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I recently accquired about investment/vaccation properties in Kissimmee, FL (close to Disney), short term rental town houses which lot of investors are buying right now. Below are some estimates/ numbers I got for a real estate firm. I thought I share it with everyone here who might intersted.
"If you buy wisely, and get a good management company, then it isn’t too difficult to cover all your costs of ownership in rental income, and maybe even make a few dollars. The choice of community is important, and for townhomes you shouldn’t really look further than Windsor Palms or Encantada. Windsor Hills does well for rentals, but the townhomes are too expensive there. Emerald Island and Terra Verde don’t really attract quite enough rental bookings.
There are no particular issues for Canadian owners. Property taxes are the same as for US or any other owners (despite a rumor to the contrary). You will be required to file IRS tax returns each year, but allowances for rental properties are generous enough that it is unlikely you will ever pay any taxes. If you are looking to finance your purchase, then I think you will find RBC is your best option right now. I understand they are offering duel US dollar/Canadian dollar accounts that work very well for this sort of situation.
Here are some numbers based on 4 bed homes on Encantada, which do about as well as anything. You would probably need to pay around $160,000 to get one right now, though. 3 beds may be closer to your price range (around $120,000 furnished and ready to rent), and the bottom line is still going to be positive. The numbers are quite similar for the townhomes on Windsor Palms, too. These are based on the figures used by the onsite management company, eManagement.
Monthly management fee $150
Monthly pool maintenance $75
Average monthly electricity costs $275
Water, monthly $30
Phone service, monthly $40
Miscellaneous, pest control, licenses $50
Property taxes $4704 per year $392
HOA fees, $863 per quarter $216
Home insurance, $800 per year $67
Total costs (excluding mortgage) $1295 per month
Nightly rental rates are $109 to $229. Assume an average of $125 per night. The management company takes 20% commission from bookings that they put into the home, leaving $100 for the owner. Note: the renter pays for the end of rental clean, and for taxes. Bookings placed by the owner are not subject to commission, so they increase the net nightly rate. On these figures, the break-even point from rental income is 13 nights per month, or 22 weeks per year. The management company currently anticipates placing 25 to 25 weeks per unit per year.
The figures for 3 bed units work out a bit less well, because the costs of ownership are very similar, but the average net nightly rate is probably more like $90. So the break-even point for a 3 bed home is around 24-25 weeks a year.
If you want to incorporate the cost of a mortgage into the calculations, you should include only the interest payments, as the capital repayments are not costs of ownership, they are a reduction in the debt on the property. The interest can vary widely with the mortgage taken. An 80% mortgage at 4.75% on a property costing $150,000 adds $475 to the monthly costs, and increases the number of weeks to break even on a 4 bed home from 22 weeks to 30 weeks a year.
This is an achievable target, especially if you can add in a few weeks of bookings yourself at full rate. So my view is that a 4 bed home on Encantada should be self-sustaining, covering all costs, including the interest on a typical mortgage. If you don’t take a mortgage, then you have a $475 a month margin to compensate for the money you have tied up in the property. These calculations don’t take into account any equity gain in the home during your period of ownership, which should be considerable."
"If you buy wisely, and get a good management company, then it isn’t too difficult to cover all your costs of ownership in rental income, and maybe even make a few dollars. The choice of community is important, and for townhomes you shouldn’t really look further than Windsor Palms or Encantada. Windsor Hills does well for rentals, but the townhomes are too expensive there. Emerald Island and Terra Verde don’t really attract quite enough rental bookings.
There are no particular issues for Canadian owners. Property taxes are the same as for US or any other owners (despite a rumor to the contrary). You will be required to file IRS tax returns each year, but allowances for rental properties are generous enough that it is unlikely you will ever pay any taxes. If you are looking to finance your purchase, then I think you will find RBC is your best option right now. I understand they are offering duel US dollar/Canadian dollar accounts that work very well for this sort of situation.
Here are some numbers based on 4 bed homes on Encantada, which do about as well as anything. You would probably need to pay around $160,000 to get one right now, though. 3 beds may be closer to your price range (around $120,000 furnished and ready to rent), and the bottom line is still going to be positive. The numbers are quite similar for the townhomes on Windsor Palms, too. These are based on the figures used by the onsite management company, eManagement.
Monthly management fee $150
Monthly pool maintenance $75
Average monthly electricity costs $275
Water, monthly $30
Phone service, monthly $40
Miscellaneous, pest control, licenses $50
Property taxes $4704 per year $392
HOA fees, $863 per quarter $216
Home insurance, $800 per year $67
Total costs (excluding mortgage) $1295 per month
Nightly rental rates are $109 to $229. Assume an average of $125 per night. The management company takes 20% commission from bookings that they put into the home, leaving $100 for the owner. Note: the renter pays for the end of rental clean, and for taxes. Bookings placed by the owner are not subject to commission, so they increase the net nightly rate. On these figures, the break-even point from rental income is 13 nights per month, or 22 weeks per year. The management company currently anticipates placing 25 to 25 weeks per unit per year.
The figures for 3 bed units work out a bit less well, because the costs of ownership are very similar, but the average net nightly rate is probably more like $90. So the break-even point for a 3 bed home is around 24-25 weeks a year.
If you want to incorporate the cost of a mortgage into the calculations, you should include only the interest payments, as the capital repayments are not costs of ownership, they are a reduction in the debt on the property. The interest can vary widely with the mortgage taken. An 80% mortgage at 4.75% on a property costing $150,000 adds $475 to the monthly costs, and increases the number of weeks to break even on a 4 bed home from 22 weeks to 30 weeks a year.
This is an achievable target, especially if you can add in a few weeks of bookings yourself at full rate. So my view is that a 4 bed home on Encantada should be self-sustaining, covering all costs, including the interest on a typical mortgage. If you don’t take a mortgage, then you have a $475 a month margin to compensate for the money you have tied up in the property. These calculations don’t take into account any equity gain in the home during your period of ownership, which should be considerable."
