Orlando Vacation Homes Q&A
Should I purchase a new construction vacation home or look for a home that is up for resale?
Ultimately the decision is up to you based on your needs, the aesthetic appeal of the home, and how much work you are willing to do after the sale. While purchasing a resale home can be less expensive upfront, there are additional costs that will need to be considered like replacing the roof, appliances, and HVAC system. However, some people love the character of resale homes and don’t mind the after purchase expenses that go into making the home fit their needs.
On the other hand, buying a new home comes with a lot of benefits. Builders understand trends and needs of vacation-home owners better now and most homes are open concept designs with large open living spaces and connected airy kitchen. This is very popular in vacation homes especially those that sleep large groups of people. New homes are also built to the latest building codes and standards which includes more energy efficient technologies to help keep ongoing utility costs down after the purchase of the home.
Furthermore, new communities in Orlando are being built in some of the most desirable areas. Many developers bought land just before the recession and are just now constructing homes on the land. In addition, builders are more educated now with what guests are looking for in vacation communities, and are designing the communities with more resort like amenities including gated entrances, large clubhouses, extended pools and spas, and even food and beverage services right in the community. There are many other advantages too like builder incentives and warranties that will ensure if anything goes wrong in the first few years, you are protected as a homeowner.
Do I need a home inspection?
While it is not mandatory to have a home inspection before you buy, we do highly recommend it. Even on new construction homes, inspections offer peace of mind that everything is functioning properly in the home, and if it isn’t it can be addressed before closing. A home inspection isn’t only for finding defects in the home, it is also an opportunity for the new homeowner to learn more about the property. This is especially helpful if you are purchasing a home in an area you don’t live in.
Why should I work with a realtor when purchasing an Orlando vacation home?
When making a purchase of a home, selecting the right realtor is important. In Florida, the seller pays the commission for both the seller’s and the buyer’s agent. However, as a buyer, you want to make sure that you have an agent in your corner that will represent you and work hard for your best interests during the home buying process.
All of our sales associates at Viva Orlando are Florida licensed realtors with expertise in the vacation rental/second home market. A keen understanding of the vacation home real estate market is important to ensure you find the perfect home to meet your specific needs. We know it’s an important decision and our experience will help you find the perfect vacation home or income-producing property.
What is the role of a property management company for vacation rental owners?
Property management companies, like our sister company Casa Floridian, play a key role for vacation rental home owners. They manage every aspect of your vacation home when you aren’t there. With a property management company helping you, all the everyday aspects of managing a vacation property are handled.
The services of a property management company usually involve the following:
•Taking photos for the management’s website.
•Writing property descriptions.
•Marketing the property to potential guest nationally and internationally.
•Managing all logistics including reservations, payments, check-in and check-out.
•Conducting inspections as needed.
•Housekeeping and light upkeep as needed.
•Handymen on staff for regular maintenance.
•Ability to dispatch emergency maintenance.
•Accounting services for your property.
•Maintaining required licensing.
What are Home Owners Association and/or Membership Fees in the Orlando resort communities?
Home Owner Association (or HOA) fees are paid by the owner in order to help maintain all the common areas within the resort community. The membership and HOA fees pay for all the following services: security, landscaping in community areas, recreational aspects of the resort, and maintenance of all the community spaces including parks, pools, community centers, etc. The fees even pay for staffing needs within the vacation home community such as security guards, concierge staff (if offered in the community), life guards, and other staff for shops and poolside bars and community areas as needed.
HOA fees are a good thing, especially in resort communities. The more the community can offer to both vacationing guests and homeowners, the more appealing the overall community is for everyone. This means, as a homeowner and investor, you are able to offer more amenities to potential vacation guests who will rent your home.
What is an appraisal and how does it work?
Simply put, an appraisal is the unbiased estimate of the fair market value of the value of a home’s worth. The appraisal is used by lenders during the mortgage loan process to ensure the amount of money requested by the borrower is the appropriate amount to pay for the home. It is conducted by highly trained and licensed and/or certified professionals whose sole job is to offer an objective value analysis of the home.
To obtain an appraisal, a professional evaluates different elements in the home like size, age, condition, and physical features. An appraisal will compare the evaluated home to ones within a one mile radius that have been sold ideally within 90 days. However, the appraiser will take into consideration home sales within six months to one year, if needed, to get comparable home costs. Included in the appraisal will be a survey and a list of improvements that have been made with in the last year.
Some aspects that help boost the value of the home might be a bit deceiving. Many people know that an updated kitchen and bath are great selling features, but they might not add as much value to the home as expected. Of course, the newer the home looks, regardless of age, the better the home will be valued. Other things that will help the home’s value is great school districts, updated roads in the area, and improvements to the neighborhood.
What is a resort community?
Resort communities in Orlando are planned luxury communities with homes designed to attract residents and owners who are interested in the vacation home market. These communities are beautifully designed, typically gated, and located near area attractions like Walt Disney World.
Because resort communities are geared toward vacationers, many of the communities have amenities similar to hotels such as:
- Community club houses
- Resort style pools with lazy river
- Poolside cabanas
- Poolside bars and restaurants
- Sundry shops
- Recreational activities like volleyball and basketball
These additional amenities are geared towards the vacation market to compete with area hotels. Resort communities use HOA or resort fees paid by home owners to provide and maintain these luxury amenities to the community.
