Vacation rental investments in Florida
This article will focus on vacation rental investments in Florida markets, specifically the Kissimmee market, from our expert friends at Vrolio.
Vacation rental investments in Florida post-Covid
Despite the hard hit to the tourism sector in Florida, it made a quick and fast comeback and is seeing record numbers of tourists, both from in state and out, compared to other states in the US. Domestic tourism was up during Covid due to Governor DeSantis’s encouragement for Floridians to travel within the state. Disney continues to press forward with increasing their capacity starting this month. With Disney in Orlando being open since July 2020 travelers have been flooding the area for the use of vacation rental homes for staycations and Orlando attraction visits. During spring break 2021, Disney actually sold out many days and the STRs have been booked since! The theme parks were so packed out during spring break that many guests staying in vacation rentals couldn’t even secure an Uber to get to the parks because all of the available Ubers and ride shares were booked up.
What does the data say?
Transparent found that overall the news is positive – many markets are enjoying not just a recovery, but a growth in demand over and above what they could expect. With the vacation rental data telling us that rates are over 20% increased on 2019, it is clear that confidence in demand has returned, as indeed has occupancy this Summer! Pompano Beach on Florida’s South East Coast is in the Top Growing US Vacation Rental Markets.
Lighthouse reported that Pompano Beach is the largest destination of our top 5 growing vacation rental markets with 1784 rentals currently listed. The vacation rental data indicates a 194% increase in reservations, and a May ADR of $176 (+19%). Summer occupancy is up a huge 71%, with advertised rates also increased to $185.
Additionally Destin, in Florida’s Panhandle, is a beach/leisure market where the bookings nearly doubled for this July, showing that demand for vacation rental bookings is high. US Vacation Rentals Summer 2021 Outlook: Occupancy, Rate & Demand.
Where should you be investing in an Airbnb?
Florida continues to have some of the hottest vacation rental markets in the United States as well as a real estate market that is booming, which has brought back investor confidence. Many times investor clients have come to Vrolio knowing they want vacation rental investments in Florida, but aren’t sure which Florida market to zero in on. Below are some general guidelines on investing in the Florida markets including the market zone, destination category, length of season, and recommended entry budget for a short-term vacation rental property in that market. The recommended entry budget is the starting point for your investment amount where you will begin to find a profitable short-term rental.
Breakdown of popular Florida vacation rental markets
Panhandle–Beach destination; somewhat seasonal; recommended entry budget: $500K
South West–Beach destination/snowbirds; somewhat seasonal; $400K
Central East–Beach and events destination; seasonal; $280K
Central West–Beach destination; mostly seasonal; $400K
South East–Beach and resort destination; year-round rentals; $500K
Central–Theme park destination(events/resort/family); year round market; $300K
Florida Keys–Beach, boating, fishing, family destination; mostly seasonal; $500K
Advice for buyers considering vacation rental investments in Florida
Despite the increase in home prices, investment capital for first and second homes/investment properties continue to climb in these Florida markets and new home builders can’t keep up with the demand.
Cash buyers are king, but if you are financing, having a pre-approval letter may help you in a multiple offer situation. Using the right lender who understands short-term rentals, can pre-approve you in advance, and cut down on the loan contingency period to 7-10 days will help you in this competitive market. Also minimizing your inspection timeline will help expedite the sale and sellers are typically in favor of this. If you aren’t local to your preferred market, be ready to get there to see the property and write the offer. Working with the right team (realtor, lender, etc) will make or break your investment.
When looking at vacation rental investments in Florida, consider the additional amount of money you may need to spend to give added value to the space and make it an incredible guest experience, or “instagrammable.” Many homes in these markets need to be at this tier to stay competitive with the other properties.
Kissimmee, FL market tips and data
If we look at investing in the Central Florida market, and more specifically the Kissimmee area (near Walt Disney World), you will find that there are certain criteria that make a top performing vacation rental property. Since Kissimmee attracts multigenerational guests, the homes that tend to be the most profitable are 5+ bedroom homes. Extra amenities such as game rooms, pools, bikes, snacks & water, upgraded/updated home items/decor or a nicely themed home increase the rental value. With this in mind, investors are encouraged to add at least a $10k start-up budget to their pro forma analysis.
Kissimmee is one of the largest vacation rental markets in the United States and holds top ranks in vacation rental supply and ADR.
In 2019, Florida had the highest STR property count in America with the top two markets being Kissimmee with over 37k properties (there are now over 46,000) and Davenport, FL with over 26K.
July 2021 to June 2022 Predictions–Kissimmee, FL
According to Transparent data from the city of Kissimmee, homes with 5-7 bedrooms are currently operating at 80%+ in occupancy.
The average nightly rate for these homes is $400 +
For a single-family property, investors can often double their average nightly rate at the end of the year holidays and around spring break in Kissimmee.
Investors can take the above information from current performing homes and estimate their profit for potential vacation rental properties with Vrolio’s free pro forma tool. Below is the link to this vacation rental analyzer calculator (a free investor account provides access to this tool). Please note these are all estimated projections.
Vacation rental investments in Florida…or any market
When investing in any market, but especially vacation rental investments in Florida, consider the above investment strategy tips while doing your due diligence to research potential investment properties. According to Erica Muller, CEO of Vrolio, “Every market can have a successful short-term vacation rental property if you know what the “sweet spot” is in that market. This is why it is important to work with a trusted advisor who knows how to find that sweet spot. You can make money or lose money in the same market depending on the property you buy, the demand, expenses, and other variables.” Lighthouse and the Vrolio team are both dedicated to assisting investors with finding these “sweet spots” and identifying profitable opportunities.
About Vrolio - vacation rental real estate
Vrolio is a real estate marketplace that focuses on short-term vacation rental investing. The company started with selling vacation rental investments in Florida and now Vrolio is connected to agents across the United States who specialize in their vacation rental markets and assist investors with buying or selling vacation rental properties. Vrolio is also home to the Certified Vacation Rental Agent certification, a certification program that teaches real estate agents how to sell vacation rental investments. Please reach out to Advisor@Vrolio.com for more information.
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