Couple of ?´s for villa owners

[Freyja]

I can totally understand if you villa owners don´t want to give me the exact numbers of your own villa purchases but I have a couple of questions I was hoping you could help with.

I have seen 4 bedroom homes in Kissimmee (Indian Creek) priced at approx. $260 000. Is that the approx. total price or do you usually negotiate the price? How much are taxes and other expenses that might get added on?

Would you rather buy a new home or one for re-sale?

What are mortgage rates approx?

How much do villa owners usually pay monthly for management, maintainance, gardeners, pool cleaning, heat, electricity etc.?

How many weeks a year is your home oocupied by renters?

Anything you would do differently the second time around? Would you even do it again?

 

[5mins2disney]

Hmm....you ask a lot of good questions! LOL

First of all, if you're interested in real estate, I can put you in touch with an excellent local realtor who specializes in homes in STR (short term rental) communities near Disney.

In the US, it's very rare for someone to pay the listed or advertised sale price of a piece of property, usually you negotiate the price downwards (especially in today's soft real estate market).

There are all kinds of other costs, such as mortgage closing costs, title insurance, closing fees, etc, that they add on to the sale price at a transaction closing, again, a realtor or mortgage person would be best to advise you on this.

Would I buy a new home or resale? Well, depends on you! You get a warranty from the builder with a new home typically, which is nice. With a used home, it may already be furnished and up and running. In a new home you're going to have extra expenses to furnish it. In a used rental home, you can buy it basically ready to go, and include the furnishings in your mortgage. In Indian Creek I don't think there are any new homes for sale though. (JMO, but this is probably not where I'd buy in the area right now, again, ask a realtor for advice on this though!).

Mortgage rates depend on many many factors, such as your down payment, type of the loan you get, term of the loan, and your credit rating. You need a mortgage broker to help you here...a good realtor should be able to connect you to a good mortgage lender.

Monthly mgmt, maintenance, cleaning, taxes, pool heat, utilities, HOA fees, insurance, etc, all vary depending on the type of home you buy, and the resort it's in. I could tell you what it costs to run a townhome in Windsor Hills for instance, a larger pool home would most likely incur higher electric bills, for instance. In our resort we pay HOA fees, but our cable TV is included in the price. So is our exterior landscaping, exterior building maintenance. As part of our monthly MC fee they include weekly pool maintenance and monthly pest control, some MCs do it this way, some charge for everything separately.

Our homes are pretty well occupied...I'd say 40-45 weeks per year, but we're on the high end of the occupancy scale, most people don't get that high of an occupancy rate, just so you know. It has a lot to do (I think) with being in the right resort, having a very nice place, and good marketing, MC, pictures, etc., at least it seems to be working for us!

Would I do it again? Absolutely! It's been a lot of fun! I get to talk Disney with people every day basically! The one thing I would tell anyone looking to do this, is you get out of it what you put into it, and if you want bookings, you will need to work hard at it! I would not count on an MC getting you any bookings, I would count on doing it yourself!

I am thinking about buying another townhome once I find a new job, so if that gives you any indication of if I would do it again, the answer is yes, definitely. I personally think the market being very soft right now makes it a great time to buy, if you can afford to. You're in this for the long haul....if you hope to make money over the short term, you will not, most home owners lose $$ on their STR homes, the place you might make a profit is in the long term appreciation of the real estate.

 

[Freyja]

(JMO, but this is probably not where I'd buy in the area right now, again, ask a realtor for advice on this though!)...

...


Would I do it again? Absolutely! It's been a lot of fun! I get to talk Disney with people every day basically! The one thing I would tell anyone looking to do this, is you get out of it what you put into it, and if you want bookings, you will need to work hard at it! I would not count on an MC getting you any bookings, I would count on doing it yourself!

I am thinking about buying another townhome once I find a new job, so if that gives you any indication of if I would do it again, the answer is yes, definitely. I personally think the market being very soft right now makes it a great time to buy, if you can afford to. You're in this for the long haul....if you hope to make money over the short term, you will not, most home owners lose $$ on their STR homes, the place you might make a profit is in the long term appreciation of the real estate.

First of all, thanks for a great reply!

