Orlando had Over 75 million visitors in 2018.. Of course, you’ll visit popular destinations such as Walt Disney World, Sea World, Universal Studios, Wet’n’Wild Water Park, and even Kennedy Space Center for a variety of reasons.
Offering your home as a vacation rental or forming an investment group to buy those types of properties can be very profitable.
A thorough investigation is required, especially when buying a villa as a machine that generates income.
1. Talk to someone who already owns a rental property.
This is a fast-growing business, but it can also be very stressful. Find someone who has been around for a few years and ask for advice and feedback.
If you decide to move on, then there are some serious studies to do!
2. Question: Does it make financial sense?
Talk to your tax accountant about how buying a villa, especially for commercial purposes, can affect your tax rate. Financial advisors should be familiar with both local fixed asset tax and federal tax law regarding the gains and losses of such assets.
3. Select the appropriate location.
Orlando is a city of about 270,000 people, spanning 110 square miles. The closer the villa is to a major tourist destination, the more expensive it will be to buy, but it will be more profitable.
Walt Disney World is probably the most visited theme park in the world. It is actually located in Buena Vista, 16.3 miles southwest of Orlando on the I-4E, near the town of Kissimmee. There are hundreds of homes around the property, from bungalows to cottages to condos, many of which have their own pools. Of course, whether any of these major real estate will be available for purchase is another matter.
Most of the other major theme parks, such as Universal Studios, Wet’n’Wild, Seaworld and Gatorland, are also southwest of Orlando. The Kennedy Space Center is located 45 miles east of Orlando on the east coast near Cocoa Beach.
Before deciding where to buy investment property, look at the cost and location of real estate near all these locations.
4. Find an affordable property.
The cost of a vacation home isn’t just about the initial price and subsequent monthly mortgage payments. There are insurance, utilities, maintenance and even security system costs to consider.
Insurance premiums can be particularly high. First, the house itself has insurance, and then you need insurance to cover the guests of the house. Before making a decision, consult an insurance agent with experience in vacation home rentals.
5. Make sure you can rent the property.
Some regions and local governments actually prohibit homeowners from turning their homes into vacation rentals. If so, find a leader in the Homeowners Association to discuss your plans. We will do some research to see if there has been a petition by neighbors seeking to withdraw the law permitting the rental of real estate.
6. Don’t rely on property income to pay your mortgage.
The ideal strategy for buying a villa for an investment is to fully charge your monthly real estate income to pay for all your monthly expenses, including the cost of your mortgage. That way, you will never get out of your pocket.
However, in reality, it rarely works, at least for the first year.
Orlando is the best vacation spot, and even if you can buy real estate in the best places, you need to post it on various marketplace websites, promote it, and get a stable customer. It can take some time, and at the same time, you need to be able to pay all your invoices while waiting for that stable income to come.
To buy a villa, you have to pay a 20% down payment. Generally, if your mortgage payment exceeds 36% of your monthly income, you will not be able to get a loan (this is the potential income from the property itself, keep in mind).
7. Make the necessary repairs.
Keep in mind that even if you buy a new home, you always have a need for repairs. Large appliances such as dishwashers and refrigerators have a habit of being distributed at the worst moments, and are usually divided into three parts, so the air conditioner may come out at the same time. You will need enough cash to be available to meet such an unexpected bill.
The rule of thumb is always to plan the worst scenario. Therefore, it is unlikely that all three major appliances will fail at the same time, so if you have enough cash to repair all three at the same time, you can stay ahead of the game.
8. Choose your investment group wisely.
If you can’t afford a vacation rental property yourself, you can choose to join an investment consortium. This is an ideal way to enter the real estate investment market, but make sure your consortium (or group or partnership-whatever your legal entity) is running efficiently.
When investing in real estate with a family, it is imperative to do so on a legal basis and everything is stated in a binding contract. This is common sense. Keep in mind that verbal agreements are usually not worth the unwritten paper.
9. Create a marketing plan.
As soon as you decide to buy a villa for investment purposes, start working on your marketing plan. In this regard, it will probably take several months to line up all the ducks.
Of course, we encourage you to list your property on the websites of all available vacation rental property marketplaces, but you will also need your own website specific to that property. This website should consist of a complete description of the property and all its equipment, dozens of professional quality photos, and at least one video walkthrough.
You can create a social media account for your property and start communicating the information “Exciting new vacation rental homes are about to open!”.
We have updated this article and republished it to help new readers.
Do you have questions about the process of buying a villa?
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