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Margus' Blog

By Margus Mahar | Agent in Orlando, FL

How does vacation rental business work?

I often get asked - so how does this vacation rental business work? Please do not hesitate to call, text or email with any further questions: margus@jcpennyrealty.com or 321-388-6856

What is needed to generate 8%+ Annual ROI in STR (short term rental) business? Well, it is actually pretty simple - we need the right ingredients. I have created a short list of bullet points to bring out what, how, why and where.
  • A resort type of community with plenty of amenities - i.e. Emerald Island, Windsor Hills, Champions Gate, Solterra or Reunion 
  • Size matters!! 5+ bedrooms - as many families vacation with either friends or extended families, therefore bigger is better. i.e. Reunion offers its purpose built homes which have up to 18  bed 18.5 baths at price of $3.7M furnished and ROI of 15%+ (cash-on-cash)!!
  • Style, color, curb appeal!!! Most homes are rented online nowadays and statistically by the women of the household. Additionally hopmes with lot of great colorful photos get featured more, therefore generate more rentals. 
  • Amenities - both community and home. Game rooms, pools, spa, movie theater, etc. Both top communities (Reunion and Champions Gate) invested heavily into amenities. Both have their own water parks, golf courses, spas tennis courts and Reunion even is adding a wedding chapel (great idea if you ask me). 
  • Location of the home within the community and direction of the pool. South and West facing pools get much higher rate due to the all day sun exposure. Water, conservation or golf course view also adds to rental potential and nightly rate. 
  • Great property management company. Top companies do not even go to "lower" end communities - they do not have to. Companies such as Tropical Escape, who do not charge monthly maintenance fees, rather earn only when the house is rented, are who I recommend to deal with. In order to sign up with i.e. Tropical escape, the house needs to qualify and pass the criteria I listed above.
  • NOT SO IMPORTANT to be very close to Disney!! Yes, true it helps, but its not that important to be right next to Disney. As a matter of fact all of the top vacation rental communities are within 20-30 min driving distance. 
    • Why? Because (especially foreign travelers) many come to Orlando for week, two or three at a time, yet go to Disney only 2-3 days on average. Rest of the time is spent going to beach, playing golf, hanging by the pool, shopping etc. So the closeness to Disney is important, but not nearly as much as most think. 
So what would a property like this cost me?
  • Emerald Island (one of the oldest in this list) starts from $250,000 and up. Average nightly rate $150 - $180 p/night
  • New construction with access painting and furniture will start from $350,000 and up (average home being $450K-$600K). Average nightly rate $250 - $300 p/night

In conclusion - the vacation rental can be very lucrative especially when adding the rental revenues and appreciation together, but it MUST be the right property and managed with the right management company. 

Take a look at the proposed ROI figures (by Tropical Escape) for Reunion, Solterra and Champions Gate below or at: www.FLHomeDeal.com

Reunion West


Retreat at Champions Gate


Solterra


See Reunion Purpose Built ROI (9-18 bed): Financianls with mortgage


How does vacation rental business work? by Margus Mahar 

Please do not hesitate to call, text or email with any further questions

Contact Us

Margus Mahar, Realtor®

Specializing in Luxury and Investment Properties

- Certified 203K Renovation Specialist

- Advanced Construction Expert (ACE)

- Dream Team Professional TM

www.FLhomedeal.com

J.C. Penny Realty, LLC.

8701 W Irlo Bronson Memorial Hwy, Suite 200

Kissimmee, FL 34747

Phone: 321-388-6856

Email: margus@jcpennyrealty.com

Skype: margus.mahar



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