May I ask, where you would buy if you were buying now?
You mention that you´re thinking of buying another townhome. I guess that means you believe you will make a profit in the long run from it. Right? What do you consider to be "in the long run"? Are we speaking 15, 30 years or even more?

 

[5mins2disney]

First of all, thanks for a great reply!

May I ask, where you would buy if you were buying now?
You mention that you´re thinking of buying another townhome. I guess that means you believe you will make a profit in the long run from it. Right? What do you consider to be "in the long run"? Are we speaking 15, 30 years or even more?

I would buy in Windsor Hills, where we already own / operate townhomes. It's currently the "hot" resort (with good reason, it's gorgeous!)...and I think personally, real estate price wise, it's very undervalued for what's there, and it's location and amenities. Put this same resort in other parts of the country and it would sell for 3-4x the price. Pulte (the builder) is selling similar condos at it's new resort, Vista Cay, for close to $400k!! I'm saying that, by the way, based upon my local realtor telling me he feels it's very undervalued relative to what else is selling in the area, and what he sees places like condotells selling for. One thing you can look at is the cost per square foot...some condotells are selling in the area for $800-900 per sq foot (ouch..guess who's making the $$ on that deal!?). There's a new resort being built called Tierra Del Sol...selling for over $400 per sq foot (do yourself a big favor and avoid this one...lots of people having lots of problems with the developer there taking their $$!). Windsor Hills townhomes...$165 per sq foot...just to give you an idea, but hey, you do the math and research yourself, please, don't take my word on it. If you're serious, do a lot of research.

Here's 2 good reports for you to check out on the local STR real estate market, how quickly things are selling, for what % of list price, in which resorts, how many current listings, how many homes sold, etc...
http://www.tdorlando.net/statistics/April-Stats-07.pdf
http://www.tdorlando.net/TD-News-April-07.pdf

Will I make a profit from it? Hey...there's no guarantees in life...I don't have a crystal ball any more than you do! hehe If I did I'd be rich by now, I would have picked all of the winning stocks, horse races, superbowl winners, etc by now and be writing you from my yacht somewhere! LOL By "long run" though I mean 5 or so years...maybe 10, definitely not 15-30...but you never know! In 15-30 years this resort will be older too, and I'm sure something newer and better will be around...and by then, it will be time to sell here, buy there...etc, nothing is good forever after all!

 

[isla bonita]

Would you rather buy a new home or one for re-sale?

What are mortgage rates approx?

How much do villa owners usually pay monthly for management, maintainance, gardeners, pool cleaning, heat, electricity etc.?

How many weeks a year is your home oocupied by renters?

Anything you would do differently the second time around? Would you even do it again?

We built ours and it was great getting what we wanted but it was a lot of stress being away for most of it and we like many others had many problems. Our home took 22 months to build. Yup you heard right 22 months to build. I would if I ever get another chance buy post construction and never go through the stuff we did. I would purchase a home in the Formosa Gardens area only. My personal choice. Location, location, location Also we would buy in the resort we already own in most likely.

We purchased our home before everything went thru the roof. Our mortgage rate is 6.25% the rate will vary from situation to situation. We also bought our 6/5 when the cost came to 120 per sq ft.

Some of the items we pay for
mortgage
insurance
taxes
man/co
pool
pest control
electric
telephone
water/sewer
home owners association fees
clean fee
tangable fee
county and state tax

We have owned our home for almost 3 years and we are doing well now. It was a lot of work but so worth it. We are presently booked 25 weeks and counting. They tell me it is generally 26 weeks to break even. We spent a little more on our home so it will take more I think to break even but we are always adding to our home and at some point it will be less out put and more input I am hoping.

If we should come into a windfall I would do it all over again no let me take that back I would buy a home already built and would also make sure it was a 4 bedroom. It would be great to have something for all size parties.

Our family has had the most wonderful vacations and we have memories of a life time. If I had to sell it tomorrow I would not have one regret. There is a commercial here in the states

rental car $500.00
disney tickets $1,300.00
plane tickest $1,500.00
rental home $375,000.00
memories priceless

 

[tednvon]

Hi, lots of good information from the folks above...Here are the figures as I had them before we sold our home in Emerald Island...

