Considering buying a Disney Area Vacation Rental Home? 8 Things to Think About
- John Candelario
- Nov 9, 2017
- 4 min read
Want to make money in the short-term vacation rental business? Do you want to avoid headaches, earn profits, and own in a resort community you can be proud of?
Buying Disney Area property is tough because of the limitless choices. I come from a family of Disney enthusiasts, so I have local knowledge that I hope you find useful! My experience as a vacation rental expert in the Disney area has allowed me to experience the pitfalls and enjoy the good economic times in our industry, and I want to ask you a few compelling questions to get you thinking before you invest your hard earned money.
1.) Is my neighborhood or resort close to Disney World? Location location location!
Orlando is a sprawling metro, but short-term vacation home rental zoning actually pushes a lot of the rentals to an area we locals call "Four Corners" which is the quadripoint that connects Osceola, Polk, Lake, and Orange counties.
Several of the closest neighborhoods to Disney World include:
Reunion Resort - Gated community, a ton of amenities, 3 Championship Golf Courses - when you roll up on the gate you think WOW. Price range is $350K-$2mm
Windsor Hills Resort - Excellent location, close to Disney, gated (guards are really nice there and remember people by name sometimes), nice amenities, a rental family favorite for several years. Price range is $140K-200K
Windsor Palms Resort - Great value, excellent location, gated, ok amenities with a price tag of $100-150K
Champions Gate - New construction, new amenities, high ROI and yield because of heavily promoted web presence. Price range $370-$500k.
Solterra Resort - Value. You get a ton of value for what you are paying. I personally love the amenities because they just built a pretty great lazy river and the newest phase of construction has 14 bedroom homes so you have everything from town homes to 14 bedroom property at the resort. The security is top notch. $350K-$1mm price point with most properties being on the lower end of that range (we obviously know the most about Solterra).
Encore Club at Reunion - Gated, great amenities, and 3 championship golf courses. Really new stuff here, you can see and feel the new when you drive up. Price range is $350-$2mm.
Windsor at Westside - Good location, excellent amenities, newer, great value, good rental flow $375-500K price tag
Formosa Gardens - 2.5 miles from attractions and 29 miles to the airport. Newer homes at a great location with a $299k-1mm price point
Calabria - peaceful at a $290K-450K price point
Paradise Palms - gated and excellent location at a $240-325k price point
Highlands Reserve - Great rental traffic, popular location, quieter community, right off highway 27...golf courses are really nice. Older homes, but still a favorite among guests. Price range is $180-375K
2.) Does my resort have a stellar reputation?
The reputation of the vacation rental home resort is critical. What are people saying online? Google search the resort to find what comes up first. While you may have already did some research, you need to check forums, Facebook pages, reviews on HomeAway and AirBnB, Google reviews, and other relevant sources to get the real scoop. For example, a Central Florida resort was popular for lax security, numerous break-ins, and constantly partying locals and college students...if I were buying this is the exact type of vacation rental resort I would avoid.
3.) Are you purchasing NEW or used...
If you are buying new, the price tag may be higher, but you can advertise everything as new in your HomeAway / AirBnB listings. New furniture and new homes rent at a higher price point on the online marketplace vs. previously owned.
4) Rent before you stay!
I always recommend vacation home rental investors rent a similar home in the resort they plan on owning at. You can avoid a HUGE mistake by not staying only to find out the resort has serious issues with security, trash, noise, and parking. Stay by paying $150 / night with a few fews to avoid a $400,000 mistake.
5.) Buy under your budget
There are tons of expenses that go along with owning a Disney area vacation rental home. You do not want to budget for a $350,000 purchase only to later find out management fees, a $40,000 furniture package, $15,000 in repairs, and tax issues are putting you in the red later. Take what you think you can afford and reduce that number by 20-25%.
6.) Understand Tax Implications
Tourist taxes vary. For example Osceola charges 13% and Polk charges 12.5% when you are taking bookings. Make sure you know that when you collect your bookings you are doing right by the tax man to avoid a big bill later.
7.) Be realistic about rental income expectations...
Investors, especially first-time vacation rental investors tend to be overly optimistic about rental income. Management companies may promise the moon and the stars, but you need to be realistic about rental income, especially since a ton of expenses go a long with it. Take a look at the data below to get an idea how this will look after you buy...
8.) Ask the right questions...
Interview your broker, especially if they are pitching this as an investment opportunity. Brokers tend to just make up numbers out of thin air with no support...ask them how their numbers are supporting and ask for that support on paper. Do your due diligence, know your numbers, and research your community before taking the plunge.
I hope this was helpful, if there is anything I am missing - please feel free to drop me a comment and I'll add it in!
Cheers,
John Candelario
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