Will I make a profit from my Florida rental?

… and is it worth it?

“Will I make a profit” is a question we’re often asked when potential Florida rental owners quiz us about what it’s like to own a villa in Tuscan Ridge, Orlando.

It’s best to first analyse this question without a mortgage but with travel costs from the UK to Florida.

Starting villa rentals in 2013 and visiting once or twice a year, we would have broken even after 4 years (at the end of 2016).  We believe the break even point is 35 weeks of rentals.

With a $5k per year mortgage, the break even point is 40 weeks.  For us, it took 6 years to turn a profit, helped by a 43 week 2018 season.

After 7 years of strong rentals and some great feedback we have also invested around $20k on large one-off repairs such as AC, pool heater and white goods.  These should average out over time – we bought when all the large appliances we at breaking point (circa 11 years old).

So will I make a profit then? Not unless you get up to forty weeks of rental.


The dreaded tax form

In conclusion we believe 35 weeks is the break-even point without a mortgage, and 40 weeks with a mortgage.  We’ve done pretty well out of our rental in all honesty but it takes effort – every trip we take to Florida we undertake maintenance and treat the house to paint in various rooms.  Here’s some stats:


You can see that the bookings have dropped off in 2017 due to the poor GBP USD exchange rate; it’s much more expensive to holiday abroad in the USA.  We’ve had to increase our GBP rate in order to account for this and in 2019 we had to abandon advertising in GBP due to the volatility of the currency.

  • 2013: 35 weeks ($107 average daily rate)
  • 2014: 36 weeks ($122 average daily rate)
  • 2015: 45 weeks ($118 average daily rate)
  • 2016: 40 weeks ($106 average daily rate – the GBP FX crash)
  • 2017: 36 weeks ($111 average daily rate)
  • 2018: 43 weeks ($129 average daily rate)
  • 2019: 40 weeks ($128 average daily rate)

Large one off expenses

  • 2013: $6k (pool heater)
  • 2014: $1k (renovations, pool pump)
  • 2015: $6k (air conditioning)
  • 2016: $2k (renovations, pool lights)
  • 2017: $3k (hurricane Irma, oven / stove, tumble dryer, TV)
  • 2018: $1k (washing machine, pool heat pump)
  • 2019: $1k (pool pump, leaks, and filter housings)

Profit with averaged expenses of $2k

On average a villa will cost an average of $2k per year in what I call “one off” costs.  Even in years where nothing goes wrong, an AC unit will eventually fail after 10 years so you want to even out your predicted costs.  In addition to this we average around $1k in general repairs and maintenance.

Here we have removed the large expenses and replaced with an average expense of $2k per year.

  • 2013: -$6k, 35 weeks
  • 2014: $1k, 36 weeks
  • 2015: $9k, 45 weeks
  • 2016: $3k, 40 weeks
  • 2017: $1k, 36 weeks
  • 2018: $4k, 43 weeks
  • 2019: $2k (predicted), 40 weeks

Our figures above do not include items such as mortgage costs nor the villa depreciation on the US Tax return because this isn’t a real expense in respect to book keeping (they claim it back as capital gains when you sell).

Note: Introducing a 20 year mortgage of $150k at 3.5% interest adds a $5k yearly interest bill to the mix, reducing the 2015 effective profit to $4k.

Roughly speaking you’ll therefore need 40 weeks of rentals to break if you have a 20 year mortgage.  So our 5 extra weeks in 2015 brought us a profit of $4k.  We reckon around 35 weeks to break even without a mortgage.

Note: In 2016 we hit 40 weeks with $3k profit.  Adding the mortgage then brings this back to a loss of $2k – but in 2016 we were hit by the FX crash and a lot of guaranteed booking rates made in GBP meant that we were under pricing the villa by 30%.  Another point to note about advertising your rates in GBP.

Forty weeks to break even.  Seriously?

Not exactly. Remember that we’ve had many family trips out to Florida in these figures, even if it was to repair and refresh the villa at the same time.  Not all rentals are equal.  Take mortgages or travel out of the equation and you’re making money.

