Has anyone bought a house with the idea of renting?

[Camping Griswalds]

We just stayed in a lovely home in Emerald Island. We loved the vacation home idea! So have any of you decided to take the plunge? What is the best way to look for a home? /do you purchase with the idea of renting it out, and then maybe eventually having a second home? We were wondering what prices were like down there.

 

[CoralCayTownhome]

We are just about to close on the purchase of our Vacation Town home in a new 192 area resort Coral Cay. After having done hotels, on site and then a few villa rentals we decided to take the plunge. (the weak $ did help)

From the UK we used a specialist company so how you start within the USA with be different I suppose and as far as prices are concerned, sorry I can only compare UK to Florida. Like most people we do need to rent it out to pay for itself but will be great for our own vacations.

Tracey

 

[KayR]

We took the plunge in 2002 when prices were a lot lower than they are now.

There are several forums dedicated to vacation rental owners where you can read up about the ins and outs of renting.

Make sure the numbers work for you financially - I personally don't know how anyone can make the numbers work these days without putting a large deposit down (where you are in some way subsidizing vacations by using your capital). Don't forget to take into account costs (utilities, insurance, taxes, advertising costs, licences, HOA fees, etc). There are several taxes to be aware of : Real Estate, Tangible Property Tax, Sales Tax, Occupancy Tax and then of course you may have to pay state and federal taxes.

It also takes a LOT of time. Don't underestimate how much time it takes if you do it yourself. If you don't want to do it yourself, then you need to use a management company that will get bookings for you (but you will receive less net $$ than if you did it yourself. I firmly believe that you need to handle bookigns yourself and take a very active interest in your home. You will need a local management company what ever you do. Make sure you have a good one and work with them.

Talk to a realtor about homes, but don't assume that what they may tell you about renting is true (many people have been promised the earth by realtors and then found out the truth and have been shocked)

I don't want to scare you, but you need to know what you are getting into. Do your research, do your due dilligence, do your homework. Then if you still want to get into renting a vacation home, you can do it with your eyes wide open.

That said, we love it. It is hard work, it does take time, but we bought before the big boom, so can make things break even.

--Kay

p.s. Emerald Island is a beautiful community.

 

[CoralCayTownhome]

KayR that is definately sound advice. We do expect to put a lot of work into generating bookings.

What websites do the people in the US use to book villas/townhomes? We need to start some advertising.

Tracey

 

[5mins2disney]

Been there, done that... if you need a local realtor who specializes in resort properties / vacation homes in the area, please PM me, I have a great guy you can work with!

I would be very careful about which resort you buy in...some of the newer / up and coming resorts are going to be VERY difficult to make any $$ in. (This is why we bought in Windsor Hills).

You need to realize something else..most people who do this lose $$ at it, plain and simple. Are you prepared to be negative cash flow? For some people, this is not a big deal, but if you think you're going into this looking to make a fortune in revenue, let me shatter your illusions right now!

There are benefits, for sure, you own a home, you can decorate / furnish it any way you like, and you can also write off 2 trips a year to WDW on your taxes (you're visiting your investment property).

The area AVERAGE for weeks of rental occupancy for a vacation home? A paltry 21 weeks...

http://www.mickeytown.com/what-are-...eks-rented-for-florida-vacation-rental-homes/

If you think a large MC is going to get you bookings, think again...you're going to need to work hard to do it yourself. If you do use a MC, they're going to take anywhere from 10-40% of the rental income, get you "not enough" bookings, and then, often times, the rents will be so pitifully low you'll be upset (I hear this from other owners all the time).

Before you go any further, I suggest buying 2 of the industry "bibles" on how to do this:
www.fulllybookedrentals.com
www.howtorentbyowner.com

There's also a great forum for rental owners called:
www.laymyhat.com

 

[Sunrisedream]

Some excellent advice already, but a single piece of advise from me would be if you do not feel could run the house for a year minimum without rentals, think hard before you purchase. We have made a success of our home, but not without lots of hours at the pc daily, and listening to lots of advice. Research, research, research! I am pleased to say I am still loving every minute (well most anyway), but it is by no means for everyone!

