| First question, always | Can this specific parcel be rented nightly? County zoning and the association’s declaration both have to say yes |
|---|---|
| Second question | What does it cost to carry each month before the mortgage — commonly $1,000–$2,000 in the Disney corridor |
| Financing | A second-home loan needs personal use and usually beats investment pricing; a DSCR loan underwrites the property’s income instead of yours |
| Down payment | Typically 10–20% on a second home, 20–25%+ on an investment or DSCR loan |
| The number that decides it | Break-even occupancy — if it sits above what the market actually achieved last year, the deal does not work |
| Biggest cost people omit | Turnover cleaning, which scales with the number of bookings rather than with revenue |
Be honest about what you are buying
There are two purchases here and they are priced differently. A pure income property is underwritten on its numbers and you will be comparing cap rates. A family second home that happens to rent when you are not there is a lifestyle purchase that partially subsidises itself, and pretending otherwise leads to disappointment on both fronts.
The distinction is practical, not philosophical. It changes which communities make sense, which loan product you qualify for, how many weeks you can block for yourself before the economics break, and whether furnishings and amenity spend are an investment or a preference. Decide which one you are doing before you look at houses, because the answer narrows the search considerably.
The check that ends deals
Whether a property can legally be rented nightly is decided per address, by two authorities, and the stricter one wins. County or city zoning determines whether transient occupancy is a permitted use on that parcel. The homeowners’ association’s recorded declaration can restrict leasing far more tightly than any government does — a 30-day, 90-day or six-month minimum, caps on leases per year, or an outright prohibition.
A property can sit in correctly zoned territory, hold a valid state licence, and still be unrentable because of the declaration. Get both in writing before your inspection period ends. Treat a rental history as marketing rather than evidence: enforcement in Florida is largely complaint-driven, so years of untroubled operation means nobody has complained yet, not that it is permitted.
The cost stack pro formas leave out
Cleaning and turnover is the big one and it behaves differently from every other cost, because it scales with the number of bookings rather than with revenue. A year of three-night stays costs far more to service than the same revenue from week-long ones.
Then: management or co-hosting, platform fees, dynamic-pricing software, utilities including pool heat, internet, lawn and pest, HOA dues, CDD assessments where they apply, property tax reassessed at your purchase price rather than the seller’s homesteaded figure, insurance written for short-term-rental use, licensing and lodging-tax filing, and a genuine reserve for the roof, the AC and the furniture — all of which you will replace sooner than a long-term rental would.
In the Disney corridor the fixed portion of that stack commonly lands between $1,000 and $2,000 a month before a mortgage payment. Any projection that does not show you each line is not a projection.
Financing: the three products and what they actually require
Second-home financing generally offers the best rates and lowest down payment, but it requires genuine personal use and lenders have tightened how they verify that. A property you never visit and rent full-time is not a second home, and misrepresenting occupancy on a loan application is a serious matter rather than a grey area.
Conventional investment financing prices higher and asks for more down, typically 20 to 25%, and qualifies you on your personal income and debt-to-income ratio. If you already carry mortgages, that ratio is often the binding constraint.
DSCR loans underwrite the property rather than you — the lender looks at whether projected rental income covers debt service at some ratio, commonly 1.0 to 1.25. No personal income documentation, faster, and priced accordingly. For buyers with several properties or complicated self-employment income they are often the only practical route, and the rate premium is the cost of that.
Which one fits changes the maximum price you can pay, so establish it before you shop rather than after you are under contract.
What return to actually expect
Lower than the marketing suggests, and highly dependent on price. The useful exercise runs backwards: decide what return you need, calculate the price that produces it at market rate and market occupancy with your real operating costs, and then see whether anything is trading there. Frequently nothing is, which is itself a finding.
Three figures do the work. Cap rate ignores your mortgage and tells you whether the property works. Cash-on-cash divides cash flow after debt service by the cash you actually put in, and tells you whether the deal works. Break-even occupancy is the one to look at first — it converts an argument about optimism into a single number you can check against what the market genuinely did last year.
Supply matters too. Central Florida has been adding short-term-rental listings into a market whose nightly rates have stopped climbing, which means pro formas written two or three years ago do not clear today. If a projection shows a comfortable return on a 20%-down purchase at current rates, look hard at which year its data came from.
The mistakes that cost the most
Buying in the wrong section of the right community — several Disney-corridor communities permit nightly rental in some sections and not others, behind the same gate and under the same name.
Underwriting on the seller’s tax bill. Florida reassesses on the sale price, so a long-time owner’s homesteaded figure can be less than half what you will pay.
Ignoring the CDD. It is not an HOA fee, it often is not in the listing, and it can add $1,500 to $4,600 a year in newer communities.
Treating a manager’s occupancy claim as market data. On-site managers advertise their best homes; independent market figures for this corridor run considerably lower.
And buying the amenity rather than the arithmetic. A lazy river is genuinely good for bookings and also arrives as a permanent line on your tax bill. Both things are true.
General information about how these purchases work, not investment, tax or lending advice. Loan products, rates and qualifying rules change; rental eligibility and costs are specific to each parcel. Verify everything for the property in front of you.