Condo vs Townhouse vs Single Family Home | What's The Best Choice as a Vacation Rental?
We get a fair amount of "pure investors" that ask us "What's going to make us the most money?", which is not really a fair question to ask when investing in real estate. Buying the property "right" is key, and there are hundreds of real estate investing books that go into much deeper detail than I would in a blog post. If you're reading this and you're purely looking at a vacation home in Orlando as an investment, and you will never use the property yourself, I'll save you some reading. A single family home is the most popular and desired type of property that guests are looking for when planning their vacation. Your rental revenue is almost always going to be higher when comparing the same number of bedrooms between the three types of homes. With that said, let's jump into what makes the different types of properties appealing to different buyers, and what's important to note before purchasing each of them.
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Many buyers that look to invest in Orlando, have some previous experience with owning a condo at the beach or even in the mountains on a ski resort. They're familiar with them, and in many of these beach or mountain locations, condo's are a home run for rentals. There's only so much beach front real estate, and only so much real estate surrounding a ski resort. This certainly plays to the rules of supply and demand, as everyone wants to be right on the beach, but inventory is very limited. Orlando is a different breed altogether.
Condo's in the Orlando area are pretty much always in a resort setting, which is fantastic. Guests coming to Orlando truly are looking for that resort experience while on vacation. If guests chose to have a relaxing day instead of going to the parks, they want to grab a drink at the tiki bar, stretch out by the pool, and enjoy the Florida Sun. Resort communities are almost always gated in the Orlando area, giving both vacation home owners and guests peace of mind while they're at the resort. Resort communities also provide other amenities such as a convenience store, a club house with game rooms and fitness centers, and sometimes shuttle services to shopping and restaurants.
Another benefit of the condo is that it's the cheapest option to own and operate in most cases. The square footage is less, meaning that heating and air conditioning is often less. Many times cable and internet are included with the HOA or condo association fees, and water is included as well. Property prices are cheaper as well, lowering the barrier to entry into the vacation rental market, and keeping property taxes lower as well. Lastly, there is no roof or foundations to worry about, eliminating a huge portion of potential maintenance cost.
Lastly, no matter where you visit around the world, it's always nice to have a view. Whether that view is over a city, into wilderness, or of the Disney fireworks, it's always a huge plus to the value of the property. A view in a single family home in the Orlando area, isn't really possible in the Orlando area (unless your right next to the fireworks show), so you have to build vertically to get it. One particular example of the benefits of a view in Orlando is in Vista Cay Resort. Vista Cay only offers condos and townhouse options and has beautiful small lakes on the perimeter of the resort. The townhouses are three stories, so they do get a bit of a view as well. However, nothing rents better in Vista Cay than the 4th story condos with the lake view. From the 4th floor condo balconies, you can look over the lake towards Lake Buena Vista, with a stunning view of roller coasters, ICON park, and a fireworks show at the end of the day.
Briefly, we'll also run over the cons of a condo. First, in Orlando for most cases, it is the lowest rental income producing option. A 3 bedroom single family home with a pool will almost always outperform a 3 bedroom condo. Supply and demand. Second, the HOA and Condo Association fees are high, resort amenities come at a cost. Third, there's less privacy sharing up to all four walls with other condos. Fourth, the floor plans are small and usually only big enough for one family, with little natural light. Fifth, condos are less customizable with hardly any recreational space to get creative with decor. Sixth, its almost always harder to obtain financing with a condo. Seventh, some condo resorts in Orlando don't have elevators, making rental rates suffer terribly for 2nd and 3rd floor units, even if they have a view.
Here are the major vacation rental communities offering condos in the Orlando area: Vista Cay, Storey Lake, WIndsor Hills, Bahama Bay, Bella Piazza, Tuscana, Caribe Cove, Oakwater, Terrace Ridge, Bella Toscana.
There are a number of similarities between condos and townhouses. Those similarities include often times being in resort communities, and townhouses are also less costly to own and operate compared to a single family home.
Townhouses have a more unique pro in being often times cheaper than a single family home, with plentiful financing options, while offering similar benefits. Families can drive their car right up to the townhouse with easy access to the front door. Many times there's a bedroom and bathroom on the first floor, great for grandparents coming with the family on vacation. Some communities even have garages attached or associated with the townhouse that can be converted to game rooms, or locked for owner storage when they use the property themselves.
I see the townhouse being the best option for couples, or families who love to visit the Disney area throughout the year, but don't have a ton of money to put into a vacation home. Rentals can help cover some of the cost of ownership, and owners can enjoy the property many times with lower financial burden.