 

[kilee]

Lot's of great advice. I think as long as you're not looking at making money from it, that would be #1. I know we are looking at a vacation property (not in Florida) that we might rent out to help subsidize alittle. However, we know it won't pay for much more than 25-35% of the annual cost of the cabin. For us, it would be just an investment in our future, and someplace we can spend a lot more time at as a family.

 

[5mins2disney]

I would like to echo and emphase what Kay and Sunrise already said...that it's a lot of TIME on your part to market your home, answer the dozens (or 100s) of emails you get on a daily basis.

If you don't do it...and you don't answer them VERY quickly...someone else will..and you won't be successful. Orlando is one of the more competitive / cutthroat markets for vacation rentals, you can be successful....but it's directly proportionate to how much effort / hard work you put into it!

If you think you can sit back and have it come to you, or someone else is going to do it for you, then I can almost promise you you're going to lose $$. (Most people do, just so you know this up front).

If we haven't scared you off just yet! hehe...go for it! It's been a lot of fun personally speaking...someone once said it's a year long intensive course in the hospitality service industry, and you can't pay $$ to get this kind of training and education anywhere else!!

On the other hand, if you were a stay at home mom or something, I think this is just the perfect kind of side business thing where you could answer emails at your leisure and it's not so time consuming as to take up your entire day.

The hardest part of it is getting going, since that's when you get the most bookings, are the busiest, and also, don't really know what you're doing just yet!

Once your home gets up and running and your calendar has some bookings or is partially filled, the amount of work / effort dies down some, and it's not as time consuming as it is initially. Initially, for us at least, is was a small nightmare to get the house furnished, up and running, get a website launched, deal with all kinds of fun other issues (furniture showing up smashed a week before the first guests were due to arrive), local utility problems (took 3 weeks to get the water in the house turned on), etc.

You definitely need a good local MC, and they can be hard to find. Stay away from the big boys, for the most part, that's all I will say on that subject!

 

[CoralCayTownhome]

This is great advice - did scare me a bit at first but there is no pulling out now.

I'm not scared of the hard work - just getting started is the problem with advertising and DH is sorting what I hope will be a decent web site
MC is on site so we will have to see how good they are.

5mins2disney - the links to the books are great - thanks

I will be so happy if we can break even in year one. Lets hope.

Tracey

 

[5mins2disney]

Lot's of great advice. I think as long as you're not looking at making money from it, that would be #1. I know we are looking at a vacation property (not in Florida) that we might rent out to help subsidize alittle. However, we know it won't pay for much more than 25-35% of the annual cost of the cabin. For us, it would be just an investment in our future, and someplace we can spend a lot more time at as a family.

Right-O Kilee! As long as you're not getting into it looking to make much on the home, then you will be fine! If you're looking to offset some of your costs / etc, you will be in great shape. I think over the long run you could make $$ on owning a second home just from the real estate appreciation, but we're also in a slow - downward trending real estate environment right now, so caution is warranted, it may head down further still before turning around.

The one bright spot, the real estate market is down, but the vacation / Disney market doesn't seem to be, it's been one of the best spring periods for vacations in the area they have seen in years!!

 

[KayR]

KayR that is definately sound advice. We do expect to put a lot of work into generating bookings.

What websites do the people in the US use to book villas/townhomes? We need to start some advertising.

Tracey

What works for us, may not work for you, but I would certainly look at VRBO.com for starters.

What I recommend is do some google searches - think like a guest and look for
Vacation rentals disney
vacation rentals Coral Cay
and other ones you think of. Use US phrases like vacation rentals instead of holiday homes, villa for a townhome (UK people tend to call homes villas which does get a little confusing!) - BTW - I am a brit, although living in the US, so I speak both English and American

Make a list of the sites that come on the first page and choose from there. Try and get as much advertising as possible - it costs to advertise on the good sites, so expect to pay upwards of $1000 or more per year.

If you have a community website like the ones for Windsor Palms or Windsor Hills, then I would join it. Link up with other owners at Coral Cay to share information (maybe someone has a Coral Cay forum you can join). If you can find other CC owners, consider joining to www.myvrzone.com - it is not an advertising site, but a referral network and has some calendar update functions too. (George likes it )

Join top-forums.com - a forum for owners in FL. You can find tons of owner advice there - and may find other CC owners too. I am sure Disboarders would get bored with all the rental talk - so best to follow up on t-f.

