# Florida Investment



## InvestDream (Jul 30, 2013)

I am thinking of invest in Florida property and I talked with an agent in Florida. She recommended me to do resident investment and not vacation home. SHe told me that the maintenance cost will be very high and could be up to 40k-50k/year. But The vacation home looks more attractive to me. I am not sure which way I should go and would like to listen to some advice here
(1) should I invest in Property in Florida?
(2) Invest in Resident house?
(3)Invest in vacation home?

Thanks


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## Addy (Mar 12, 2010)

InvestDream said:


> I am thinking of invest in Florida property and I talked with an agent in Florida. She recommended me to do resident investment and not vacation home. SHe told me that the maintenance cost will be very high and could be up to 40k-50k/year. But The vacation home looks more attractive to me. I am not sure which way I should go and would like to listen to some advice here
> (1) should I invest in Property in Florida?
> (2) Invest in Resident house?
> (3)Invest in vacation home?
> ...


Did the Realtor mean the vacation home would be $40-$50K/yr? Is this for one unit?


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## kcowan (Jul 1, 2010)

Is your objective capital gains, income or just an expensive place to stay?


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## InvestDream (Jul 30, 2013)

kcowan said:


> Is your objective capital gains, income or just an expensive place to stay?


My Objective will be capital gains, income. Vacation Home looks like getting a lot of money with 1000-2000/week., But I am not sure the cost to maintain a vacation Home


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## InvestDream (Jul 30, 2013)

The vacation home is a big House with 4-6 bedroom.
My objective will be capital gains. The rent for vacation house will be 1000-2000/week. This looks very attractive , but I am not sure the maintenance cost.


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## marina628 (Dec 14, 2010)

I have first hand experience with this and on paper the vacation home looks very attractive but when you factor in the higher management cost , cleaning and utilities plus marketing expenses you are probably going to be better off going Long Term. We priced out a 1 bedroom condo in resort vs a detached house and there was less than $200 difference in the net revenue per month. I can tell you that if you make cash offers you will get a better deal right now.We are going down in 3 weeks to close on a couple different properties.


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## marina628 (Dec 14, 2010)

top-forums.com is a forum that has been around at least 10 year for florida short term rental owners.I learned a lot from there,mainly it is not all what it appears to be.When you add the HOA fees , the manager fees ,the cleaning lady expenses ,etc you need to get $30,000 + in revenue just to break even. You can still do it but there is a lot of research you need to do and also most homes rent 15-23 weeks a year .Don't forget to factor in your opportunity costs if paying cash.


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## My Own Advisor (Sep 24, 2012)

$30,000k USD per year just to break even seems pretty steep. 

What about condohotels?

A better deal?

http://www.condohotelcenter.com/condo-hotels/florida-condos.html


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## Ihatetaxes (May 5, 2010)

marina628 said:


> most homes rent 15-23 weeks a year .


We are rented almost 40 weeks in 2013 and will likely book at least a few more. 14 weeks already booked in 2014.

Have a good product and market it well. I have a professional photographer coming down this month to take new photos and a video to improve our already great web listings. 

Spend money on improvements and upgrades. We have HD Smart TVs, new Weber BBQ, extremely well equipped kitchen, tons of beach gear, high end furnishings, luxurious linens and towels, the best Internet and cable package, free long distance calling anywhere in North America, etc.

It's a business so run it like one. Haven't had a single bad comment from a renter yet. I leave wine and beer plus a case of water for every new renter. I leave laundry soap, dishwasher tabs, tons of toilet paper, paper towels, coffee filters, etc. I think if you are cheap people won't be back or give you good reviews. I have Bluetooth surround sound speakers so people can connect their smart phone and play their own music, 20 DVDs, 50 novels, etc. Everyone says it feels like home.

We are the most expensive option in our neighbourhood and yet we are almost always booked solid.


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## FrugalTrader (Oct 13, 2008)

@Ihatetaxes, what area of Florida are you in? Orlando?


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## marina628 (Dec 14, 2010)

Yes you are right you need to run it like a business and since there are 7200 homes on VRBO you need to stand out from the rest.If I were going short term I probably would buy a six bedroom at Formosa Garden Estates .There seems to be a big demand for these sort of homes as many times extended families vacation together.


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## My Own Advisor (Sep 24, 2012)

@marina, 

Here?
http://www.vrbo.com/113534#photos

Holy crap...