Bottom line...if you need to break even to not upset the family budget then do not purchase real estate in another state. IF you can afford to float anywhere from 1000 to 10,000 dollars a year in extra expense without losing sleep or cramping budget then you may just may make money over the long haul on appreciation and monthly cash flow.
I can tell you I spent about 2 hours a day on just answering emails, setting up contracts, handholding guests who were scared to death to rent from a owner, and doing about 1/10 of the work on the Dis and other boards that the folks who have posted above do every day.
Cut to the chase monthly dollar figures...Appx but not too far off!!!
PITI on a $350,000 3/4 bed 2-3 ba FURNISHED home/condo-20% down at 6.50%... $2270

Utilities:
(gas/elec- (minimum) $300,
cable $50
water/sewer $50
management $200
pool care $100
pest control $40
Homeowners assoc (top communities) $180
cleaning fees $200
rental tax appx $100
repairs/ maintainance ($appx $40.00/hour in your absence) $100
advertising (vrbo.com and others) $40
supplies (towels, linen, light bulbs, furnace filters $40 Appx monthly cost....................................... $4000
Annual Cost appx.................. $45-48,000

Income-do your own math...
20 weeks at $1000/week $20,000
25 weeks at $1000/week.....$25,000
20 weeks at $1500/week...$30,000
25 weeks at $1500/week..$37,500
30 weeks at $1500/week..$45,000
and so on.....Check out sites like www.vrbo.com and look at the prices they are offering for the condos and homes. That is your market. (a quick scan of 3br/3bath condos in Windsor Hills has a lot them "from 79 to 99/night")..please do your survey. IF you let someone else rent out your home they will take a big chunk of the rent for fees....

We bought right after 9/11 and got a 7 bedroom 6 bath for under 300,000 in Emerald Island ...heck they gave us $4000 cash for travel expenses, it was so hard then to move homes. The furniture package folks were hurting and sold us complete package for 7 bedrooms for $22,000 and was pretty high end stuff. The home rented very well and we did well. However, I could see the writing on the wall as literally thousands of houses and condos were built around Disney from 2003 to 2005. I do not have the incredible energy of 5minstoDisney or Isla Bonita who can tell you how many hours a day they spend on these boards and marketing and renting their properties...It really was fun for a couple of years, but taxes went way up, insurance went up and up, fees and utilities went up and rents stayed pretty flat....also as much as I love Disney our 7 bedroom was an investment, not a dream home we would live in one day....I think that makes a difference.
Now the upside. Disney will always be Disney and these homes should hold value or increase...not sure about the condos or townhomes. Disney World is on a huge roll as far as attendance. Numbers are way up and the savvy budget minded family is really moving toward off site homes and condos....Disney is not taking it lying down and is cutting costs of budget hotels, offering free meals and extended hours to those who stay on property.

Just do your homework, and remember that the current owners who help you out on this board are very very hard working folks who put in so much time at this.

good luck...I hope you didn't mind a note from a former owner...I would be most interested in other opinions or corrections to my figures.

all the best...Ted

 

[Freyja]

As always, you Dis´ers are amazing. Thanks! I´m sure I´ll post some new ?´s later today.

 

[5mins2disney]

I just heard that there's 2 townhomes for sale in foreclosure on the south side of Sir Kaufman in WHR...side by side.... $450k for both, unfurnished, south facing pools, tiled. (This is an UNBELIEVABLE deal!). Usually townhomes sell for $250-315k to give you an idea. Wish I had some cash and a new job lined up right now! /sigh
- George

 

[4eyedbuzzard]

I am not an owner, but I just wanted to comment as I have owned income property in the past, and must point out that being an absentee owner in a tourist market can be very difficult and nerve-wracking at times. As 5min2disney and others have pointed out there are large fixed overhead / operational costs regardless of occupancy.