Get your own website with info etc. Look at other owners and see what they do on their websites. You will see good ones and not so good ones. Try and make yours a good one

Good luck (and welcome to becoming an STR home owner)

-Kay

 

[ducklite]

The home I live in now was originally built as a vacation home. One thing to keep in mind is the cost of furnishing and supplying it. Bare minimum I would expect the purchase of reasonable quality furnishings, linens, window treatments, major appliances, small appliances, kitchen wares, and decorating items will run at minimum $20,000 for a 3BR home. I spent well over $40,000 on my furniture and hosuewares--window treatments were another $20K, and electronics another $15K!--and I'm still adding things here and there.

IMHO people do notice the quality of furnishings and housewares, and if you want to build repeat business I would at least go with a moderate quality in these items.

Anne

 

[CoralCayTownhome]

Cheers Kay

 

[5mins2disney]

The home I live in now was originally built as a vacation home. One thing to keep in mind is the cost of furnishing and supplying it. Bare minimum I would expect the purchase of reasonable quality furnishings, linens, window treatments, major appliances, small appliances, kitchen wares, and decorating items will run at minimum $20,000 for a 3BR home. I spent well over $40,000 on my furniture and hosuewares--window treatments were another $20K, and electronics another $15K!--and I'm still adding things here and there.

IMHO people do notice the quality of furnishings and housewares, and if you want to build repeat business I would at least go with a moderate quality in these items.

Anne

I agree! We're wayyyy over $20k, but it has paid off in bookings. We wanted to go all high end everything. Here's another TIP...keep a VERY detailed record of every single stinkin thing you buy for your home....why? Because some Feb/March...you're going to get a form from Osceola County asking you to itemize every sheet, towel, fork, etc and pay a separate tax on every single piece of inventory that goes into your home....grr.... ( I just spend 30+ hours last weekend entering all of this into Quicken). It nets out to $300 or so for a typical home in taxes... I don't understand why they don't just make it part of the already outrageous 13% hotel / occupancy tax...but hey.. who am I to figure out our taxes!? LOL Anyhow, a good inventory kept now will save you hours of time down the road when you have to fill out this report next year...and they will want every single individual item listed line by line... sigh.

If you haven't done so Coral...please..do yourself a HUGE favor and buy those 2 books I linked to above. I wish I'd read these before I got going...would have made a huge difference in how we went about getting started. Fortunately, we did most of it "right", but figured it out all on our own using "intuition"...these books though tell you step by step what to do! If I'd read the books though I would have known what to do... step by step...rather than figuring it all out on our own! LOL.. oh well.. good for you though!

Also..in addition to those forums... www.rentors.org has a lot of helpful "free" advice and online newsletters that are worth a read.

 

[sympatico]

As one who likes staying in vacation homes my suggestion is please spend a little extra on mattress sets. I look for websites that state that the beds have pillow top mattresses or similar. I've stayed in a few that the beds are so hard I had to go buy one of those eggshell foam toppers to put on it. I'd rather know it has a good mattress than and expensive table and chairs or whatever. Men also like big screen TVs, DVD etc. in the family room. Wireless high speed internet is another necessity nowadays, most people that need it have a laptop of their own. Game rooms are also good.

 

[HeatherFeather]

Agreed about the mattresses! We LOVED the villa we stayed in in January but would NOT rent it again only because the mattesses were cheap and uncomfortable. If you can't get a good night's sleep it really wreaks havoc on your vacation. Next time I will search out or specifically ask what kind of mattresses are in the home.

As one who likes staying in vacation homes my suggestion is please spend a little extra on mattress sets. I look for websites that state that the beds have pillow top mattresses or similar. I've stayed in a few that the beds are so hard I had to go buy one of those eggshell foam toppers to put on it. I'd rather know it has a good mattress than and expensive table and chairs or whatever. Men also like big screen TVs, DVD etc. in the family room. Wireless high speed internet is another necessity nowadays, most people that need it have a laptop of their own. Game rooms are also good.

 

[isla bonita]

CampingGriswalds

That is what drew us to purchase a rental home. We stayed in one and thought this is the bomb. We have since bought and have owned now for 2.8 years.

lots of work
lots of cash
lots of fun

It has not been and easy undertaking but worth the work. We have our own website but you need to be on many others, business cards, word of mouth, and so on. We are down in Florida only twice a year. The rest of the work we rely on our man/co. You need a good one. The home needs care every time we are down. I could pay for everything but it can get costly.

