Updated for 2016
If you’re in the market to invest in a sunny vacation rental near Disney World then lets talk money. These are six of the most common vacation rental expenses that you will incur when you own a short term rental property. These are NOT your settlement expenses but rather your recurring expenses associated with ownership.
1. Property Management (Villa Management) Fees: If you live outside of the Disney area (within a few hours or more) than management is a must in my opinion. They rent out and maintain your Disney area vacation home, condo or townhouse for you.
Cost To You: $150 and up per month
2. Resort Community Amenity (or membership) Fees
So you think that just because you own in the community means they let you use the amenities for free? Well they do (depends on your definition of free) but they certainly don’t all let your guests use them. There are a handful of specific resort communities in Davenport and Kissimmee, Fl that tack on this fee to you so that your guests can utilize amenities such as the pool and gym facilities. Not all communities do this but you should be aware of the ones that do prior to investing.
Cost To You: Anywhere from $10 per each booking day on up to a flat fee of $250 per month on top of your management and HOA fees.
3. Orlando Homeowner’s Association Fees
Probably the most unavoidable fee that exists in Davenport, Kissimmee and Clermont vacation home communities. The fee you must pay to the homeowners association that covers that upkeep and maintenance of the community itself. This is important because if you do not pay this fee the HOA (homeowner’s association) can put a lien on your property. I know many of you are familiar with HOA’s but many of our investors from other countries don’t have these so it’s a noteworthy point.
Cost To You: Ranges from around $30 per quarter on up to over $250 per month
4. Property Maintenance Fees
These fees are the costs of Orlando vacation home ownership. These fees include expenses such as:
- Yard maintenance (sometimes covered by your HOA and sometimes not)
- Pool maintenance (typically $80 per month depending on the size of your pool)
- Utility expenses (power, water, cable, phone etc)
Cost To You: Could start anywhere from $250 per month combined and can go up from there depending several factors such as the size of the home and what your HOA includes. I always recommend to estimate higher than lower.
5. City, County and State Short Term Rental Taxes
Just when you thought you were getting off easy here comes good old Uncle Sam with his hands in your vacation home. You will only incur these fees when you rent your property out not when you stay in it. You can only be taxed on money that you make so every booking is considered money you made according to the government. If you’re using a management company they usually take care of sending this money in for you. I still always recommend consulting with a Davenport, Kissimmee or Clemont vacation home tax specialist. Also, many people charge the tax to the guest. Find out from your management company how they recommend doing it.
Cost To You: Usually around 13.5% with everything taken directly off the top of your booking revenue (percentage can vary depending on county)
6. Short Term Rental Insurance
This policy is required by just about any Davenport, Kissimmee or Clermont vacation home management company before they will rent your property out. The minimum coverage they require is usually around $1,000,000 but I have seen some companies willing to lower their requirements to half of that for coverage. In any event this liability insurance policy is an expense you will have on top of your traditional homeowner’s insurance policy.
Cost To You: $1,000,000 policy’s range around $300-$500 per year.
We hope to earn the opportunity of helping you achieve your investment property goals this year. To set up a free, no obligation investment property consultation with us please use our scheduling tool or contact us directly at 866-422-6191 and if you have enjoyed this article please consider subscribing to our blog and stay updated on future information.