The cons for townhouses can be similar to condos in the fact that they generate less income than a single family home in most cases, but more than most condos of the same size. They often times also have a higher HOA, there is less privacy with neighbors on one or both sides, smaller floor plans, and less customization with rooms or recreational spaces within the home.
Here are the major townhouse communities in the Orlando area: Solara, Windsor at Westside, Storey Lake, Champions Gate, Vista Cay, Windsor Hills, Paradise Palms, Bella Vida, Lucaya & Lucaya West, Enclaves at Festival Resort, Reunion, Summerville, Villas at Seven Dwarfs, Venetian Bay, Compass Bay, Dream/Serenity Resort, Trafalgar Village, Waterstone, Windsor Palms, Regal Oaks, Regal Palms, Encantada, Emerald Island, Lake Berkley, Tuscan Hills
Single Family Home
Lastly, we'll jump into the most popular vacation rental option in the Orlando area, the single family home. Not only is the single family home the most common amongst guests, but owners as well. Online travel agencies exploded the vacation rental market in the Orlando area, turning previously existing neighborhoods in the Disney areas, into vacation hot spots for tourists. Now that some time has passed since the vacation industry disruption, you'll find that Orlando has very defined vacation rental vs residential communities, and rightfully so. In another blog, we'll dive deeper into the rules and regulations of vacation rental homes in Orlando.
There are more benefits of owning a single family home than any other type of property. To start, in Orlando, single family homes have the widest range of offerings, locations, prices, and amenities. You can find non-resort communities that do allow short term rentals all over Polk, Lake, and Osceola counties. Non-resort communities have much lower HOA's but often times are in great locations, with each home having a private pool (huge plus). Not only do many of these communities allow for short term rental, but they also allow for long term rental. With lower price points, many times it can make sense to rent these properties out long term, or at least have the option to go from long term to short term, or vice versa. There's also much more space surrounding a single family home. According to VRBO®, in 2019, 31% of travelers looked to travel with their pet. Over 1/4 of hundreds of thousands of travelers on the site! That means that those with pets will be looking for a yard to take fido out, which isn't possible in a condo or townhouse (most cases).
Additional benefits include the ability to finance. You are purchasing a home and the land beneath it, providing tremendous value to lenders. Additionally, there's a massive variety of floor plans in the Orlando area. Often times you can find a home with 2 or more masters, a den with a movie theater or rec room, a game room in the garage, or space for additional beds so your property can accommodate more guests. You can also customize each of these spaces. If your family is into Starwars, you've got an entire galaxy (Dad jokes are welcomed here) of options of furniture, paint schemes, and themed rooms with the space to do it. While it's possible to make themed rooms in a condo or townhouse, it's more difficult. You have less space to work with when it comes to the furniture and decor used for theme rooms.
Lastly, some of the drawbacks of a single family home include the cost to own and operate. A SFH will always be more costly to purchase, and while triple and quadruple sliding glass doors let an incredible amount of natural light into the home, they're not great insulators. Thus increasing the cooling bill in the summertime in an already larger square foot option than a condo or TH. Larger homes also mean more furniture to purchase, repair or replace. More people sleeping in the home also means more kitchen ware, towels, and linens needed to accommodate those guests. Lastly, if there is a yard to take care of, it may not be covered in the HOA expenses, thus increasing your monthly overhead.
The major SFH vacation rental communities in the Orlando area include: Solara, Windsor at Westside, Storey Lake, Champions Gate, Windsor Hills, Paradise Palms, Bella Vida, Reunion, Solterra, Trafalgar Village, Emerald Island, Lake Berkely, Solana, West Haven, Windsor Palms, Aviana, Tuscan Hills, Tuscany, Highgate Park, Legacy Parc, Calabay Parc, Highlands Reserve, Westridge, Providence, Sandy Ridge, Winwood Bay, Formosa Gardens, Encore Club, Orange Tree, Silver Creek, Southern Dunes, Ridgewood Lakes, Calabay Parc at the Towers, Terra Verde.
It's important to note again that each type of property has it's unique benefits, and each community is different. In order to really understand a property and community, come take a look around. Stay in a vacation rental home or two before you purchase and get a feel for which option is right for you and your family. I hope this article was helpful, and enjoyable for you. If you're ready to purchase a condo, townhouse, or a single family home in the Orlando area, reach out to us by clicking the button below.
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