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## marina628 (Dec 14, 2010)

Yes that is where we stay when we rent in Florida ,not that house though.We pay $3000 for the week ,I use a wheelchair and these bad *** homes have enough space I can get around without bumping into furniture ,also most of them have luxury swimming pools and there is at least one area with adequate stairs and railing that allows me to get in the pool.I understand you have to pay $600,000 for these houses but you can get $18,000 a month and there is demand for this.My friend is German living in Canada and he advertises in German Newspapers and his is filled 6 months of the year with 2-3 clients and he uses it 3-4 months for himself and then he rents it weekly to friends and family.I rather have fewer people in my house than having to let 40 different families in it each year .I almost bought a STR in April ,the guy showed me the bookings ,he was asking $179,000 .He had rental income $24480.17 and his expenses $17244.46 there was no mortgage on this property so when you considering all I would get for $179,000 cash is pretax $7000 it was not worth it.
Typical Expenses -
You have to pay $1000 -$2000 advertising on sites like VRBO .
Cleaning fees of $70 - $100 per guest stay
Lawn/pool/Pest Fees -typically in Management fees
Insurance -$1200
Management fees - average $350 a month if they have to take care of pool etc
Legal costs to purchase and sell
Repairs happen even to a new house so allow for expenses for pool heaters ,A/C ,dishwashers etc ,tile coming lose .
Supplies -Good rentals provide some toiletries ,dish soap ,laundry soap etc so even $10-$15 per stay add up
Sales Tax and Remittance
Property Tax
Utilities -Electric Water ,Gas,DSL ,Phone security on this 1700 sq ft house cost $410 -$665 a month
License fees state of Florida $170
Cost of a mailbox for forwarding mail $100 a year
Photos for website $250 -$300
Cost of Website for year $500 
You guys know my risk tolerance is high and I want a piece of Florida like the rest of you but Short Term Rentals is another beast where you cannot get any guarantee .I can justify it when I can use the house myself 2-3 months a year as you get to write off one trip a year for 'inspection' but recommend you to go study vrbo calendars like I did myself and to rent 40 weeks is very rare .Smart investors wont count on 40 weeks and I want more than break even when I am spending $200,000.
I just bought a detached house for $93211 including legal and closing fees which closes in 2 days .My cost per year is Property taxes $800 a year ,insurance $1200 a year and $300 a year HOA .I have a tenant who will pay $1150 a month plus Utilities.


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## Ihatetaxes (May 5, 2010)

We only have 10 bookings this year so far. One for 105 nights, 2 separate month long bookings, 6 more ranging from 8 days to 3 weeks. Only 1 booking for 7 days - seems like most want to stay longer and we don't accept anyone for less than a week.

2014 2 bookings and over 100 nights total (at $200/night plus taxes, pool heating and assorted fees).

You certainly don't need 40 renters to get 40 weeks. We have set a 3 month minimum for the winter. Having one retired couple is great.

Up to $23k in expenses this year so far but that includes some technology and pool equipment upgrades.


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## marina628 (Dec 14, 2010)

Is this Disney Area or South West Area?


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## Ihatetaxes (May 5, 2010)

FrugalTrader said:


> @Ihatetaxes, what area of Florida are you in? Orlando?


SW Florida. I wouldn't buy in or near Orlando for three reasons. 1. I dislike Orlando myself (rented there and explored the area and I didn't like it at all) and although we do rent our home out we use it ourselves quite a bit and prefer where we bought. 2. I prefer being near the Ocean and wanted something within 10 minutes of the beach. 3. The rental home market in and around Orlando is so saturated that vacancy rates are higher and rental rate are lower.

Just my 2 cents.


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## marina628 (Dec 14, 2010)

I like Cape Coral for same reasons , if Florida allowed me to play poker when I am there I would be content to make that my Winter home but they won't so I have to stick to Caribbean lol


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## bleon (Sep 18, 2013)

*Ask Questions*



InvestDream said:


> I am thinking of invest in Florida property and I talked with an agent in Florida. She recommended me to do resident investment and not vacation home. SHe told me that the maintenance cost will be very high and could be up to 40k-50k/year. But The vacation home looks more attractive to me. I am not sure which way I should go and would like to listen to some advice here
> (1) should I invest in Property in Florida?
> (2) Invest in Resident house?
> (3)Invest in vacation home?
> ...


Invest Dream,

Management companies manage your property under a contract stating percentage fee of gross income, expenses will usually be passed on to you. 

Therefore, go step by step:
Contact different management companies (rental & vacation rental) and ask questions, lots of it. Such as, what king of properties do they manage, location, etc.
Then look for the property to buy and put it under management with the company you chose. Asking questions will save you a lot of time in the future. 

Another thing, traditional rental has less risk than vacation rentals.


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