Why It’s Smart to Invest in a Vacation Home in Orlando

Thinking about buying a vacation home in Orlando?  You’re not alone. An estimated 1.13 million vacation homes were sold in the U.S. in 2014 – nearly a quarter of all residential transactions. That’s the highest number since the National Association of Realtors (NAR) began collecting data in 2003.

Why are people buying vacation homes instead of renting them? On the face of it, renting seems like it would be more cost-effective for vacationers. But buying a vacation home can be a smart investment.

Some people buying vacation homes are baby boomers who have sold their family homes for cash, and now choose to invest some of that money in a winter home in a warm climate or other future retirement destination. On the other hand, the NAR has found that half of all vacation home buyers purchase a property with the intention of renting it out to defray some of the costs.

Central Florida is a prime location for owning or renting a vacation property, since it is the tourist capital of the world. And Kissimmee is home to the largest inventory of short term vacation rental homes in the nation, thanks to its proximity to Disney World, and other area theme parks.

If you choose to buy a vacation home with the intention of renting it out, you might want to consider buying a property in a condo/hotel or resort community. In the case of a condo/hotel complex, owners benefit from the hotel’s management when vacationing themselves, and while renting to other tourists.

Residents of condo hotels and resort communities enjoy access to all the amenities offered to vacationers, such as resort pools, luxury spas, health and fitness centers, even fine dining and concierge room service. In addition, condo hotels offer 24/7 security and resort communities are usually gated, and may even provide security patrols. Plus, on-site management typically takes care of any cleaning, maintenance and all interactions with renters.

Resort communities have the added benefit of offering buyers more variety. You can typically choose from two-bedroom condos to spacious single-family villas with up to 13 bedrooms. This makes it easy for both buyers and renters to find something that fits their lifestyle and budget.

Vacation home buyers should be aware that there are costs involved in a purchase, such as utilities, taxes, cleaning fees, insurance, HOA fees and management fees. But you can still generate positive cash flow. As an example, a 6 bedroom, active rental in the Solterra Resort in Davenport, FL produced net revenue of $13,626.74 after expenses, for one homeowner last year.

One way to generate more cash flow from a vacation home rental is to rent the property yourself with a service like Airbnb or VRBO. However, you will need to handle your own advertising, take payments from tenants, have a way for them to access the property, and be in charge of hiring a reliable cleaning service.

You can avoid taking on all of that work when you buy an Orlando vacation home in a condo/hotel or resort community. You will have to share rental revenue with the hotel operator and resort management company, since they handle the marketing and management of all short term rental agreements. But this type of arrangement may be more cost-effective and less stressful in the long-run, since you won’t have to worry about promoting and renting the property yourself.

For more information about buying a vacation home in Orlando, contact a Team Donovan agent today. We specialize in the sale of properties for use as a second home, investment or both. We know which communities in the Central Florida area are zoned for short-term rental, and can offer you the best return on investment in terms of rental income and property appreciation. Call us at 407-705-2616 or fill out our online contact form today.

 

 

 

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