[TeresaE]

Arrange to meet with several property management companies in the area and get their estimate on the potential income.

[Pat2015]

Originally Posted by bowlingal

Don't forget the very high bond and taxes in that area. Better off going further north and buying pre-owned. If you check the Daily Sun, you will see tons of houses south of 44 for sale already....you must ask yourself why???

For a lot of people it’s for the profit that can be realized south of 44, and they stay down there with another purchase.

[DrMack]

Originally Posted by Rainger99

There are a lot of homes for rent!

Rent From A Villager | Rental Homes in The Villages Florida | Advertise Your Village Rental

Yes, we were able to rent out our home by just offering it at 3000 a month no problem. 2000 square feet of living space and furniture. It was easy to do. Just don’t overcharge. It isn’t a princely sum, but it does cover taxes and maintenance. South of 44 wasn’t for us. What ever you decide I wish you the best in your decision.

[Packer Fan]

Originally Posted by Villager2be

Hi All, thrilled to have found this forum, looks like a great source for exchanging ideas/info!

My wife and I are from NJ, visited last month and decided we'd love to buy a place in Eastport that we can enjoy for a couple of the snowbird months, but also be able to recoup as much of our expenses by doing short term rentals the rest of the year (most likely using a management company).

We are considering either a 3 BR Cottage or one of the Patio Villas, ideally we would love to break even after factoring in lost interest on our cash purchase (not sure break even is possible, given rental supply/demand outside of snowbird season).

That said, would greatly appreciate if those in the know, would please offer their view and possibly include thoughts on the following:

1. Does one of these models make for a better short term rental place, i.e. does one typically provide a better return on investment?
2. Is there decent enough demand in the March through December period or does supply greatly outweigh demand? Is it realistic to think we should be able to break even?
3. Do you get a good return on the added purchase cost of a 3rd bedroom, or most short term renters don't need the 3rd bedroom, i.e. 3/2s rent for similar $ as 2/2s?

(I understand and expect our first year will be challenging since Eastport is still being built)

Thanks so much!

So I read through this and there is some good info and some bad. I have had 2 rentals for 10 years so I know what I am talking about. It’s pretty simple - when designers were selling for $250 and Patio villas for $180k, mortgages were 3.5%, and bonds paid nothing, it made some sense to buy a rental in TV as a diversifier to your portfolio. However, at current prices with mortgages at 7% and bonds paying 4-5% it makes no sense. Also, there are a lot more rentals now. Lastly for you - without renting out Jan-March you will lose money big time. Aa an example - high season rents form $5900 a month. Summer rents for about $1800. You MIGHT get about $3000 for Nov-Dec but Eastport area? No way. Put the $300k in bonds and use the $12000 you get per year to rent. Trust me, you will be better off. My rentals are paid for and I am moving into one and selling the other.

[Andyb]

Originally Posted by Villager2be

Hi All, thrilled to have found this forum, looks like a great source for exchanging ideas/info!

My wife and I are from NJ, visited last month and decided we'd love to buy a place in Eastport that we can enjoy for a couple of the snowbird months, but also be able to recoup as much of our expenses by doing short term rentals the rest of the year (most likely using a management company).

We are considering either a 3 BR Cottage or one of the Patio Villas, ideally we would love to break even after factoring in lost interest on our cash purchase (not sure break even is possible, given rental supply/demand outside of snowbird season).


That said, would greatly appreciate if those in the know, would please offer their view and possibly include thoughts on the following:

1. Does one of these models make for a better short term rental place, i.e. does one typically provide a better return on investment?
2. Is there decent enough demand in the March through December period or does supply greatly outweigh demand? Is it realistic to think we should be able to break even?
3. Do you get a good return on the added purchase cost of a 3rd bedroom, or most short term renters don't need the 3rd bedroom, i.e. 3/2s rent for similar $ as 2/2s?

(I understand and expect our first year will be challenging since Eastport is still being built)

Thanks so much!

Not a good rental area south of 44 during off season. Look at buying north of 44.

[airstreamingypsy]

As for the how many bedrooms question. I always buy at least three. With no basements and sweatbox attics, I use the third bedroom as my storage room. All I need is two, mine and a guest room, but the third is a necessity for me.

[mrf0151]

Originally Posted by Papa_lecki

Pretty sure a management company will require you to rent at least one of the peak months, they dont make much money on short terms, and they are a lot of work.

Yes, a lot of work for sure. That is the reason we only do annual rentals. Much less work and no "hotel tax".

[jarodrig]

Originally Posted by Villager2be

r

recoup as much of our expenses by doing short term rentals the rest of the year (most likely using a management company).
:

By “short term rentals “ I hope you don’t mean the ABnB overnight or weekly rentals !!

