Why Rental Rates are so Cheap in Orlando, and why YOU should care

This is Part II of a two-part series. Part I discusses Setting a Budget for an Orlando Vacation Rental. Here in Part II we discuss Orlando’s cheap rental rates, how they affect your budget, and why you should care.

A great friend of mine in the Orlando Vacation Rental business loves to tell his guests:

You can get a great location, great property, or a great price… Choose any two out of three!

Now, you might think that you see cheaper rates all the time! And you may… but then I would ask what you want to give up to get those cheaper rates. Do you want
• a dirty home,
• no pest control (those are people complaining on Facebook about multiple cockroaches in their vacation rental)
• a dirty pool,
• an unmaintained pool heater or HVAC system likely to break down,
• a bad location, or
• one that is not safe?

Do you want to save on your accommodations but spend money (and hours) driving to get to anything you want to enjoy while on your vacation?

Assuming that another vacation rental home has the same expenses that we do (and they MUST unless they’re not properly maintaining the home) there is no place for the owner or management company to ‘save’ any money operating it, in order to lower their rental rates.

Perhaps they don’t update anything… and old furniture, tube TV’s and old appliances in rough shape are not a concern for you. But even NOT keeping those types of things up to date won’t save THAT much money.

Even with all of these possible ways to cut back on operating and maintenance are accounted for and a property still checks all of the right boxes, you will still see ‘cheaper’ places with what I call ‘low-ball’ rates. Meaning they charge less than what it actually costs to operate.

And lest you think that the reason you see higher and lower rates is because some people make money and others don’t, remember I’m not talking about profit at all! Goodness! Profit?!?    What’s that?    We’re talking about Orlando vacation rentals here! No one is actually making any money!

If that’s true, why don’t owners raise their rates? Don’t they need to?

Why cheap rates can be found

There are simply too many owners of vacation rentals in Orlando (literally tens of thousands) who bought them in the mistaken belief that owning it would allow them to visit and stay in the home for less money than it costs them to rent someone else’s home for a few weeks each year. “Why… you could even make money!” they were told. So they did it! They purchased a vacation rental, without actually really wanting to be in the vacation rental business!

(As experienced business owners and managers, we actually chose to get into this business, but as a lifestyle, not a source of income. If we wanted to make a profit, we would have gone anywhere but Orlando, and that includes just about anywhere else in Florida where rates are far higher.)

The dream becomes a nightmare for most

Just like timeshare owners, the vast majority of Orlando vacation rental owners realize after a few years that they are paying out far more money for it than it would simply cost to rent a hotel room, or even a nice villa. These people usually aren’t business owners… they’re just visitors to the area who got sold a dream, and now they’re trying to minimize their losses on it.

Not knowing what else to do, they rent out their home for anything they can get for it, because even $1 in rent is $1 less out of their pocket.

Why are they so desperate? Because they have lots of competition in the Orlando area, and there is simply nothing special about their properties that will make people want to stay in them. Like one of a hundred identical doors in a chain hotel, their vacation rental is one of a hundred identical houses, lined up like row housing, with no reason for a guest to choose one over the other.

Owners of these types of vacation homes have nothing different to offer a guest, so they differentiate themselves in the only way they can and know how; with a cheaper price.

(There are actually other ways to differentiate a common vacation rental, but only real pros with a lot of additional money can do that. And that’s not what these folks signed up for.)

So they will keep lowering their price until they get booked. And if a few of these types are watching each other do this, they wind up chasing each other into the ground on price.

Their rates become far less than the cost of owning and operating their property, and they end up literally subsidizing other people’s vacations. They pay out money each month so that others can go stay at a nice place in florida! Of course they never admit this to anyone; their relatives, spouse, and especially guests. Who wants to look that foolish in front of others? Besides, what can they do? The rates are what the rates are! (Where have we heard that before?)

How to make the dream work (or what makes Breezy Oak Villas different)

The greatest factor in running a successful vacation rental is having a great property where people want to stay!

We’ve chosen our properties very carefully, and maintain and upgrade them to ensure that they offer many unique benefits. We have great properties with great amenities, in a quiet, relaxing, wonderful location, with unparalleled privacy in our pool areas. That’s a very desirable combination that is very hard for guests to find. Our homes are never just another vacation rental. So we get booked.

Aren’t Orlando’s low rates just somebody else’s problem?

Why should you, as a guest, care about any of this?

