Alexander Holiday Homes

-The # one question all management companies get from home owners is 
How much money will I make?

It is true that there are an estimated 12,000 short term  rental properties in Osceola County alone.  24,000 in Central Florida this year. This is America’s 3^rd fastest growing real estate market. Will this market level off ? Are there too many rental homes already in the Orlando market ? International investors have benefited from the success of Orlando since Walt Disney opened in 1971. There were almost 51 million tourists last year that visited the Orlando area. Excellent numbers since all of Florida had just over 80 million visitors last year. People just keep visiting Orlando year after year in greater numbers. That being said; there are no hotels racing to build  vacation pool homes.  There is far more profit in building a 500 room hotel then building 50  homes on the same piece of land. The inherent costs to develop being basically the same but the profit on 500 rooms is far more then 50 homes. Our market is dominated by small or medium sized management companies. For the most part single family property owners wanting to take advantage of the hundreds of thousands of guests who ask for rental home vacations. Outside of the United Kingdom there is a general lack of knowledge about vacation homes. North and South  Americans are ready to accept alternatives to hotel accommodations. It is estimated that 60 % of the pool home rentals are based on reservations from the United Kingdom. The combined North American markets of Canada and the USA occupies a mere 25 %  of villa rentals. Other international markets share the balance of clients. There are a variety of reasons why certain homes do well and others fail financially . This report will attempt to clarify these issues for you. 

Management:

    The fact remains ,the best home in the hands of a poor manager will never do well.  In 1981, Alexander Holiday Homes was considered a radical idea. Imagine the large Alexander family on vacation with all their children and asking for something larger then two hotel rooms.  Out of necessity came the concept of renting a home for a vacation. Today, over 800 legitimate companies claim to be in property management in Central Florida alone. Only an estimated 50 manage more then 35 homes. Most are legal but all too many of them use questionable business practices. Contacting the Better Business Bureau of Orlando and you will discover how many have major complaints on file against them. For some it is a sideline or weekend  activity to another type of business such as real estate or a maid service. In the late1990's almost 170 homeowners lost, or nearly lost their homes as their management companies mismanaged their vacation homes. Rentals were seized for not having proper licenses or failure to collect and submit  the Florida sales tax. This situation repeated itself in 2006 with another major management company that left over 200 home owners owing millions in back taxes. Since then the industry has improved but there are still several poorly managed companies. A good management company values honesty, integrity and thrives on accuracy in reporting owner income. The Alexander Group is a family based company that understands that behind each  address is a real family with real dreams concerning their investment. At the same time, the Alexander’s will not manage any property we do not feel is marketable. We understand the clients needs but balance this with the owners wants. Very few home owners of ours are wealthy and able to absorb long term debt.  We can only make money for owners who have homes able to generate a profit.

Which Homes Generate Top Dollar?

This is almost a mystery to many companies. There are a host of reasons why some owners do better then others but it all comes down to marketing. If your management company chases after only one market then it is guaranteed you are likely  to fail. First and foremost there are two major types of markets. RETAIL and WHOLESALE. Most companies focus on the wholesale market as it is easier to have agents do all the work on their behalf. There are large  tour companies willing to buy access to rental homes. The problem is that  without exception tour operators buy in but at a lower rate that can be  up to 45  % off the RETAIL ( street rate). We have seen the British market pay as low as $55 US / tax included to buy a 4 bedroom pool home. American tour operators pay slightly more with commissions averaging 25 to 35%.  In return for such low rates they fill a house day in and out .The numbers look good but once all costs are calculated out the owner walks away with next to no money. These owners basically subsidize the vacation industry. Today's dream home is tomorrow’s  memory as many companies seek out new properties for their clients. For some companies a 3 year old home is to old to market. Not an exciting prospect for your own home if you select the wrong type of Property Manager. 

·    Here are a few basic truths:
-Any investor with less then 20 % down payment and no strategy to promote their own bookings  is guaranteed to have real financial  problems  if they rely on their WHOLESALE only property manager  to fill the house.

