Investment, Property, Property management, Vacation homes & real estate

Does rent income pay for the financing of a vacation home?


If you do not have the full amount to buy cash a property in Orlando, a good way out is to do a financing. Less bureaucratic than in other countries, the ease of credit approval for foreigners is one of the advantages of financing a property in the United States. In addition, it is possible to take advantage of the income with the seasonal rentals to cut back on the investment expenses.

With low interest rates (between 5 and 6 percent a year), the minimum amount of financing is usually US $ 100,000 in the United States. Those who opt for financing must guarantee at least a 25% deposit, and must prove sufficient income to pay the monthly installments of the property in the next 15 or 30 years, depending on the choice of financing modality. That is, the minimum value of the purchased financed property must be US $ 133,334, including the value of the down payment, but it is worth remembering that homes with better returns on the investment start at around US $ 250.

However, before buying a property in Orlando, it is important to keep in mind that this is a low liquidity investment. It is worth asking yourself if you are able to keep the house, without having to depend totally on the seasonal rental or the sudden possibility of sale. With the rental income, you will have to pay for the cleaning, water and energy consumption, advertising and commissions of the property manager. Therefore, the purchase price of the house is only part of the investment. Everything should be taken into consideration.

Your business plan must contain the key elements that define the correct positioning and financial goals to achieve. It is important to know how to detect the fundamental objective of your property and look for its competitive edge. The first step is to define how the calendar of your vacation home will be distributed, between family use and seasonal rentals. Once you have done this, you will certainly know the economic potential expected for your home. That is, the less you use the house, the more possibility you can profit from it.

The expectation of income from rental properties in Florida is quite relative because values may vary substantially from one property to another. Overall, good homes in Orlando yield about 4 to 6% with seasonal rentals and 3 to 4% with conventional rentals. It is worth remembering that these numbers are very expressive for the American market, where the savings accounts yield less than 1% per year.

The amount levied from renting a seasonal home in Orlando varies considerably from property to property. A 4-bedroom house in Orlando, for example, within a maximum of 10 minutes from Disney parks, is rented an average of 28 weeks a year with an average daily rate of $ 124 (net to owner), generating a gross revenue of about $ 24,000 a year, that is, about US $ 2 thousand a month.

Deducting business operating expenses and taxes (estimated at US $ 16 thousand a year), you may get a net income between 3% and 5% of the value of the property, an amount that can cut back on the expenses with the property, but may not totally pay the monthly installments. On average, renting a vacation home pays for operating costs and about 8 financing installments. The other 4 end up being the investor's own investment, which represents about ? of the paid funding.

Due to all these factors, to get into in this billionaire market and make a good deal, it is important to take the advice of an Orlando real estate expert. Get in touch with one of our brokers and know the trading possibilities!

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real estate, investment homes, return on rental property