Investing in rental properties is one of the most profitable ventures. While this investment type can yield high returns, build wealth, and generate substantial property appreciation, it is essential to know what you’re getting into before doing so.
With choosing a potential investment destination, property owners typically have a wide variety of questions. Here are the top 5 questions about investing in Orlando rental properties, answered by a professional property manager!
1) Is Orlando a Good Place to Invest in Properties?
Orlando is a highly lucrative location for investing in rental properties. Whether multifamily or single-family, there is a consistently high demand for Orlando rental properties yielding significant rental rates and return on investment.
A study conducted by Rentcafe in the beginning of 2024 ranked Orlando #10 most competitive rental markets in the country. According to the study, the Orlando rental market has:
- Competitive score: 81.4
- Average vacant days: 39
- Occupied apartments: 94.4%
- Prospective renters: 8
- Lease renewal rate: 68.5%
- Share of new units: .64%
Competitive markets mean that the rental demand is high and renters are competing with each other for rental properties. Competitive markets are a significant advantage to rental property owners because it means you will likely have multiple prospects interested in your property. Multiple prospective renters makes it easier to rent your property, decreasing vacancy rates and maximizing rental income. Taking into consideration that the United States has 19,502 incorporated places, and 10 cities with a population over one million or more, ranking #10 attests to the profitability of an Orlando rental property.
Orlando is well-known for its tourist attractions, but the city offers more than just amusement parks and themed merchandise stores. Orlando consistently ranks among the top job markets in the country and even added 100+ jobs per day in 2023, according to the Florida Department of Commerce. But what does job growth have to do with your rental property? Well, Orlando’s job growth draws a continuous influx of new residents who need somewhere to live. These new residents typically search for rental properties and, in addition, choose to reside in those properties for more than one year.
2) What Are the Best Neighborhoods in Orlando?
Orlando is home to a plethora of investment-worthy neighborhoods. There are many factors to take into consideration when choosing the Orlando neighborhood that best fits your needs, including property type, property size, lease length, and overall goals for your rental property. Here are some of the best neighborhoods for rental property investments in Orlando:
Lake Nona Rental Properties
Lake Nona is a 17-square-mile mixed-use planned community within the city limits of Orlando, and southeast of Orlando International Airport. Developed by Lake Nona Property Holdings, the Lake Nona Region is home to Lake Nona Golf & Country Club. The community is named for a large lake in the northern part.
Central Business District – Downtown Orlando Rental Properties
The Central Business District is home to thousands of businesses, sky-high apartments and condominiums, and charming single-family homes. Beyond lifestyle and commerce, the Central Business District comprises public art, theaters, galleries, museums, and nightlife—all connected by public transportation.
If you choose to invest in Downton Orlando, I suggest purchasing a single-family home rather than a condo, as condo HOA dues are difficult to navigate and expensive. Single-family rental properties in Downtown Orlando rent very quickly and earn great returns for rental property owners.
Winter Park Rental Properties
Winter Park will always be a staple of the Greater Orlando Area. Residents enjoy the lifestyle Winter Park brings, and the sense of community is unmatched. This area is home to about 28,486 residents and located just north of Orlando in Orange County, Florida. Winter Park is known for its true community feel with abundant parks, brick-lined streets, spectacular homes, museums, deep lakes, and shops along Park Avenue.
College Park Rental Properties
College Park is a vibrant neighborhood located just outside of downtown Orlando where you can experience urban living with a small-town feel. This community is made up of some of the finest local retailers, award-winning restaurants, and small businesses found in Central Florida. College Park’s wide selection of services, bungalow-style homes, tree-lined streets, and parks and lakes create a vibrant lifestyle and a comfortable place for residents to call home.
Florida Center North Rental Properties
Florida Center North is a neighborhood in Orlando, Florida, with a population of 9,351. Florida Center North is in Orange County and is one of the best places to live in Florida. This area offers residents an urban feel, and most residents rent their homes.
3) Should I Invest in a Long-term or Short-Term Vacation Rental?