Orlando is a very unique tourist market, to a great degree almost exclusively dependent upon one single entity - WDW's perception and position in the tourism dollar marketplace. Some may live in denial of this, citing all the other attractions - but Orlando tourism is a big house of cards built on WDW. EVERYBODY else(incl Univ and Sea World) is just a leech. WDW has typically been pretty dependable as a benevolent host to parasitic lodging operations over the years, but the only guarantee is that WDW will maintain its own market share via pricing and marketing. Right now WDW is on a bit of a roll, but part of that is at the expense of other Orlando attractions in the never-ending competition for tourism dollars. WDW's free airport shuttle, "free dining" during slow periods, better packaging discounts, etc all draw dollars away from competing lodging and theme properties. There is a good amount of spill over demand right now, but if(or when) tourism declines(and international tourism to the U.S. is down), there is so much "fat" in WDW pricing that WDW can easily take a cash flow hit and weather out virtually any bad economic times. Large hotels and chains will also survive. But private owners of upscale lodging cannot generally survive more than one bad year, if that - they just don't have the capital reserves to run in the red for any length of time. What happenes if in 2010 tourism drops? Pick a reason - further economic downturn/inflation in the US, war, transportation prices(fuel), etc. What happens if you cut prices to compete and still only book 30 weeks, but at 25 weeks equivalent income due to discounting? Can you pump the required 10 to 15 G's in fixed expenses into the property out of pocket? This would be my biggest fear - small owners pressed for cash flow, "eating each other alive" in poorer economic times.

I don't think this will probably happen, but I wouldn't label it as completely unimaginable either. Just something else to consider.

 

[tednvon]

Good point!
It is really hard to believe that Disney would do a huge downturn, but after 9/11 it took quite a while to recover. Of course, it is during the down times that investments can be the best deal...just very nerve racking and it takes time for markets to bounce back.
Again, I admire and understand all the work and time required to take the best care of a property from long distance. I'll bet if all the Diser's here who own property tried to figure out how much per hour they "got paid" last year for all time spent working on property issues they would be lucky to make a $1.00 and hour!!

It is a labor of love, especially if will be a dream home one day...but love can be a lot of work...These boards are not only fun but theraputic when you own property around Disney...better than Valium!!!.....but not quite as good as a margarita in Mexico at Epcot!!!

And George, for those two townhomes, if unfurnished, Don't we need to figure furniture into any price in order to make it a rental?...How much do think these days to make it top of the line like yours....20K per unit???? I am really out of that loop and furnished ours before Plasma became almost a necessity to be competitive?

Peace...
Ted

 

[isla bonita]

4eyedbuzzard

You are so right.

We unlike many were not sold a dream but a reality. Many unsuspecting home owners were told that their homes would pay for themselves. Def. a possability but not a def.

We had an income property not far from our home. When things went up around here we sold and purchased right before they went up in the Orlando area. We had a win win situation. We have a mortgage but no PMI. We have capitol put aside for those lean months that might arise.

I have worked like a dog all hours of the day and night to promote our home. It has started to pay off. It is not a small part time job if you want it to succeed.

I do not want to sound like it can not be done I just want all to know it does come with a price and to have all the facts before you sign on the dotted line.

I would not change a single thing it is all a learning experience and I am still learning.

 

[4eyedbuzzard]

Good point!
It is really hard to believe that Disney would do a huge downturn, but after 9/11 it took quite a while to recover. Of course, it is during the down times that investments can be the best deal...just very nerve racking and it takes time for markets to bounce back.

I don't see WDW doing a huge downturn, but there are ups and downs in tourism - and hopefully we'll never have an event like 9/11 again - though that might be a great time to buy. But even though I'm renting a 4 bdr home this June, I did still consider staying on site - but the pricing/value and required accomodations swung us (family of five) to an offsite home, THIS TIME. But given other perks, and if WDW pricing was a bit better, I would book there. It's a mouse-eat-mouse world out there.

 

[4eyedbuzzard]

We had an income property not far from our home. When things went up around here we sold and purchased right before they went up in the Orlando area. We had a win win situation. We have a mortgage but no PMI. We have capitol put aside for those lean months that might arise.

I have worked like a dog all hours of the day and night to promote our home. It has started to pay off. It is not a small part time job if you want it to succeed.

Can I borrow your crystal ball and then hire you as my MC?

Congrats on your timely decisions and that hard work stuff.

