Return on Investment – Orlando vacation homes

Many prospective owners want to know what the Return on Investment in Orlando will be on their vacation home.

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.

Return on investment – 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 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 plus some self-generated bookings, should easily attain over 40 weeks occupancy each year. This should be sufficient to cover you running costs and deliver to you a good profit. Once your property is established and you are generating some re-bookings, your income level can obviously increase over time.

We believe that ultimately the return on investment on vacation homes is best measured as a mixture of overall costs and personal enjoyment. You get to create some great memories during your time as an owner and the property pays for itself. This is when your return on investment is undeniable.

You are buying a beautiful property for you and your family to use and therefore nothing will ever be set in stone.

Selling your property in the future.

Hopefully you will be able to benefit from increased equity gains. Should prices continue to increase you could be putting some serious capital back in the bank.

Discover the latest new vacation homes communities 

Professional Investors and Institutional Investors

For professional investors, short term rental properties are extremely popular investment vehicles. Your return on investment will typically be higher as you will not be using the property yourself. With a well structured plan, a great management team and a Realtor who knows what you expect, finding the right investment is just a matter of time.

Achieving between 10% and 20% is commonplace, subject to your budget and timescales.

Prices of investment properties start from $1 million.

For further information about our current investments, contact us. Advise us as to what you require, what your expectations are and let us take care of the rest.