Lorraine Gray and Ian Bailey wanted to invest in a property to rent out. Their initial idea – of buying a cottage in the Cotswolds – was quickly rejected.
They decided that being a landlord in Britain was too much hassle for too little reward, due to years of hostility from governments and high mortgage rates.
Instead the couple, from Southend-on-Sea, decided to look for a property in the United States, deciding that it would be easier and more lucrative – even though it was thousands of miles away.
They chose to invest in central Florida, where Gray had been on holidays as a child. “For the same sort of money as a five-bedroom furnished property in Orlando there were small semi-detached cottages or a flat in the Cotswolds,” says Gray, 39, an accountant. The couple knows many people who have sold up at home and invested in property across the Atlantic.
“We wanted a good-sized property that works for couples as well as multi-generational families. A big tick for Florida was the year-round appeal for global tourists. The Cotswolds just doesn’t have the weather.”
But it doesn’t have hurricanes either. When Hurricane Milton battered the Gulf Coast and caused severe damage to holiday homes in Siesta Key and St Petersburg, the Orlando area was relatively unscathed. “Florida and hurricanes go hand in hand, and we understand that risk,” says Gray, after reporting minimal disruption.
Five-bedroom furnished properties in Orlando come for the same sort of money as a flat in the Cotswolds - Eduardo Guerini Photography LLC
Florida is the top location for foreign buyers in the United States, accounting for 20pc of all international purchases, according to the National Association of Realtors (NAR).
With 74m tourists in 2024, Orlando is the most visited location in the United States. Gray chose the location specifically because of its proximity to theme parks. “The ongoing investment into Walt Disney World and Universal is impressive – plus Epic Universe opening in 2025,” she says.
In Davenport-Kissimmee, the area where they bought, a good holiday let will usually be rented out for 40 to 50 weeks per year, with yields sitting around 8pc to 10pc, according to Zoe Attwood, of a real estate brokerage Serhant. “Anything with between three and six bedrooms would do well, within a 20-minute drive radius of Walt Disney World,” she says.
Average occupancy rates of three to five-bedroom properties are fairly similar in the Disney area (62pc to 65pc) and prime areas of the Cotswolds (62pc to 64pc), according to analyst AirDNA.
Yet property prices are lower in Florida. The average detached house sale in the past year in the Cotswolds was ￡674,904, according to Rightmove. Meanwhile, a villa with a pool near Disney World typically costs $400,000 (￡308,263) to $500,000 (￡385,330), according to Attwood. She cautions: “Avoid properties with more than six bedrooms – they are more difficult to rent and are coming back on to the market in droves as they fail as rentals.”
Gray and Bailey, an electrical engineer, were searching within the $450,000 to $525,000 range and fell for the low-density, tranquil feel of Watersong community. Here, they found a five-bedroom 3,256 sq ft detached villa with a cinema room, pool and games room backing on to lake and woodland.
Lorraine Gray’s five-bedroom detached villa comes with a cinema room, pool and games room - Eduardo Guerini Photography LLC
“It was in great shape and just needed a cosmetic make-over,” says Gray. After buying it, she quickly had customers: a full house of paying guests in April, before a good summer and bookings for the first half of 2025 from wintering ‘swallows’ from the northern US and Canada.
Costs to consider
The high occupancy rates and low tax burden are balanced with the heavy running costs of Floridian homes. Transaction costs were 5pc, and mortgage rates were hefty at the time they took out a 30pc loan, at 11pc. Rates have since reduced to around 8.5pc for foreign buyers, with a 70pc to 75pc maximum loan to value ratio.
Her 30-year fixed rate deal is fairly typical so she will aim to refinance in a year or two – this is easy to do without hefty early repayment fees. By the fourth year, the mortgage can be redeemed in full without any penalty, says Ben Attwood, a mortgage specialist at Serhant.
Other costs to consider are Insurance and local tax (the equivalent of council tax), which Gray pays with the mortgage. “These could be in the region of $2,000-$4,000 and $5,000-$7,000 respectively,” says Attwood.