 

[isla bonita]

4eyedbuzzard

Yes, yes you can. yeah right we totally lucked out.

Our first full year our equity well I don't want to rub it in but no single stock broker on wall street did as well I am sure.

It was an investment that my husband wants to happen again in his life time. I told him the next blue moon is not for eons. We are truly very blessed.

 

[2xDisneyDad]

I just heard that there's 2 townhomes for sale in foreclosure on the south side of Sir Kaufman in WHR...side by side.... $450k for both, unfurnished, south facing pools, tiled. (This is an UNBELIEVABLE deal!). Usually townhomes sell for $250-315k to give you an idea. Wish I had some cash and a new job lined up right now! /sigh
- George

Since this topic is getting a bit of mileage I thought I would report back and give my 0.02 cents. Although compared to the advice/info already being offered by the people in this thread it is most likely closer to 0.1/2 cent .

We began looking at this after selling a local rental that I had purchased when I was single in 1996 and just out of school. Needles to say there has been a relatively large upswing in the market since. Much like Isla Bonita I was faced with a good amount of gains in equity and now a family with a 3 and 5 year old that LOVE Disney (it sounds much cooler if I blame the kids, but I think we all know the truth ). In addition, I love real estate as an investment, at the right price. My belief is the Disney market is a bit soft now and at worst we could find a fair priced property to parlay our investment in to. While I do not think this is a decision that should be entered into lightly, it also must be one in which you must be comfortable with and have somewhat of a "fun" factor. After all, it is a house at Disney for God's sake, not a tenement. I am the first to admit I am no expert in the Disney real estate market, the amount of communities is staggering, but at the same time it took me no time to narrow our interest into one community...Windsor Hills...and....we wound up BUYING. This is not a plug for WH, as the right place is what and were you want it to be for your interests. It simply worked for us based on us primarily having an interest in a townhome and the proximity to the parks with amenities offered. I will echo that a good real estate professional is your best friend here. I have met very few in my life that I liked dealing with, never mind trusting with this type of investment, but was very fortunate here and got hooked up with someone that was a real asset. As far as hard monthly numbers, a lot depends on the home you buy and principal you are putting down, but a good agent can supply numbers once you decide where and if you want to buy.

In any case we feel it was the right decision, have financial buffers in place in the event it is not, and figure we can always sell in 12-18 months without much of a loss and hopefully a slight gain. No one can predict the future though.

Now we are beginning the fun part of furniture, house ware, and my favoite...flat screen TV shopping. Wish us luck we are due to close on the 31st.

I would leave you with the members of this board are a true asset and willing to help and share their experiences. I took a lot of advice from them and you can also search the DIS as similar topics have been discussed.

Good luck,

Steve

 

[5mins2disney]

Good point!
And George, for those two townhomes, if unfurnished, Don't we need to figure furniture into any price in order to make it a rental?...How much do think these days to make it top of the line like yours....20K per unit???? I am really out of that loop and furnished ours before Plasma became almost a necessity to be competitive?

Peace...
Ted

I'd allow closer to $40k to get it all furnished high end and running. But ours cost more than many. The "platinum" level furniture stores in the area were quoting us $23-24k, but not with high end electronics, mattresses, etc. Basic package was $15k for a 3bed/3bath (but total junk), gold package was $18-19k, kind of average furniture, bedding, TVs, etc, then you have to realize the local furniture places charge nearly 100% markup on things.

We also spent $4500 or so on tile, $2200 on paint, ceiling fans, tons of misc stuff, paid our MC several $1000 in labor to put it all together for us remotely. Then you have other startup costs too like marketing, a website, licenses, insurance, HOA, it really adds up, and you want to allow a few $1000 at least in buffer expenses to make sure you have enough short term capital to run it for a while. We did it all ourselves, ordered everything online. Furniture ordered from discount places in North Carolina (but it's more expensive stuff, better quality, but discounted still), electronics, etc, and paid the MC to put it all together for us. It still ended up with a much better result and at a much more reasonable cost for what we got.

We did things though too, like bought a Nintendo Gamecube on Ebay with 15 games...total cost $135, for instance, to save a little where we could, but many homes have game systems, but not 15 games there to play with 4 controllers.