In addition to the costs that were mentioned there are always upgrades needed, gas grill tanks to be filled, linens to be checked over, toys weeded thru, house ware counts to be done. Nothing would be worse then cooking a meal and only having 4 forks for a home that has potential for 14.

I do not want to scare you off but this is what was told to me before wh went thru it. There is to much to loose if it is not your cup of tea. We fine tune everything before we leave twice a year and hope for the best the rest.

We have had some of the nicest guests stay in our home. Our guest book is filled with wonderful things. I cry when I read it. It is so great that many have had such a wonderful vacation staying in our home. It is the best thing I think we have done. It has allowed us to spend time with friends and relatives we would not normally afford to do. Our home is a little larger so we bring down family and friends and have such wonderful memories. I know the parks are the big draw but for me its the times we all spend around one of our tables in our home.

After reading the good the bad and the ugly and you still thinks its a good thing I say go for it. The time you get to spend there is priceless. Truly priceless.

 

[5mins2disney]

As one who likes staying in vacation homes my suggestion is please spend a little extra on mattress sets. I look for websites that state that the beds have pillow top mattresses or similar. I've stayed in a few that the beds are so hard I had to go buy one of those eggshell foam toppers to put on it. I'd rather know it has a good mattress than and expensive table and chairs or whatever. Men also like big screen TVs, DVD etc. in the family room. Wireless high speed internet is another necessity nowadays, most people that need it have a laptop of their own. Game rooms are also good.

Absolutely!! We're the same way...for all of the reasons you mentioned we bought the very best mattresses Sealy makes, same thing with linens. Guests regularly come back now and rave about them, and ask where they can buy themselves a set!!

I can tell you this though...none of this comes cheap..but if you want bookings....you need to do it!!

Coral...for starters you probably need to advertise on the big 5.... vrbo.com is #1 in the industry...and homeway just bought the next biggest 4...so sign up for homeaway and by placing 1 ad they will list you on all 4 websites.

Oh..by the way..if you buy the Glossbrenner's book (fullybookedrentals.com) you get a discount on all of these. And..the other site I suggested...howtorentbyowner.com... the lady that wrote the site / book is now the president of Homeaway!

There's also a good set of Yahoo forums you should join:
http://groups.yahoo.com/group/vacation_rentals/

And remember...great photos are worth a million words on a website!! You MUST take great photos...let me repeat that..it's CRITICAL!! Here are the "rules" on how to do this:

http://www.laymyhat.com/newsletters/newsletter1.htm#tips

Funny, when you know what the "rules" are...you can read people's ads and see instantly who's breaking them, and the results tend to be obvious... (their bookings calendars are generally empty). You can ruin a beautiful home in a second with bad photos or a bad website.

 

[ducklite]

The home needs care every time we are down. I could pay for everything but it can get costly.

That is so very true. When you own the home you'll find that 30% of your vacation time is spent taking care of it. Touching up paint, cleaning carpets, fixing leaky sinks, powerwashing, sweeping the driveway and lanai, all the things that the cleaning people don't do but need to be done. (We never had a cleaning service or property management company as we had a trusted friend in the area to leave the key with.)

You have to do the same amount of maintenance on your vacation home as you do on your primary residence--probably more if you are renting it.

Anne

 

[FLParadisevilla]

I have to chime in and agree with what everyone has said its a lot of work but the people I have met and the friends I have made are Priceless!!!
I was amazed when I started how other owners kind of took me under thier wings and helped give me a fast lesson on what I needed to do again Priceless!!
The guests we have had have all been so great I keep in touch with them all they are more like friends than guests in our home! The advice and input they have given me are again Priceless!

The mattresses are a big thing we had horriable mattresses in the house and I couldn't sleep now thats one of the biggest compliments I get is how wonderful our beds are and how well rested our guests have been!

But I have to say that I would not change anything there have been some ups and downs like with anything you do in life, but I would not change all the great people that I have met along the way. The owners all stick together and help each other out it really is quite amazing!

I say go for it if it sounds like something you can handle finacially!