Villa Costs

[PAUL GIZZI]

Hi All

After a little advice, Thinking of buying a Villa and wondered what the yearly running costs are.

And i would hope to rent of 26 weeks a year i hope ( would this be realistic )

Thanks

[Gerry Reed]

Very difficult to give accurate figures as there are so many variables - Size of villa, management company charges, insurance, utilities (will you have reclaimed water for the garden ?), type and age of pool heating and A/C, how much maintenance you do yourself (painting, general repairs etc), type of internet, TV package, phone package etc etc and don't forget the local taxes (12% in Polk) on everything you earn. Hotel licence. Pest control. Regular replacement of fixtures and fittings, advertising costs and the list goes on.
Our villa is occupied in to the 30s weeks a year but that includes 6 to 9 weeks for us (usually in low season).
Overall I would say we brake even and have two or three cheap (only pay for flights) holidays a year but I think very few owners would make a profit after all costs and maintenance are taken into account and that is without charging for the hours you will spend responding to enquiries and dealing with guests. It also depends if you need a mortgage of course.

We bought when the exchange rate was around $1.75 to the £. It is now in the low $1.20s and so if we sold now, even with the drop in villa prices since 2005, when we bring the money back to the UK we will have a profit, but you can not rely on that.
All in all, get a villa if you want to use it yourself and you enjoy the contact with renters and DIY, but don't do it just to make a profit - you will be disappointed

Sue

[Snapper]

Paul - Estimate anything from say $30k a year to $50k a year and you won't be far off.

It's not just the size of a property that will influence the running costs. How well you manage it, how well you clean it, the quality of furnishings and fittings, how hot you heat your pool. There are a thousand different variables all in play at the same time.

26 weeks is realistic, but you'll have to work at it. 30+ and even 40+ weeks is achievable, providing you treat it as a second full-time job.

To be successful, worry less about the cost side of things. (Strangely enough most people seem to focus on costs!!!) Instead worry about the sales side of things and how you are going to sell 26+ weeks at a rate that brings in more than the $40k+ the villa is costing you. Crack that and success is yours!

It's a great industry to be in BTW - but treat it as an industry. Don't think for one moment that you're going to buy a place and rent it 'for a bit of help covering the costs'. It will skin you alive! Go into it well informed, well prepared and knowing what to expect and you'll give yourself the best chance of success.

[cork]

Forget the idea of buying ......... Rent a villa instead.

Why ............... well if you have say £ 200,000 to spend ( over a period of time ) Think of how many

holidays that can buy ...../... WITHOUT the problems of owning & running your Villa .

Remember the Property Tax ( $ 3000 ) Insurance ( $2000 ) TV .... $ 150 per month

Remember the Owner pays for electricity ......... not the renter

[DaveL]

OK as an ex owner I will try to give a balanced view (in my opinion) of this whole question.

I owned a villa for nearly 20 years before passing it on to younger family members. As with all things there are pro's and con's.

Which is the greatest will depend on how you approach and run the whole business because that is exactly what it is -- a business.

Like many people we were hands off when we first started, we believed a lot of of the sales talk. We were busy as a family and no one had time to devote to marketing the villa and talking to potential guests.

After about 5 years it was time to either change or sell the villa. We changed. Within 3 years we went from 30% full each year at fairly low rates to over 90% at good rates. We did everything on our own and changed M/C to a caretaker only role.

It's now almost five years since we handed over the daily running so I am out of date with current costs. However I will try to give you my feel/view on this subject.

The first thing I always say to this type of question is split your outgoings into those that are permanent and those you will get back.

I would guess that current permanent outgoings on a 3/4 bed would be around $18,000 a year. This would cover all the monthly/annual bills like utilities, TV, M/C. You then have to factor in the one off costs you get each year. Some years it is zero but others are much higher. A new pool heater is $5000 with a new A/C closer to $10,000, major electrical items are around $500/$1000.

You will need to have a repairs and improvements fund to cover these costs. Just how much you put into this will be based on how much you update things before they break or need throwing away. Towels are a good example you can make them last a long time but we always replaced them every year. The cost was not high and it makes the guests feel good and want to return.

The mortgage is a cost but only partly so because it's paying for more of the house to be yours. I only ever included the interest part of the payment as a permanent outgoing.

Look at the top five villas in each of the web sites above. They are not there by chance, you will need to offer something as good if you want to be a success.

However when you look check out the weekly price and see just how many weeks they will need to cover their permanent outgoings.

If you think you can do this then come back here and ask some more questions and we will be happy to help. It's not for everybody but you can make a profit while still having (working) holidays in Florida.

Regards Dave

[Laurel Oak]

Some excellent advice here so won't add to it.

All I would say that if you are looking for an investment to make money/profit then do not buy a house in Florida, there are safer and easier ways to grow your money. If you love Florida and are prepared to work hard and accept that its not about making money and are prepared to accept that sometimes you may have to put some of your own money in then go for it.

We have owned for over 20 years and I have loved every minute of it.