Buying A Vacation Home, Villa or Investment Property in Orlando
Are you planning to buy a vacation home, villa or investment property in Orlando? If you are looking for the perfect family getaway near Disney World we have what you’re looking for. At Invest Orlando Vacation Homes we are real estate professionals who know the Orlando vacation rental real estate market inside and out. We value our customers from around the world and we understand that you may not be familiar with all that is available in the Orlando vacation home market. We are constantly working with out of town domestic and international buyers and specialize in smooth transactions, no matter the distance involved and our Orlando area agents are familiar will all aspects of the vacation rental industry and will continue to be your resource long after your purchase.
Maybe you’re looking for a peaceful lakefront home? Or is a villa on a golf course more your style? Have you heard about the new resort communities being built? How will your vacation property be utilized? Should you buy a new construction or a resale investment property? Are you going to rent out your home when not in use by your family and friends? How do you make sure that your vacation home is in a short term rental zone? Whatever it is that you seek, we are here to help and we have the answers to all of your Orlando vacation home, villa or investment property buying questions. Whatever your dreams may be, we are here to support you and to help you make the best decision possible.
Why Orlando?
More than 70 million visitors travel to the Orlando area each year, and a growing number of visitors stay in and rent vacation homes and it has become one of America’s most popular tourist destinations for both Americans and overseas travelers. With the combination of Orlando’s world famous theme parks and Florida’s year round sunshine this has generated an insatiable demand for Florida holiday villas and vacation homes near Orlando and in turn has created a massive rental property market.
Purchasing property in the Orlando area, near Disney World therefore represents one of the most attractive investment opportunities in the world and clever investors are taking advantage of this to subsidize their investment. Put simply, they use the rental income from vacationers and holiday makers to fund their investment and have the added benefit of owning their own vacation home, villa, condo or townhouse in Florida to enjoy with their family and friends.
Popular Vacation Rental & Resort Communities near Orlando
If you are looking to buy a vacation home, villa or investment property in the Orlando area, near Disney World and the other attractions, you will find below a selection of popular vacation rental and resort communities which may be of interest to you.
Frequently Asked Questions
What are short term rental zones?
The majority of clients looking to buy a vacation home or rental property in the Disney area of Orlando will hear the term Short Term Rental zones (STR) prior to buying a property. Short term rentals are defined as being permitted to be rented for periods of 6 months or less. Anything over a 6 month and 1 day period is classed as a Long Term Rental (LTR). Most homes in Florida are zoned as residential or (R-1). This means that the home is for residential purposes and ‘subject to’ the community association agreements. It could also be rented out for Long Term Rental (LTR). Some ‘Deed restricted’ communities may not agree owners to rent out their property even for Long Term Rental.
What is considered to be the Disney World, Orlando area actually consists of 4 different counties. Lake, Polk, Osceola and Orange counties. The first three are short term rental friendly whilst Orange County mostly consists of residential and commercial zones. The County may permit short term rentals, but the community will also have to agree. Only with this agreement will it be a short term rental community. This is typically stipulated by the developer of the community at the time of construction.
Ensure that the property you are buying as a vacation home or investment property is in a short term rental zone.
What are the average occupancy rates?
The gross rental income before taxes and expenses depends on not only how you use your property but also the location and property type. A vacation home will typically be able to charge a higher rental amount than a town home or a condo. The onsite amenities within the community plus the driving time to the theme parks can also have an effect on your income.
An oversized, high end property in a luxury resort community may return a much higher rental price on a daily or weekly basis but will probably suffer from lower occupancy rates. Owning a vacation home with up to 14 bedrooms may appeal to families who intend to use the property several times throughout the year. They will only be able to place it on the rental market for a few weeks during the peak seasons.
A typical 4-7 bedroom vacation home should achieve an absolute minimum of 30-35 weeks occupancy each year. That is, if priced correctly AND the owners only used the property out of the peak weeks. You should market the property in your home country and treat it as a business. This is especially important if you need a rental income to assist with mortgage payments.
What would the return on investment be?
