Ten point checklist to property investment in Florida
Florida has long been a favourite destination here in the UK, both for holidaymakers and property investors. In this article, we’ll take a look at your options in Florida vacation rental accommodation and how to make the most of your capital in the Sunshine State.
Florida welcomed 110 million visitors from around the world in 2016, and of those an extraordinary 68 million went to Orlando.
The Theme Park Capital of the World, 8 of TripAdvisor’s top 15 worldwide amusement parks are in Orlando, and there are plenty more besides these. It’s a dream location for a family holiday, but the city is also rich in world-class golf, shopping, dining and culture for those adults who fancy a day away from Snow White.
There’s a lot of resort hotel accommodation and private villa rental available in Orlando, but it can be very pricy, especially for, say, a family of four. There are alternatives, though, which may be of interest if you like the idea of investing in Orlando.
1) Sought-after accommodation
One sector worth exploring is the increasingly popular serviced apartment. Highly favoured by the Airbnb generation, these suites can be 5 times the size of a standard hotel room and contain 2 or more bedrooms, multiple bathrooms and a fully equipped kitchen. Despite this, they offer far better value than hotels and are much more suitable for families and groups.
There are currently only 3 major serviced apartment developments in Orlando, so occupancy levels are high and there is plenty of scope for palatable rate increases in the future.
2) Excellent facilities inside and out
A luxury apartment fitted out to the highest standards is a good start, but visitors to Orlando expect the best of everything.
Inside the resort, a range of wining and dining options is important, as are bars, lobby service, arcade rooms and fitness centres. Some kind of onsite store or market is desirable.
A health club and Spa will be expected, and it will need to be indulgent.
Outside, multiple pools are essential. In fact, nowadays people want more than just to swim lengths, they want waterslides, surf simulators, lagoons, lazy rivers and water sports piers. In Orlando, a destination resort needs to be an attraction in its own right.
3) Operational property with proven performance
A track record of consistent rental income and high occupancy levels is very important for any investor.
Astonishingly, an Orlando realtor recently reported a development where the current asking price for a 1-bedroom condo is $400,000 – and it won’t even be ready for four years.
4) Fully hands-off annual income
With such visitor numbers, a rental income share programme should prove lucrative. However, do some calculations to establish a NET yield equivalent.
As ever, anything above 7% will be appealing, but as it’s Orlando, a year-round destination, your rental agent should be able to improve on that – around 8.5% NET would be a good starting point (see below).
5) Specialist management onsite 24/7
You’ll need to rely on local experts to handle all the day-to-day running of your apartment, such as cleaning, maintenance and repair. But they’ll also be responsible for all marketing and bookings, so make sure they have a depth of experience of luxury resort management and a substantial global database to keep your rental income heading upwards.
6) Get in early for a better deal
Most developments are delivered in phases, and the purchase price for each increases as more services come online and demand grows. Early investors can save as much as 40% on the final phase price.
7) Get a start date for your income
If you can’t find an apartment that provides immediate income, do make sure that a definite start date is contracted.
8) Protect yourself at purchase
You’re probably not familiar with how the American real estate purchase process works, so do insist that all fund are placed in escrow. This means your money will remain untouched until all due diligence, certification and licensing have been carried out satisfactorily.
9) What’s included in the price?
Don’t get hit by an unexpected bill for furniture, fixtures and fittings. Also, find out what the deal is when it comes to repairs, replacements and maintenance.
10) Can you join in the fun?
After all, Orlando is Vacation City – make sure you will be allowed to use your apartment and the facilities at no extra charge.
James Harrington, Business Development Manager at sector specialists Emerging Property, has a word of advice: “Any property investment involves a significant sum of money; putting it overseas makes getting specialist advice essential. Processes, liabilities and terminologies vary the world over which is why it’s so important to talk to an expert first. And don’t be talked into anything; just ask any questions you have and then go and mull it over. Don’t deal with anybody who tries to rush you.”