·    At Alexander’s we have a healthy mix of 60% WHOLESALE and 40% RETAIL sales

·   Here is another truth:
United Kingdom bookings are typically 7 or 14 nights.  They pay less rental income but stay longer. Americans and Canadians stay 3 to 7 nights. The fastest growing sector of the Orlando market is the Florida resident and Last Minute  drive in market staying 3 nights. With the flood of vacation homes a smart consumer knows they can wait and get a  huge discount on the price. This is made extra easy  to find with the explosion of online sales and web only companies.

·    A third truth:
Owners who assist in finding their own good rate rentals always generate good income. Many owners do so well they own  more then one house.

Our sales include the healthy and lucrative INTERNET market and we have had our site: www. floridasunshine.com since 1995. We definitely are industry leaders in this technology.  Furthermore, we have industry alliances right across North America and Europe. We advertise in major international travel journals. We are members of the Orlando and Kissimmee Visitors and Conventions Bureaus. We are members in good standing of the Central Florida Property Managers Association. Our advertisements reach millions of clients worldwide each year. Does it cost a lot  of money to advertise? Many thousands of dollars but it pays to balance the reservations with full rate and wholesale reservations. It is the only way to keep owners profitable. Please ask us about our Fee Based advertising programs that can help build retail sales. We have several cooperative advertising programs.

What factors Influence Rental Rates?

Simply put location and pricing. Many homes  do have superior locations but lack highly desirable amenities. We have found that owners who appreciate this come to also understand that we have found that the market demand for standard luxury homes is far greater then that of more expensive executive homes. Therefore after all costs are absorbed , the profitability of an executive homes does not outweigh that of a standard villa.

Executive Homes:
This has to be the most misunderstood term in the industry. Many companies define executive as being a new home. Others say it is a home in certain neighborhoods. There are a host of definitions. We have found that it falls in to two categories. Clients who are from the United Kingdom feel a lakefront home with better decor is executive. No matter where it is located in the Kissimmee area. Americans resist  homes beyond a 10 minute drive from Disney as being executive. North Americans expect the house to have very high end furnishings, lakefront , be less then 5 miles to Disney, have a spa with private pool, and must be larger then the average available home. High speed internet and independent Jacuzzi spas are the hottest items of demand at this time. Games rooms are very popular with guests. They will pay for this extra luxury without hesitation but remember seldom stay longer then 7 nights. The demand for executive homes is certainly greater from the American side of the market then it is from international clients.
 

Rates:
60% of all reservations involve a travel agent at some level. Agents demand and get healthy commissions.  When it comes to executive categories we see that 85% of the requests would be Wholesale or Commission generated rates. Once again, the demand for standard luxury homes is always greater. Examining our website will reveal current and typical rates. Estimate that there would always be  ¾ of the reservations averaging 25% in commissions. The other ¼ of the time the bookings would be at the posted rate. We as a company always take 10 to 20% commissions if we find the client. Rates vary according to numerous factors that include length of stay, source of client  and currency fluctuations. Alexander and Associates prices in USA and Canadian dollars plus UK sterling. We do not charge owners for their owner generated reservations.

What can you do:
We have observed that owners willing to classify their home properly and able to understand that on occasion the reservation may require they accept a different classification of their home. These type of  owners do benefit from the changing post Sept 2001 ( 9/11 )  market. Owners that generate their own reservations and work along side us are the most likely to succeed.  We would be more then pleased to assist you in marketing your home  towards a profitable future. Please consider all these factors and we can develop a marketing plan that suits your needs for years to come.

Rental Income Guarantee : all we ask is you do your research and contact the better Business Bureau of Orlando and any local Kissimmee and Orlando Chamber of Commerce. It is our observation that there has never been a  single company in Central Florida that has managed a reliable guaranteed rental income program for the long term. There are too many market realities that have influenced the long term success of a rental income guarantee program.  Is a rental guarantee impossible? Not at all but for the most part they are short lived and may come with difficult contractual  requirements that all too often do not work in the favor of the home owner.

Conclusions: every home is unique. We can only tell you industry averages and then inspect your villa. We have well equipped villas that generate 40 + weeks of rental income per year and others with the same floor plan that generate half of that. In every case it has everything to do with location and features. Only by inspecting your villa can we determine whether it will fit inside our rental program.

*Please note all prices and statistics are based on the 2006 market as studied by the Orange/Orlando CVB and are always subject to review. Opinions expressed here are subject to our interpretation and  you as a vacation home owner should verify any of these facts.

Thank you