If that’s the case , be prepared to NOT make friends within the neighborhood !!

I would suggest you also join the NextDoor forum and do some searches to see what the consensus is with that type of rental property !!

[CoachKandSportsguy]

Asking TOTV for expenses is not a complete due diligence exercise:
Whose your target market? Demographics? What's their expectations on spend? What's their repeat buying preference? What's their prefered months, what's their expected max rental rates? Different clientele for high season versus low season,
what's your targeted market repeat seasonal renter and their requirements? Golf cart included makes a huge difference in appeal, when priced in. . . Final make or break number: what's your occupancy assumption and rate for April through Dec off season?


so, real world figures from a rental in an LLC for limited liability this year:

purchased: 2018, closed 2019 about $350K, custom designer
furnishing cost pre pandemic: $15K
internet hardwired outlets 2 in each room, plus whole house wireless
Golf cart cost: $12K
current value @500K
lot purchase number out of 99 lots, somewhere between 10 and 20,
Southern Oaks nearby amenities: no rec center, no food and 1 restaurant, no 18 hole golf, 3 executives with no golf cart access and no bridge access to cross 44. ie, marsh bend was just dirt with Fenney down the road. .
annual occupancy rate from 50% to 80%, varies by year

current expenses basis for a non local owner:
$20,000 - $25,000 per year, depending upon PM percentage, repairs AND INSURANCE (ding ding!)
excluding mortgage, including bond, lawn care, watering, insurance, taxes, cable for any type of renter, heat, and electricity, home watch, repairs, and PM fees.

With 80/20 LTV mortgage, add another $15K at 4.5% commercial loan. RE tax basis increases at 7% per year, insurance increases are currently 5-50% per year, with a non zero probability of cancellation.

cash flow positive after three years, starting year 4. pandemic had a huge impact on travel and renting,
income tax still no taxes paid, and will never had taxes given loss carry forward and depreciation carrying cost.

ROI will NOT be realized from income generated from renting, especially not with a mortgage nor with a PM fee.
ROI will come from the terminal value, ie, disposal or sell value. If you plan to go from slumlord to resident, there is no ROI,
there is only expense offset while not a resident. Without income, a house is only shelter costs and there are NOT ROIs on shelter costs. if you don't understand these points, then be sure you consult with a financial expert so that you have the proper expectations for outcome probabilities.

good luck, but if you don't have a financial model set up to figure out these items, or you think that slumlording is an easy road to instant ROI riches, you might want to re-think that naive assumption.

As far as illiquid asset house flipping goes, the easy money had been made, though you can still make money if you are experienced negotiator, can find estate sales of older homes, and can rent them out with 100% availability, with a for sale sign in the background. . or buying in a brand new development and selling when the developed area has no more land left. However, if you look at the sheer amount of new houses being built, why would someone buying want to buy a used house when new ones are being released constantly and look exactly like yours?

former corporate finance guy,
with lots of investment and modelling experience.

[Dusty_Star]

Originally Posted by Packer Fan

So I read through this and there is some good info and some bad. I have had 2 rentals for 10 years so I know what I am talking about. It’s pretty simple - when designers were selling for $250 and Patio villas for $180k, mortgages were 3.5%, and bonds paid nothing, it made some sense to buy a rental in TV as a diversifier to your portfolio. However, at current prices with mortgages at 7% and bonds paying 4-5% it makes no sense. Also, there are a lot more rentals now. Lastly for you - without renting out Jan-March you will lose money big time. Aa an example - high season rents form $5900 a month. Summer rents for about $1800. You MIGHT get about $3000 for Nov-Dec but Eastport area? No way. Put the $300k in bonds and use the $12000 you get per year to rent. Trust me, you will be better off. My rentals are paid for and I am moving into one and selling the other.

Sensible advice!

[Lisanp@aol.com]

You need to factor in the rent you would be paying for the "Snowbird months" if you didn't own here. After factoring in that $15K or so, the ROI isn't difficult to recoup.

[DrHitch]

Originally Posted by Villager2be

we'd love to buy a place in Eastport that we can enjoy for a couple of the snowbird months, but also be able to recoup as much of our expenses by doing short term rentals:

First, you should do a search within this forum because this topic has been covered many many times.

Second, in recent years, the villages become saturated with "investment" properties used for short term rentals.

Third, many other property owners distain very short term (less than a month) in their neighborhoods.

But, there are property management (watch) companies that can walk you through the numbers.

[Bitsee]

Agreed !