Insurance premiums are high in Florida – and may well rise higher as hurricanes become more extreme because of climate change. Florida’s office of insurance regulation puts the average household premium in Florida as $3,600 per year, far higher than the national average of $1,915. Where the property is a short-term rental investment, the owner is advised to have liability insurance protection too, which can lead to higher than average premiums.
Typically US house insurance treats hurricane damage as a “wind event” while flooding is usually covered by a separate policy. After Milton, many homeowners on the coast did not realise they were not covered by a flood policy.
Other costs to consider include local tax (the equivalent of council tax), which Gray pays with the mortgage. “These could be in the region of $5,000-$7,000. Owners then need to take into account local tourist taxes, property management fees and maintenance/wear-and-tear costs,” says Attwood. Home Ownership Association fees are payable in a resort for the upkeep of amenities, and Gray is paying $1,500 per year.
The Florida property ‘was in great shape and just needed a cosmetic make-over’ - Eduardo Guerini Photography LLC
There is no Florida state tax, but owners have to file a federal tax return each year to report income. A long list of deductions – mortgage interest, repairs, advertising, insurance, management fees, utilities, real estate taxes and virtually all running costs – means that sizable tax bills are “very infrequent”, according to Simon Howell of Howell International Tax in Kissimmee. “Plus very few owners pay capital gains tax on selling.”
Whilst building up their client base, via social media and the villa’s website sunsetpalmvilla.com, they are charging from $185 to $245 per night for the villa, with British, American and Canadian guests. “It’s a passion project as well as a long-term investment,” says Gray.
Rental owners in Orlando are benefitting from the misfortune of those on the west coast who have suffered in recent hurricanes, says Jerry Barker, who helps international buyers find investment properties. “We’ve seen hundreds of people evacuated to Orlando filling up all the vacant vacation homes we had. September and October are the quietest months here so owners got a financial boost; some evacuees will need homes for months.”
Top-dollar longer term rentals
The areaaround Disney leans more towards the short-term vacation rental market, but long-term rentals are chosen by those prioritising investment strategy over personal use, says Barker. This has been the case with Mathew Gregg and his wife Sue, both 57, who have two profitable buy-to-lets in the Sarasota area on the Gulf Coast. Since acquiring a one-bedroom flat and a two-bedroom townhouse in 2018, they have had trouble-free changes of tenant with only a two-week void period – and being away from the coast has meant they have also avoided hurricane damage.
With monthly rental incomes of $1,400 and $2,000 respectively, Gregg reckons the yields are between 6pc and 7pc, similar to the British average. Yet he says they perform better than the two buy-to-let properties they have now sold in Salford – and there’s less hassle.
“We sold the second one last month, getting out before the new Government targets the buy-to-let sector,” says Gregg, from Essex. “The capital appreciation over seven years was disappointingly low, the yield just 2pc.”
The cost of flying over and hiring a car to buy the properties were tax deductible, and the rest is pretty hands off as he has a managing agent, Patricia Tan, who finds tenants for him. They have rigorous background and affordability checks, and tenants’ rent should not exceed 40pc of their income.
“Have a good lease agreement, but with the law heavily favouring landlords, tenants who don’t pay up can be evicted within seven days,” she says. Running costs for these longer-term rentals are lower than holiday lets due to the lack of cleaning costs and utility bills, and no need to collect and file tourist taxes.
For those owners who also want to use their property, monthly letting is more common than holiday rentals in the Sarasota area, says Tan. “Winter months – January through to March earn top-dollar rentals, with some guests staying three, or even six months – the snow birds from northern states, Canada and Europe.”
Rental properties are smaller than you might find in central Florida – two-bed, two-bath condos are ideal for a retired couple – and can cost $220,000 to $300,000.
Monthly rentals are a lot less work than weekly, and are easier for absentee owners to handle from their home country, adds Tan. For Gray, the importance of having a great management company in place has been affirmed by Hurricane Milton.
