The term zoned for “short term rental” or STR is something that you will read or hear about continuously during your research for a Kissimmee vacation home, but what exactly does that mean, and how does it affect you as a investor?
In Florida, land is designated for use as “zoned” by a county or city. Zoning specifically defines what land uses are allowed for a particular area. There are four main basic categories:residential, commercial, industrial and agricultural.
Most residential property is zoned “residential” (I was up all night researching that), and can be rented out as a “Long Term Rental” (LTR) if the community association permits LTR. In some cases a community may be “Deed Restricted” and may not allow its residents to rent the property long term. Residential property may also be zoned for “Short term rental”.
Short Term Rental
A short term rental is a rental of a property for a period of less than seven months. Over a seven month rental period the rental would be considered a “Long Term Rental”
To operate your vacation home as a “short term rental” property,you must apply for a tourism tax license and a business license from the county that your property resides in. It’s a simple and inexpensive process which will allow you to operate your property as a “small hotel”. This license is only granted to an owner whose property qualifies by being in a properly zoned area and is essential to allow you to run your STR business.
Properties that are found to be operating a STR program but are not licensed to do may be fined up to $250 a day for non-compliance.
Every Investor has different needs but the important items are always the same, just in a different order.
So here are my 10 top tips for buying a investment vacation home in the Disney/Kissimmee area – in no specific order of importance.
Probably the most common request is to have a property “with 20 minutes of the mouse "Disney" ”, close to shops and restaurants.
The vast majority of the short term locations are within 20 minutes of Disney, but because of the scale and distance being close (as in walking distance) to shops and restaurants is a little more difficult. With the expansion of the likes of Championsgate and Reunion and the addition of Storey Lake each offer different location benefits but on the whole the vast majority of resorts are in good or very good locations so unless you are in need of something specific don’t dwell too long on the longitude and latitude of your target home.
Resale vacation homes come in various levels of condition, suffice to say that very few owners spend a lot of resources on updating their home just as they are about to sell it. Best policy may be to buy a new home and furnish it yourself if you want the perfect house otherwise you should budget in some additional funds to “freshen” up your newly purchased resale vacation home. A fresh lick of paint, a carpet cleaning and some new bed sheets wont break the bank and will make all the difference.
This is especially pertinent when dealing with the number 3 tip….
You have most likely stayed at a vacation home at some point if you are considering buying one. That means you have surfed the property management or rental websites to decide which to rent. The number one thing that makes a renter chose one house over another in the same location are the pictures.
Make sure you do what it takes to get great inviting pictures, hire a professional and do it properly. It will pay you back many times over.
It’s a mistake we see over and over again. Owners spend hundreds of thousands of dollars on a beautiful home and have horrible photographs taken. Don’t be that guy.
Calculating the Returns
DO NOT take someones word that you’ll be able to retire on the proceeds from renting your vacation home.
Most buyers don’t know that they can do the calculations themselves, some basic research and good representation will ensure you know exactly what to expect financially.
One of the things I’ve noticed recently is how well properties with modern updated professionally decorated furniture packages are renting over the older more traditional looks. It seems that there is a distinct difference more than there ever was before.
The professional vendors we now use to furnish homes have really stepped up over the last year or so and there is a very noticeable difference. Modern brightly furnished homes rent way better than older dark traditional homes.Times are changing and so are visitors don't get stuck in the past because you'll be making the amount they made in the past
The new big resorts have vastly improved over the last few years. Developers have scrambled to improve the infrastructure of the resorts so they can sell their product and it has worked.
The Retreat at Championsgate, The Encore Club and Storey Lake have all gone above and beyond to be bigger and better. The positive side of this is you can get an awesome deal on some of the “older” resorts and with that lick of paint and some good pictures you can make a nice return on your investment.
If you can buy in a resort with gated security,with resort style amenities and an association that keeps the landscaping good. Your investment strategy will appreciate it from both a rental return and exit strategy perspective.
Many of the better known traditional resorts and all of the new resorts have manned gated 24 hour security.
Many others provide electronic or carded security as opposed to manned. Many buyers appreciate the additional comfort of knowing their investment has the additional security and for many its one of the more important points of consideration.
Hiring a bloke to stand at a gate all day (and all night) costs money of course and that takes us nicely to….
Home Owners Association and/or Membership Fees
Contrary to what many believe that HOA fees should be lower in their perfect scenario, HOA fees generally reflect shared funding by the ownership to improve security, landscaping and recreational aspects of the resort.
These in turn allow an owner the opportunity to generate better revenue and have a better package for their own use. HOA fees are actually a good thing – if you take away the fact you have to pay them.
Very little affects the success of your investment more than the property management company. There are hundreds in the Central Florida area and choosing the right one for you is a primary goal for your investment home – as well as your sanity.
From small family owned ventures with a few homes to the large international entities with many hundreds of homes the choices are endless.
It’s not about picking the most popular, its about selecting the one that’s best for you, your property and your investment goal.
But how does one do that with so many to chose from?
Easy, that would be simply resolved via tip #10…
It’s number ten on the list but it should be everyone’s number #1.
The single most important thing you can do to ensure your success with a investment vacation home purchase is to make sure you are working with someone who knows what they are doing . You will not know how important it was to have had good representation until it is to late. Do not compromise on your representation. Work with only the best. Please feel free to reach out to me at any point via e-mail or phone
There is no better feeling than being handed the keys to your new Florida vacation home – other than the many new friends and family members you will instantly and amazingly acquire
Let me know if there is anything I can do to help make that dream come true.
Direct: (407) 683-3818