Many budding owners want to know what the Return on Investment will be on their vacation home in Orlando. Although it is a great question to ask, it is the wrong question!
If your vacation home was to be a true ‘investment vehicle’ certain parameters would be fixed, especially the initial investment. Imagine if we could buy stocks and shares on a mortgage? It is just not realistic! So instead, we have to look at alternative ways of measuring a return on investment.
Fixed overheads of ownership.
- Property taxes
- Mortgage payments
- Insurance costs
- HOA fees
- CDD fees – if applicable
- Membership fees
- Management Fees – this can include lawn and pool maintenance, cleaning etc.
You should also allow for setting aside funds annually. These will be used to redecorate and maintain your property in the future.
Variable overheads of ownership.
The rental income is mostly variable and each year your occupancy rates and price levels will fluctuate. These differences, to some degree or another, are due to changing occupancy levels or your pricing structure. One thing you should be aware of when calculating future income is the difference between Retail and Wholesale rental rates.
- Retail rates are when the property is rented out at the full booking price.
- Wholesale rates are those which have been discounted either by you (maybe for family and friends). Alternatively it is rented at discount by your management company in order to meet targeted occupancy levels. Management companies can do this by discounting the cost of rental to travel agents and specialist companies. In return they agree to supply a certain number of weeks of occupancy.
In an ideal world, a good management company and some self-generated bookings, should easily attain over 35 weeks occupancy each year. This should be sufficient to cover you running costs and perhaps buy a few flights for you and the family. Once your property is established and you are generating some re-bookings, your income level can obviously increase over time.
Cash or Finance?
Cash or Finance
Whether you buy your new home with cash or finance you should be aware of the documentation you will require.
Proof of Funds
Having proof of funds is a key element in purchasing a property in Orlando. Whether you are buying with cash or financing the purchase, having proof of funds lets your realtor and the seller know that you are serious about buying a property.
Paying cash
Buying a property in Orlando with cash is by far the cheapest and easiest way to become the owner of a home in Orlando. Cash deals typically close in around 4 weeks but can close in just several days if all of the paperwork is in order
Apart from the short time to close on the property when paying in cash, the closing costs are also less, often 1-2% less than buying with a mortgage. This is simply because you will not have the added costs of raising finance and the fees associated with it.
The other benefit is that if your realtor can show the seller that you are a cash buyer it puts you in a strong purchasing position when compared to other buyers who may need to take out finance. Getting a mortgage is not difficult if you have your paperwork ready, but it does take time, typically up to 16 weeks and a seller can be reluctant to remove their property from the market for the sake of a few thousand more when there is a cash buyer ready to close immediately.
Foreign National Financing
Clients who are not citizens or legal residents of the U.S. should expect to make a down payment of at least 30% of the asking price in order to get Foreign National Financing in Florida. Depending on your nationality, credit and paperwork finance of 60-70% is typically available.
The lender needs to understand what they are lending on
Many U.S. lenders do not understand the vacation home market as to some degree the vacation home market is specific to the Disney area. They will walk you through the lending process and then decline your loan at the final underwriting stage because the property criteria does not fit their lending profile. It is of the utmost importance that you work with a lender who understands vacation home financing.
Before buying a property in Orlando, Florida we suggest that you understand some of the ‘ins and outs’ of being the owner of a vacation home.
We work with a number of mortgage professionals who specialize in Foreign National Financing. If you are serious about purchasing a property in Orlando, please get in contact and allow us to introduce you to one of our mortgage brokers. This way you will have a solid understanding of what you can afford, prior to viewing homes which are out of your budget. At this point you can decide on whether Cash or Finance is the best way forward.
What about property management?
Property Management is one of the most overlooked elements by first time buyers of vacation homes in Orlando. The hiring of a professional property manager is absolutely crucial to your vacation home being a success on the rental market.
A good property management company will not make promises they cannot keep. Neither will they over exaggerate rental income in order to sign you up.
Your property management company will be your eyes and ears in Orlando in your absence. They will deal with the day to day maintenance of the property, and oversee cleaning and changeovers. Their staff will take care of maintaining the pool and keeping your property in showroom condition.
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