Can 2nd home in Orlando also used as rental? (Kissimmee: real estate, renters)

[Buona sera]

We are going to Orlando next month and shopping for our second home which we want to rent out when we are not there. Do HOAs forbid this or is it generally allowed? If we bought a townhome could we offer short-term rent (2-3 months) in the winter for snowbirds? Should I be asking this in the real estate forum? Any help will be appreciated!

[luvthatmouse]

It depends on the HOA. Usually nicer communities will not allow it. Celebration does not allow short term rentals. The taxes can be high too.

[GregTraub]

Don't worry, you came to the right forum.

Most HOA's allow rental...some have restrictions on how many units within the community can be rented at any one time, but most allow long term rentals without problem

However, if you are planning on renting the property for any period of time less than 6 months and 1 day, you will need to be in an area zoned for short term rental....which means you will be restricted to properties in Davenport and parts of Kissimmee. If you really want to rent short term (which it sounds like you do) there are many other restrictions you must know about beyond just if an HOA allows it from business licenses, management, taxes, etc... Much to much to discuss in this post. Make sure to have an agent that can explain all the intricacies involved with such a venture.

[Buona sera]

Originally Posted by GregTraub

Don't worry, you came to the right forum.

Most HOA's allow rental...some have restrictions on how many units within the community can be rented at any one time, but most allow long term rentals without problem

However, if you are planning on renting the property for any period of time less than 6 months and 1 day, you will need to be in an area zoned for short term rental....which means you will be restricted to properties in Davenport and parts of Kissimmee. If you really want to rent short term (which it sounds like you do) there are many other restrictions you must know about beyond just if an HOA allows it from business licenses, management, taxes, etc... Much to much to discuss in this post. Make sure to have an agent that can explain all the intricacies involved with such a venture.

I suspected there were quite a few restrictions. So if we just bought a townhome as a regular rental maybe we could just move there in 10 years and let someone rent it now (long term)? It seems that real estate in the area is unbelievably cheap for very nice sounding, newer communities. Do you have any personal thoughts about the area of West Metro near Turkey Lake?

So how high are taxes and insurance on just a normal townhome rental?

[beckycat]

There are ppl that own condos in Lake Mary and do this. They offer month to month or whatever works for you. Look on Craigslist and you'll see some examples. So, yes you could definately get away with it.

[ngrome]

As others have said previously, it depends on the HOA that is governing the area.

I've just been through this when we just purchased our second home. When applying for a loan, there are different terms and conditions and you have to declare in the application process how you are going to use this second home: is it going to be a vacation home, or a rental (investment) property?

Your lender will draw up papers and have you sign a declaration or addendum what the purpose of the second home is. If you declare it to be a vacation home, and end up renting it, and if your lender finds out somehow, you can end up liable and in default of the loan terms. If you declare it as an investment property, there are probably some different loan rates and terms associated with that, as well as home insurance considerations. You will have to talk to a real estate agent, lender, and/or real estate attorney to ensure you know what you're getting into, because if say one thing and do another, there could be repercussions, as I was advised by my lender as well.

I never heard of a case where it is both a vacation home and rental property when you are not in it, it may be more accurate that it is considered a rental property and a vacation home when there are no renters in it. So if you plan to use it for both, I guess you have to be guided as to what is to be considered the proper declaration.

One thing in common with either a vacation home or an investment property, you will have to put down at least 15% or maybe 20% downpayment these days, as the qualification requirements have changed in light of the housing/Fannie Mae/Freddie Mac crisis. You may need a 740 credit score or better, and 739 may not even cut it (unless you pay off that one credit card, etc.).

[GregTraub]

Originally Posted by Buona sera

I suspected there were quite a few restrictions. So if we just bought a townhome as a regular rental maybe we could just move there in 10 years and let someone rent it now (long term)? It seems that real estate in the area is unbelievably cheap for very nice sounding, newer communities. Do you have any personal thoughts about the area of West Metro near Turkey Lake?

So how high are taxes and insurance on just a normal townhome rental?

Every neighborhood will be different with their restrictions, some with more than others. As far as MetroWest near Turkey Lake, I know of all the properties you are looking at around Robert Trent Jones Drive. The properties themselves are newer and very nice, however, it's proximity to Kirkman gives the entire area a stigma of higher crime rates. The stigma combined with the sheer glut of properties available in just that small area has caused the very low prices in the area. There has been alot of investor interest in the area because of the prices, and I know the rental market there is soft as well simply because of that same glut. The location is great, close to lots of employment, a college, and amenities...just the stigma. (check out Orlando Crime Map - Orlando Sentinel and the county sheriff's office for actual crime stats though) The area isn't for everyone, I'd have to interview you to determine your criteria and expectations to know if the area would be right for your needs.

As far as taxes, the rates in Orlando run between 1.6 and 2% of taxable value (basically purchase price). Insurance for the structure is usually (but not always) included in your HOA dues with townhomes and condo's. Liability and contents insurance will vary depending on what you set up with your insurance agent. I'd use between .5% and 1% of the purchase price for your yearly insurance just be sure to get a quote first.

[Buona sera]

Originally Posted by GregTraub

Every neighborhood will be different with their restrictions, some with more than others. As far as MetroWest near Turkey Lake, I know of all the properties you are looking at around Robert Trent Jones Drive. The properties themselves are newer and very nice, however, it's proximity to Kirkman gives the entire area a stigma of higher crime rates. The stigma combined with the sheer glut of properties available in just that small area has caused the very low prices in the area. There has been alot of investor interest in the area because of the prices, and I know the rental market there is soft as well simply because of that same glut. The location is great, close to lots of employment, a college, and amenities...just the stigma. (check out Orlando Crime Map - Orlando Sentinel and the county sheriff's office for actual crime stats though) The area isn't for everyone, I'd have to interview you to determine your criteria and expectations to know if the area would be right for your needs.

At risk of sounding ignorant, who is perpetrating these crimes? From an outsider's perspective it seems like Orlando would be filled with tourists and people in the tourism business, and that's it. LOL. Thanks for that map.

[itsajourney]

I would agree with everything the GregTraub has said. It's right on the money. Personally, I would not want to live in the metrowest area or the area very near Millenia Mall (other side of I-4 close to MetroWest). These two areas border some of the highest crime and most violent crime areas in Orlando. If you are talking about renting out a property for 10 yrs in this area with the prospect of making it your home down the road, I would be doubly concerned that the area might not be suitable that many years down the road. It is just too close to some big problem areas right now. 10 years down the road is a huge gamble.

Orlando is a city like any other city. We have a mixed population just like any other city. The SW side of Orlando is tourist driven because that is where Disney, Sea World, and Universal are located--but in the scheme of things, the rest of the city is huge and the tourism area is a small area of Orlando. The crime stems from the same things that cause crime to be a problem everywhere.