If you don’t have a mortgage on your property you’ll make money at anything more than 35 weeks of rental.  And if you don’t need to travel out to maintain it (but do have a mortgage) then it’s about the same although you’ll spend a lot more money on handyman charges.  Here’s some stats without the maintenance trips and without the mortgage.  Note that these net amounts include the one off costs:

Year Weeks Net Amount No travel No mortgage
2013 35 -15000 -9000 -10000
2014 36 -3000 2500 2000
2015 45 0 5000 5000
2016 40 -2000 -600 3000
2017 36 -5000 0 0
2018 43 6000 10000 11000
2019 40 2000 8000 7000

So is it worth it? Yes.


Happy days!

Cue cringe-worthy picture of us jumping in the air in Tuscan Ridge.

If you put the effort into your rental and enjoy it at the same time then yes, it is worth the effort.  With 40 weeks of bookings and a single maintenance trip a year you can make a long term capital investment that is paying for itself and that you can enjoy too. Be aware that you’ll need some serious energy to do this – up to half a day a week set aside to managing the property, marketing, and rentals.

So will I make a profit? If you find a popular community such as Tuscan Ridge, spend time finding bookings and maintaining the villa, then yes.  You will also be able to enjoy it as a place to visit and have fun!  

Once you stop enjoying your home, I would suggest it is time to call it a day and cash in your investment instead.

HMRC mortgage interest expenses on Florida rentals

As of April 2017 the HMRC started phasing out mortgage interest as an expense on US properties owned by UK tax payers.  Instead they switched it to tax relief on taxable income (phasing it in by 25% a year over 4 years). 

For example in the 2017-2018 tax year if you made £12k in net rental profit on a property and had £1.2k in mortgage interest, HMRC allow you to use only 75% of the £1.2k interest as expenses, and 25% as tax relief.

In 2017-18:

  • £12000 gross income
  • 75% * £1200 interest can be deducted as an expense (£900)
  • £11100 taxable income
  • 25% * £1200 interest is eligible for tax relief (£300)
  • 20% relief = £60 tax relief
  • 40% tax payer = £3440 tax – £60 relief = £3380

In 2020-21

  • None of the £1200 interest can be deducted as an expense
  • £12000 taxable income
  • 20% relief on the mortgage interest = £240
  • 40% tax payer = £3800 tax – £240 relief = £3560 (£180 more)

Private villa rental concerns – Dave’s Florida Villa have you covered

We have a renter who has booked a whole month at our Tuscan Ridge luxury villa (excellent!), and she was kind enough to let us know why she picked our villa accommodation. One thing the lady mentioned was that there are always concerns about whether the villa is actually real and if the pictures aren’t showing the real truth. I hadn’t thought about this. However you can rent our Florida Villa with peace of mind for the following reasons.

– Our management company. Homes of America handle all queries you have during your stay. If you look on their site you can see our villa listed. They offer a fantastic service and would be happy to address any concerns, and if you are worried about the villa you can always call them directly to check.

Bing aerial view and Google street view prove the villa is at least real. This doesn’t mean it’s lovely inside though, but it does prove the location, south facing pool, and size of the property.

– You can see our picture in front of the villa, as well as links to several profile pages on twitter, google+, facebook and linkedIn to validate our identity. Feel free to call us too for a personal chat to address any worries.

– By accident, that’s our baby boy Rowan in the picture of the living room!

I can fully understand the concerns when you are spending your hard earned money on our villa, but please be assured that the villa pictures are all up to date and that the description and location are accurate. The last thing we want are negative reviews.

Money saving tips and hints when travelling to Orlando on vacation

Saving money in orlando

The best way to approach money saving tips for your Florida holiday is to look at the biggest costs first of all, and work down.

– Overall cost. Use a cashback site such as www.Quidco.com to earn cashback for purchasing a product you were going to get anyway. We usually save 10 percent on our car hire this way.

– Flights. Fly out of season if you can. Check out the airline’s timetable but look before and after by a few days and see what flights are lowest. Skyscanner is another good site to see what airlines are lowest cost. Some airports can be a lot cheaper than others too, so if you are flexible use Skyscanner to search throughout the country for your Flight. Consider flying in and out of Miami. It could be cheaper and most hire car companies will allow you to drop the car off at a different airport for a small charge. Lastly, use a flight price checker site to monitor costs – they can go up and down on an hourly basis. Be careful though, last minute cheap flights don’t exist any more.

