There are new vacation home communities all over the attractions area in Orlando. So, there are a lot of opportunities for investments in the vacation market.
As vacationers increasingly choose vacation homes over hotels while on vacation, there are plenty of opportunities for those who want to invest in short-term rentals. This is especially true in Orlando, which is one of the biggest tourist market in the world with 72 million tourists who visited Central Florida in 2017.
However, is a vacation home the right investment for you? At Viva Orlando, we want to help see your investment grow and find the right investment property for your needs. Especially for investors who don’t live in the Central Florida area year around.
Before you decide to invest in a vacation home, here are a few questions you can ask yourself:
• Is a vacation rental a smart investment for you?
There are a lot of different types of real estate properties you can chose to invest in. Vacation home real estate is just one type. However, if Orlando is a favorite vacation destination, it might feel exciting to invest in a property you can stay in while you visit.
Remember, although you might utilize it a few times a year yourself, there will be plenty of times throughout the year where you won’t be in the home. So, you’ll need to be confident that you can cover all the costs that are involved in owning a property.
In addition to the transaction costs at the sale, you will also need to know all the costs that it will take to operate the home as a rental. How will you manage the property? Will you do it yourself or hire a property manager to handle the work? Plus, you’ll need to make sure you calculate HOA fees, utilities, and other maintenance costs of the home.
A vacation rental only generates income when it is occupied so you’ll have to figure out how much you need to charge to cover the costs of the property. How many renters will you need a month to break even? Is it realistic or not? Don’t forget, while Orlando has tourists year-round, there are slow and busy seasons and months like January and February might be hard to fill your home.
• What laws govern short-term rentals in the community?
There are certain laws in Central Florida that govern what homes can be vacation rentals. While there are plenty of vacation communities in Orlando that are designed to allow short term rentals. Some of these communities include ChampionsGate, Storey Lake, and the new Solara Resort to name a few.
However, not every home in Orlando is legally able to be designated as a short-term rental. Make sure to be clear on whether or not a property is legally zoned for a short-term rental if you want to use the property in that way. If not, you could get hit with a fine.
In addition to finding a home in the right zoned community, the State of Florida also requires owners to pay a hotel tax if the home will be used as a short-term rental. This is in addition to paying property taxes.
•Which taxes and fees are investors required to collect from guests?
Running a vacation home is like running a small business. There are definitely taxes and fees that you might be subject to besides the ones we mentioned previously. For example, many investors overlook the occupancy taxes that the State of Florida requires to run a vacation rental.
If you want to handle the vacation rental yourself (instead of hiring a property management company), you will need some type of lodging tax compliance software to help you calculate the right costs.
Viva Orlando can assist you with the specific laws and regulations that are required of vacation homes in the Central Florida area. Plus, we can help you identify all the additional costs of owning a vacation home before you put an offer in. We even offer property management services exclusively to our buyers through our sister company Casa Floridian.
We are here to help you grow your investment not matter what type of property and investment strategy you choose. If you want to learn more about vacation home properties or any investment properties in Central Florida, contact Milena@VivaOrlando.com today.