But not one person yet has mentioned the demeanor of the tenants that you will be subjected too as a tentative landlord.
We have had 5 rental homes in TV since 2008 and have been in the rental business for 35 years in Wisconsin as well.
Overall it has been just okay but by no means did we get " rich " in the TV rental game believe me. We were extremely lucky to have broken even for the most part.

Some tenants did do damage to our homes...red wine spilled on new carpeting and furniture, cigarette burns in our furniture, items stolen from the house, dents in the garage door, excess company on thier part filled the house and parked illegally in the neighbor driveways , dog poop left all over the yard, and constant partying day and night just to name a few considerations you may encounter...needless to say the neighbors there were not fond of us many times and they let us know it.

Overall, the big picture.. it really is not worth the expense and the headaches involved in my opinion thru our experiences.

Eastport is going to be a beautiful area to live, my suggestion is buy your dream home there and YOU live in it and enjoy it !
If you want to rent it out to just friends you know or family to enjoy, that also is an option.

[TomDTV]

Originally Posted by Villager2be

Hi All, thrilled to have found this forum, looks like a great source for exchanging ideas/info!

My wife and I are from NJ, visited last month and decided we'd love to buy a place in Eastport that we can enjoy for a couple of the snowbird months, but also be able to recoup as much of our expenses by doing short term rentals the rest of the year (most likely using a management company).

We are considering either a 3 BR Cottage or one of the Patio Villas, ideally we would love to break even after factoring in lost interest on our cash purchase (not sure break even is possible, given rental supply/demand outside of snowbird season).

That said, would greatly appreciate if those in the know, would please offer their view and possibly include thoughts on the following:

1. Does one of these models make for a better short term rental place, i.e. does one typically provide a better return on investment?
2. Is there decent enough demand in the March through December period or does supply greatly outweigh demand? Is it realistic to think we should be able to break even?
3. Do you get a good return on the added purchase cost of a 3rd bedroom, or most short term renters don't need the 3rd bedroom, i.e. 3/2s rent for similar $ as 2/2s?

(I understand and expect our first year will be challenging since Eastport is still being built)

Thanks so much!

I'm an annual renter for almost 2 years near Spanish Springs in 2 BR patio villa. I pay $1825 per month. Owner has decided to sell. Asked if I want to buy. Not a chance. At 20% down and 7% mortgage, principal and interest alone will be almost $1600. From other sites I've seen, taxes, insurance, etc will probably be close to that. So likely $3000 per month. That's a huge negative cash flow. Good luck with your decision

[Dusty_Star]

Originally Posted by TomDTV

I'm an annual renter for almost 2 years near Spanish Springs in 2 BR patio villa. I pay $1825 per month. Owner has decided to sell. Asked if I want to buy. Not a chance. At 20% down and 7% mortgage, principal and interest alone will be almost $1600. From other sites I've seen, taxes, insurance, etc will probably be close to that. So likely $3000 per month. That's a huge negative cash flow. Good luck with your decision

I guess there are those who like to rent & those who like to own.

I think you may have had a great deal on your rental of $1,825. You didn't mention if that includes electric & internet, so I proceeded with the figures as if they are included. I looked for 2 bedroom, 2 bath patio villas in the Spanish Springs area & found some for sale. One was asking $255,000. If they got their asking price, & the buyer put 20% down, with the mortgage, property tax, amenity fee (including water, sewer, trash), insurance, electric, internet, I arrived at a monthly payment of $2,195.
But for that monthly payment, the buyer owns house & there are some tax breaks for mortgage interest & property tax. Also, it is the buyer's house for as long as he cares to keep it, at the end of which he or his heirs will have a substantial asset, that can be sold, rented out or lived in.

I also looked at the rent from a Villager site for a long term rental for a patio villa in the Spanish Springs area & today, renting for this next year, I only found 1 & it is asking $2,000. Electric, internet, gas not included. I don't have a price for gas, but if electric is $130 (average for the whole year) & internet is $50 (high speed fiber optic), then the monthly payment would be $2,180.

For a savings of $15 a month, but no tax break for the mortgage interest or property tax & it is not the renter's house, meaning the price can rise next year & or the owner can decide to sell the house & the renter has no ownership stake in the house.

The numbers can change based on different variables. The mortgage calculation site used an interest rate of 7.883%, hopefully a lower interest rate could be found & also the owner might accept a slightly lower price for the house.

In your example, you didn't say if you need to rent another place to live soon. If so, good luck in your search. If you don't need to find another place to live and were only giving an example of buying a property to rent out, then the numbers are not as hugely negative as first supposed. But as many have indicated, breaking even is a challenge, especially in the early years.