– Accommodation. Villa vs Hotel?  A cheap apartment with a single king sized bed will cost on average 20-30 percent less than a villa.  Therefore for any group of 4 or more a villa will work out cheaper per person per night. This is before you oven consider the fact that a villa is private, more relaxing, and offers more freedom and no fighting for sun loungers!

– Eating out. This can be a huge cost during a holiday.  Get a villa and avoid having to eat out in the evenings and mornings. Pop down to Publix and buy a few groceries and your food bill will be reduced by 50 percent straight away. A villa offers all the cooking utensils you need and there’s no arguing about who’s the designated driver! Having groceries stored in the fridge means it’s more like being at home – food when you want it, and not at an inflated price. Don’t buy UK food, always get the local produce. Dine around the pool and enjoy the Florida sun.  During the day, you are allowed snacks in theme parks so make sure you get plenty of snacks and drinks before you go into the parks.  I usually buy a 24/48 pack of water and leave it in the back of the hire car.

– Car hire / rental booking & pickup. Always make sure you have compared buying separate car hire with a combination flight + car package.  We have done both methods in the past to get the best deal.  When collecting your car don’t tick any hire car options before reading what they are!  This is a classic mistake when picking up a car at the airport where they hope you’ll not pay any attention because you just want to be on your way to the villa.  The only option I ever bother with is the 2nd driver and fuel package, but this is when booking, not when picking it up.

– Car hire / rental.  Calculate if you really need the toll pass. We don’t usually bother with toll roads at all. It’s a personal choice. Fill up the tank with cash because credit cards add a hefty percentage on at some gas / petrol stations. Watch out for the extras. Sat Nav – I’d not bother, just ask for a map. Child seat – most airlines allow you a luggage item when you pay for your child, so pack the seat as a luggage item instead. We bought a Britax 2nd hand seat for £20 from the UK before we went on our last vacation, and packed this. Extra insurance – it’s expensive for what it is, so make an educated decision. Do you need the full tank option? Check the rate they will charge if you forget to fill up at the end.  If you don’t get the full tank option make sure you fill it up as close to Orlando Airport as you can (there are gas stations just a few miles away).

– Theme Parks. Unfortunately Disney don’t tend to do big discounts, but a multi day pass will work out well, and always watch out for parking costs which can mount up. Seaworld do a great second visit for $10 at the moment, and bulk Seaworld / Busch Gardens park tickets can offer great value for 14 day unlimited entry. There are a lot of discount ticket providers around, my advice is to check out the official online site and then compare and buy before you go to avoid the hassle when you arrive. Try to take your own drink / snacks into the parks. They don’t frown upon it but generally do ban coolers for obvious reasons!  Do not take sandwiches or anything that looks like a main meal.

– Insurance. Shop around on price comparison sites and cashback sites. You’ll be amazed at what your credit card might cover as well, although medical insurance is vital in the USA.  I normally pay less than £10 per person on our travel and medical insurance.  For specialist medical insurance try Medici.

– Coupons / vouchers. These are the final way to save money on eating out and groceries. Every store and shop has a coupon booklet. Pick one up and see what bargains you can get!

– Cheap things to do in Florida.  Of course the biggest attractions in Orlando Florida are the theme parks, but remember there are plenty of things to do and places to see that are cheap.  State parks offer a great value way of spending a day out – Lake Louisa state park is very near Orlando.

– Free things to do in Florida.  It’s easy to forget about the places you can visit that are free in Orlando.  Plenty of them also have Disney attractions so you don’t have to spend a fortune every day to visit Mickey and his friends!  Celebration Town, Old Town, Downtown Disney, Historic Kissimmee.  Further afield there are the Florida Keys and Everglades.

I hope this gives you an idea for money saving tips when you next visit our villa.  Saving money in Orlando isn’t as difficult as it seems, and can be just as enjoyable!