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An Introduction to Property Management

    Property management has long been the Achilles heel of any second home purchase. Who do you trust to take care of such a sizeable asset? At the office of MBT Homes we do not have a business relationship with any one management company. Many of the Realtors™ in the area work for a particular company, so they have a vested interest in "steering" you to their own management company. We think that to properly serve our buyers we should be able to recommend qualified companies on their merit, not their business affiliations. As such, when your house is closer to completion, we will give you a selection of current quality companies to chose from. I have worked with management companies for many years, as a sub-contractor, and as a member of management, and know all to well the pitfalls that can occur. My family and I have owned properties in Florida since 1989, and have first hand knowledge of what makes a good management company. I will help you place your holiday home in good hands, and as a bonus, with the purchase of a home with us, I will pay for a Virtual Tour of your property and a "mini website" that will enable you to market your own home with little effort, and generate extra income. You will be amazed how many friends and co-workers will stay year after year in your property, generating more income for you.

Property Management Basics

    A reputable and well run property management company will both take care of your property, and market it to generate income for you. Typically a management company will charge a flat fee for maintenance related services such as pool service, cleaning fees, A/C maintenance etc., a monthly fee for paperwork and a percentage of any bookings they generate.

Estimated Monthly Management Costs

 

Monthly Management Fee........................$150.00

Pool Service...........................................$85.00

Landscaping...........................................$85.00

Pest control............................................$45.00

Miscellaneous repairs/replacements...........$50.00

Total......................................................$415.00

Please remember that not all of these charges will apply, as some communities include some services in the Home Owners Association Fees.

Estimated Monthly Utility Costs

The following are rough estimates for ongoing utility costs for the average 4/5 bedroom home. We know that not every utility will apply to every homeowner. The office of MBT Homes does not believe in minimizing the estimates of your projected costs, but rather in giving real world estimates of bills that you should see on a monthly basis. Please note only those applicable to your particular community and home.

Electrical Costs: HVAC, Pool equipment*, most appliances ..............................Average $165-$225 monthly

County/City Water Utilities: home water needs, pool fills, irrigation................. Average $50-$75 monthly

Natural Gas Services: HVAC heating, hot water, pool heating*....................... Average $35-75 monthly

Cable Television services: not applicable where supplied by HOA..................... Average $30-38 monthly

Security Alarm services: only applies to homes with active alarm..................... Average $28-38 monthly

Telephone Services; Static costs with locked down phone system................... Average $25-35 monthly

* Please note that pool heating costs vary dramatically with ambient temperatures, and your management company MUST charge for pool heat to offset the extra utility costs.

Income from short-term rental

Now we have an idea of the running costs of the property, we need to find out how to offset them to help your second home pay for itself. Disney World® and other area attractions are the key to our income source. Short-term rental is a term used extensively in real estate transactions in Kissimmee/Orlando, but rarely is it explained. For a property to be rented out for periods les than 30 days, the area must be zoned by the county as "Short-term rental". Without this designation, you would have to rent your house to long-term tenants, which would restrict your income and usage of the property considerably. Short-term rental allows us to cater to the needs of the 55 million tourists per year who visit central Florida. Instead of staying in cramped hotel accommodations they can rent your property, typically in weekly increments. Different companies charge vastly different rates, and as the second home market is appreciating rapidly, homeowners must use the companies who cater to the high end clientele. Some companies generate bookings through tour-operators or travel agencies who will "blanket book" properties. At a quick glance this may seem to be a great income stream, as your second home will be booked up to 48 weeks of the year. Unfortunately closer scrutiny reveals that the income per night is miserably low. In most cases, tour operator bookings just add wear and tear to your property, with an income level too low to support your running costs. At this point you must be wondering why anyone will pay top dollar for a rental if there are cheaper options, and the answer is we all do every day. If the dollar amount was the only driving force in our lives we would all drive a Hyundai, buy generic foods, and stay in Motel6. If you look at the booking rates for Hilton, or Ritz-Carlton, or look for Mercedes and Hummers on the road, you will see that most people will pay for luxury, service and prestige. The bottom line is if you have a well decorated second home in an upscale gated community, and a well run management company, breaking even will be a lot closer to reality than fantasy. I have attached some links to a management company below who in my opinion offers the best service and booking levels in the area.

VillaDirect™- Management company run by Owners, for Owners and their Guests.

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MBT Homes, 117B Broadway, Kissimmee Fl 34741 (407) 908-2326 marcus@mbthomes.com

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