Because if someone is renting you a vacation rental home for less than it is costing them to own it, they have absolutely no incentive to rent it to you, or to continue to own it so that it will still be there when your arrival date comes around!

As a guest, you want to at least be paying more than it costs to own and operate where you’ll be staying, or it just makes sense that the owner of that place is going to try to sell it before you arrive – to ‘get out’ as fast as they can in order to minimize their losses.

And now that the cost of properties in the Orlando area, and owning and operating them, have recovered from the 2008 financial crises and the pandemic (THAT took a long time!) the pressure to sell a vacation home is greater than ever.

Due to the pandemic, work and home lifestyles have changed, and the number of US citizens moving to Florida is very high, and the pressure on real estate prices, and the demand to buy them as residences has never been higher. This is driving up demand and prices for everything in Florida.

Vacation rental owners who have been losing money for years have a chance to sell their properties without a loss on property value, and stop losing money every month on operating them, and thousands of them are doing exactly that.

Every time they do, there are a whole bunch of vacation rental guests who receive an email saying “Sorry, we have to cancel your booking. We sold the property and the new owners will be living in it. You’ll have to find some place else to stay.”

I know this happens, because every day I get people contacting me telling me that the place they had booked has been sold, and asking if I have any availability for their dates. And sadly, these guests haven’t learned their lesson, and they’re still looking for some place to stay where they are hoping that the owner will be willing to subsidize their vacation… to literally pay part of the cost of their holiday for them, by letting them stay in a home for less than it costs the owner to own it.

If the stranded guest finds one, they’re just playing roulette with their vacation. Because it is just as likely that the next vacation home they book will get sold before they arrive and they’ll be looking for some other place to stay again.

I’m not naïve. Some guests will be successful at this. They’ll find some owner whom they can take advantage of, and they won’t care if their stay costs the owner money. That’s the owner’s fault, isn’t it?

Absolutely it is. But it is also true that whenever a guest books rental accommodations for their vacation for less than it actually should cost, that they are taking a huge risk that it won’t be available for them when their vacation time arrives. And by then, they may not be able to find something suitable if they need to. They will have to pay whatever last minute rate they can find on a far less desirable property. And owners have smartened up and realized that last minute rates shouldn’t be discounted, they should be raised because desperate guests will pay far more than they will six months in advance.

A vacation trip could easily be ruined in this kind of situation.

How to guarantee your accommodations

A guest can protect themselves, and eliminate such a risk, by simply paying a fair price for their accommodations, and eliminate the incentive for the owner to sell and cancel on them, or find someone else willing to pay more and cancel on them.

The cheaper you book a vacation rental for, the more incentive the owner has to find someone else to rent it to, even if they did accept your booking. That last scenario happens a lot too, unfortunately. When an owner claims they got ‘double booked’, or emergency maintenance is needed (a pipe burst!) at the last minute… more often than not, they simply found someone else willing to pay more than you.

You protect yourself from all of these vacation disasters by simply paying enough to make it worthwhile for the owner to rent to you.

In our case, that certainly doesn’t take much. Just compare our rates to anywhere else in the country! There are thousands of people paying twice what we charge to stay in shack tents with no plumbing, in places like Arizona. Why? Because the shack tent owner doesn’t have some broke vacation rental owner next door who ALSO bought a shack tent and is trying to minimize their losses on it by giving it away to guests at a huge discount!

Lucky shack tent owner!

Be safe and relax. Just budget enough!

Protect yourself. Protect your vacation. Pay a reasonable rate for a quality vacation rental, well run and well maintained, in a good, safe location, close to where you want to be.

If your budget won’t allow for that, then change your budget so it does! It’s the only way to guarantee your trip won’t go sideways.

Every other possibility is simply a gamble.

There are a couple of other more frightening reasons why Vacation Rental Rates are so low in Orlando that everyone should be aware of.

There is pressure to lower prices when inexperienced owners compete with Sham Bookings, and worse, outright Scams they don’t even realize aren’t real! Sham and Scam Bookings feature rates too good to be true, because low prices are so effective in getting guest’s so excited that they fail to stop and think before handing over money. The lure of the great deal overwhelms their common sense. They need to ‘snag it before it’s gone’!

Unfortunately the rates offered with Shams and Scams distort the rental market. Both Guests and Owners often don’t understand they’re not real, and it distorts their perception of what properties should rent for. Not knowing the true value of things tends make them undervalued, and that’s a genuine factor in Orlando vacation rentals.

Photo by Pavel Danilyuk.