As a rental property investor in Orlando, it can be difficult to decide whether your rental property will act as a short-term vacation rental or a long-term rental. When making this decision, you will want to consider your overall goals. Although short-term rentals do provide some benefits in Orlando, long-term rentals offer more consistency and less stress.
- Orlando Short-Term Vacation Rentals
Short-term rental laws and regulations vary by state and county. In Florida, a short-term rental is defined as any individual lease agreement with a duration shorter than 30 consecutive days. Criteria for short-term rentals that typically vary by state and county include:
- Zoning restrictions (click here)
- Licensing and Permitting
- Taxation
- Occupancy Limits
- Noise and Nuisance Regulations
- Safety and Health Codes
- Homeowners Association Rules
While short-term rentals can be profitable, your income and occupancy can be inconsistent. Without a secure long-term lease agreement, short-term rental property owners take the risk of extended vacancies and months of missed rental payments. For example, your Orlando short-term rental may bring in significant profits for Disney goers, or the winter season. However, it could sit vacant from the months of May-September because short-term rentals are highly unpredictable.
- Orlando Long-Term Rentals:
A typical long-term lease duration is 12 months long, but can vary depending on the property owner or tenant’s preferences. Long-term leases provide stability, require less attention, and are generally less stressful.
Unlike short-term rentals, long-term leases provide a stable and continuous income, reliable tenants, and (typically) preserved property conditions. During this lease period, your tenants are not changing frequently as they would with a short-term rental. Your long-term tenants are typically screened and vetted to ensure reliability and financial security. At The Listing Real Estate Management, our extensive tenant screening process includes:
- Credit history check
- Debt to income ratio
- Nationwide eviction search
- Background check
- Income and employment verification
- Previous rental verification
In short, this process ensures that your tenants have the ability to pay rent on time and in full, and preserve the condition of your property. The stability of your tenants directly affect the stability of your rental income, profits, and overall property success.
4) What Are The Income and Expenses Associated With Owning an Orlando Rental Property?
There are some significant expenses associated with owning an Orlando rental property, however, the success of your property will influence how these expenses are paid. Typically, as a rental property owner you aim to have your expenses covered by the income generated through monthly rental payments. As you gain experience in owning a rental property, you will find a sustainable system that works for you.
Some of the expenses associated with owning a rental property in Orlando are as follows:
- Mortgage, loans, interest payments
- Maintenance and repairs
- Utility fees
- Landlord Insurance
- HOA fees
- Property Taxes
As a rental property owner, your income will be generated through:
- Monthly rental payments
- Pet rent
- Additional fees such as parking or amenity fees
While expenses like a mortgage or major maintenance repairs can be intimidating, taking care of bills is much easier with a monthly financial plan. To read more about rental property income and expenses, CLICK HERE!
5) Should I Hire an Orlando Rental Property Management Company?
Hiring an Orlando rental property management company is one of the most beneficial tactics you can implement to earn a passive income from your Orlando rental property. Whether or not you choose to hire a property management company depends on your personal management preferences.
An Orlando property management company, like us at The Listing, typically takes over all management responsibilities. This includes services such as property marketing and leasing, tenant screening, rent collection, maintenance and repairs, rental property accounting, tenant communications, quarterly inspections, and everything in between. Therefore, the property owner is removed from the everyday operations of the property. If you prefer to be highly involved in the daily management processes, tenant communications, and scheduling maintenance and repairs, hiring a full-service property manager might not be your best option.
For those rental property owners who prefer to earn a stress-free passive income, rental property management is highly recommended. Not only does the help of an Orlando property management company create a stress-free rental experience, but it also leads to a significant increase in profits. The knowledge and experience of our property managers at The Listing help our clients boost their earnings and streamline processes like tenant screening and maintenance and repairs.
For example, we conduct a thorough tenant screening process that allows you to find the right tenant on the first try. While finding the right tenant takes more time than finding the fast tenant, tenant screening guarantees that only qualified tenants are placed in your property. These tenants are less likely to cause problems like failed rent payments or significant property damage.
To learn more about how to maximize your income and financial returns with an Orlando property manager, contact us today at The Listing Real Estate Management, your boutique Orlando property management company!
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