Homes in these communities will have anywhere from 3-9 bedrooms with open floor plans, multiple master suites, and options for private pools.
What is a Short-term rental? also known as vacation rental…
A short-term rental is a home or condo that is rented out for a period of one to four weeks. However, some short-term rentals might even be as short as a couple of nights. This allows homeowners to offer their homes in a similar fashion to a hotel. Short-term rentals differ from long-term rentals not only in the length of the rental but also because short-term rentals typically come furnished for the renter.
A benefit of a short-term rental is the flexibility it offers the owner of the property. Owners are able to plan when they would like a home available to rent out and when they would like to use it themselves. This makes short-term rentals ideal for owners who live in their homes only part of the year but would like to earn additional income when the home isn’t occupied. However, short-term rentals do need to be maintained and cleaned between renters.
Short-term rentals are ideal in areas near attractions like the ones in the Orlando area. Many visitors to Orlando are turning to short-term rentals for their vacation accommodations because they often offer more space and options than a typical hotel room.
Can any home rent as a vacation rental in Orlando?
If you’re thinking about purchasing a vacation home in Central Florida, you might be wondering if you can rent out your property as a Vacation Rental (short-term rental or STR) when it’s not occupied. While most residential properties allow long-term rentals (LTR) there are special requirements that need to be met to offer a home on the short-term rental (STR) market.
What’s the difference between Long Term Rental and Short Term Rentals?
A long-term rental is defined as any property that is being rented for more than six months and one day. Long-term rentals usually are for owners who don’t need to occupy their home. The properties for long-term rentals are also usually provided unfurnished to the renters.
On the other hand, short-term rentals are any property that will be rented out for less than a six-month period. However, the rental agreement can be even for a night or two if desired. Short-term rentals typically come furnished and are great for owners who want flexibility on when they can stay in their homes.
When land is zoned, it is being defined by what that land is used for. Each county designates land by four types of categories:
Most homes are zoned as residential properties, and are allowed to be occupied by long-term rentals. However, not every home in the Orlando area that is zoned for residential property is able to have a short-term rental in it.
The greater Orlando or Central Florida area is actually made up of four counties:
While the first three counties in Central Florida are short-term rental friendly, most of Orange County is not. However, there are many properties in Lake, Polk, and Osceola that are just est or south of Walt Disney World that are perfect short-term rental property option.
How do you become eligible to offer short-term rental vacation properties?
First, you must apply for a hotel or tourism tax license from the state. You will also need to acquire a business license from the county your property resides in. After obtaining the correct licenses, you will be responsible to pay state and county sales tax on any rental you book. The purpose of this licenses is to allow your property to operate like a small hotel. Again, this won’t be granted to just anyone who owns a home in Florida. Only certain properties are granted to owners whose property qualifies for short-term rental business.
Properties that run short-term rental programs but aren’t licensed to do so might be fined up to $250/day for non-compliance.
In addition to obtaining a short-term rental license, you also have to have approval from your home owner’s association. It’s very important to know if your community allows short-term rentals even if the area is zone appropriately.
Viva Orlando Tip: The most successfully rented out vacation homes are located in resort style communities where on-site amenities rival hotels. These resort communities also offer key sought after locations that are close to the theme park. Plus, they’re already zoned to allow short-term rentals.
Some specific communities we recommend that are zoned appropriately and allow short-term rentals are:
Windsor at Westside
Storey Lake Resort
The Grove Resort
Encore at Reunion
Of course, at Viva Orlando, if you are interested in purchasing a home that you can later use as a short-term rental investment, we can help you by showing you the correct properties that are zoned for this preference. We can also give you resources to obtain all the paperwork to make your property short-term rental ready after you’ve closed on your home.
Can I finance the purchase of my vacation home?
Yes, whether you are a foreign national or a domestic out of state investor, you can finance the purchase of your vacation home or investment property. However, both types of investors should be aware of some common requirements and restrictions from many lenders.
For domestic investors, the process to finance your vacation home is similar to the one used to purchase your primary home. However, because you’ll most likely need to obtain a loan from out of state lender, the process can take a little longer.
Domestic buyers who want to finance also need to be aware that lenders can be strict about the reason for the home purchase. You also need to be prepared that your lender might require a higher down payment or charge a higher interest rate than they would for primary home loans.
Foreign investors will face some of the same hurdles that domestic out of state investors will face. However, if you want to buy a US property, be prepared for a tougher loan approval process than a domestic buyer.
It’s important to remember to choose a lender carefully. It might seem like all the loan terms are the same but the details could reveal a lot of limitations for foreign investors. Common differences you might encounter include:
- Limits to the minimum and maximum loan value.
- Higher down payments needed on reserve to close (at least 30% or more).
- Restrictions on which countries the lender will loan to.
- Higher interest rates.
- Restrictions to the type of property to be purchased.
In order to start the lending process, you’ll first need to obtain a U.S. bank account. Ideally, the bank you choose should have branches in the area you want to own property in. Foreign investors don’t have the same income, credit, or tax information domestic buyers have on record with the US government. Instead, international buyers might need a few months’ worth of bank or credit card statements or other financial records to qualify for the loan.
Whether you are a domestic out of state or a foreign investor, we can help you find the right lender to finance the purchase of your vacation home.