If you say Orlando, FL to anyone in the world one of the first replies will always be “Disney! Universal Studios! Seaworld!” Aside from the theme park attractions, Orlando’s amazing climate, natural beauty, nightlife, and cultural underground, make the city a hotspot for visitors from around the world.
In 2017, Orlando hosted over 72 million visitors! This major influx of tourism brings about billions of dollars in the food, entertainment, and hospitality industries. It’s no wonder vacation homes have gained a major market share of the Orlando real estate market. According to AirDna, there has been a steady 5% increase of vacation rentals per quarter, from 11,800 available rentals in 2016 Q1 to 31,992 in 2018 Q4. The numbers speak for themselves, the market is hot for vacation rentals!
What defines a Vacation Home?
So what differentiates a vacation home from a residential home? Well, it depends on your perspective and investment goals. If you own a home here in Orlando and use it as your exclusive vacation home, in other words you are the sole user of the home and it is often empty when not in use, you may call it your vacation home but it can be classified as either a vacation home or a residential home.
On the other hand, if you own a property that you use for vacation purposes, but you also rent it out to others for a week or two at a time — you most likely own a vacation home.
For real estate terms and purposes, the defining factor is whether or not the home is zoned for short-term rentals.
Homes where you are legally allowed* to lease for no minimum amount of time. A tenant may rent the home for one day, a week, a month, etc.
Usually required by law or by the Homeowner Association/Condo Association’s bylaws to be leased for a minimum of 7 or 12 months.
* Special permitting may be required. Always check with your local city ordinances and/or legal counsel licensed and specialized in real estate law.
The Advantages of Owning a Vacation Home
The pros and cons of owning a vacation home are countless, but when you are firs considering whether or not to purchase a vacation home, the following advantages come to mind:
- Since you are not contractually obligated to a tenant for a long period of time, chances for a “problem” tenant are slim!
- With regular maintenance and cleaning as tenants come in and out, you are able to better control the state of your property. Ideally, this will prolong its physical condition.
- You are able to use it whenever you please when visiting sunny Florida, instead of paying expensive hotel rates.
- Income potential is a lot higher! Daily rates will fluctuate with high and low seasons, allowing for a greater return on investment (ROI) than a lease with fixed rental terms.
- Vacation homes in Florida can usually be found in resort communities, with amazing amenities such as resort-style pools, fitness centers, water parks, and more!
Who Takes Care of It?
Alright, so you purchased a vacation home… now what? If you’re live in the immediate area, many owners tend to run their own vacation rental business. They will handle everything from the booking, cleaning, and maintenance.
Many opt for an easier route. I always highly recommend my clients reach out to a property management company that specialize in vacation home rentals. These companies often handle the entire administration of the home, from marketing, to booking clients, the cleaning, maintenance, inventory, etc. Generally speaking, these companies will charge a monthly administration fee, a commission off the booking rates, and odds and ends when it comes to maintenance.
When shopping around for a property management company, always be sure to ask the following questions:
- What channels do they use to market the home? Most professional companies will use a syndication system that broadcasts your home to hundreds of online vacation home rental websites. i.e. AirBnb, HomeAway, Booking.com, VRBO, etc
- What is their monthly administration fee?
- What percentage of commission do they charge on bookings?
- Are there blackout dates for owner-requested bookings?
- What percentage of commission do they charge on owner-provided bookings?
- What is the cleaning fee and who pays it? (usually it is the guest)
- Are there maintenance fees? i.e. pool cleaning, repairs, etc.
- Additional fees for owner-requested cancellations?
- Are there contractual obligations to the company for a certain period of time?
- Any setup fees?
With this information, you are able to choose the best property management company for your situation.
Vacation Homes, are they for Me?
Ultimately, you are the only one who can decide whether or not a vacation home will be right for your portfolio of assets. I highly encourage my clients to research the pros and cons of their purchase and all the costs associated with it. Overall, vacation homes can be a great investment opportunity. They provide owners with an asset that will generally gain value in time and also produce great rental income.
Want to learn more or get started on the journey to your own vacation home? Click the button below and let’s start the conversation!