this case, I advise you look for a "mom & pop" smaller management company that specializes in cleaning and maintaining your property. Do this locally so you can meet and inspect other properties they manage. They might help with bookings, but this would be your primary responsibility. There are websites devoted to helping rental owners achieve bookings.

For me, two main reasons stand out (and I have lots of experience from myself and others to back it up). First, the smaller management companies take really good care of properties. This is your investment and it is after all, a home, so you want it to be kept in good repair. Second, when something does go wrong, and it does, smaller companies tend to be more responsive because they do not have a ton of homes to manage. Often, a fast response means less work, less damage (if something is breaking or broke) and your renter feels better (likely to return).

AVOID WITH ALL COST the one option you will be tempted to go the most: DO NOT CHOOSE OPTION #2!!!!

The ugly truth is option #2 does cost the least, but they make their money by not properly taking care of your property (they often lack employees for the number of homes they manage) and they often SELL your property to DISCOUNT WHOLESALERS. What does that mean??? It means during the prime seasons, when you are blocked out of your home, the large management companies will "sell" your home to wholsale rental companies who then steeply discount your home at "unbelievable" rates that the wrong kind of vacationers invade your home. All too often, the result is damage beyond belief and everything that is not bolted down, stolen. This may sound "classist" but I have personally seen way too many of these trashed out homes and my heart goes out to every owner when they finally "visit" their vacation home only to find it looking like a first year frat house.

It also took me about three months to recover from similar damage myself.

In the end, one of my homes used option #1 and the other used option #3. I ended up selling (not foreclosing) because the economy dried up rentals and I couldn't afford both upkeep of two vacation properties plus primary one back home. Option #1 handled and charged a lot per booking but this was okay as the clients really treated the home with respect. I did not have to do anything when I put the houses on the market, they were already in perfect show condition. Plus, whenever I stayed there, it was so nice to stay in what my wife called a "Better Homes & Garden" style home. Definitely a vacation!

Okay, got off on a rant there... Sorry about that but I get pretty worked up over the vacation rental market in and around Disney. Good luck with your search!!!

Excellent, informative post! Thanks for sharing!

 

[LauraR]

Actually I found their property management company freely listed under the FAQs on their rental website. They list Oasis Vacation Homes http://www.ovhfl.com/ as their property manager.

Thanks for finding that!