Orlando real estate investing: the two lines that eat the cash flow

The Orlando pitch, and what's true in it

Orlando's pitch is growth, and most of it checks out. The city added residents at 8.4% since 2020 to reach 333,888, per the Census Bureau, and the metro drew a record 76.7 million visitors in 2025, up 1.8% and still the most visited destination in the United States, according to Visit Orlando. Add no state income tax and a warm-weather brand, and the demand side of the story is genuinely strong.

What the pitch leaves out is the cost side. Two lines on an Orlando pro forma are larger than in almost any other market, and together they turn a median financed rental from a thin winner into a monthly loss. The growth is real. The margin is thin, and the two lines are why.

One note before the math. This is general information, not tax, legal or investment advice. Rates, premiums and assessment rules change, so confirm every figure here with the Orange County Property Appraiser, the Florida Department of Revenue, a licensed insurance agent and a CPA before you write an offer.

The numbers that anchor an Orlando deal

Start with sources that are not trying to sell you a house. Six of them frame the analysis, each from a government agency or a primary market report.

One Census line reshapes how you read the rest. Orlando owns its homes at just 39.5%, one of the lowest owner rates of any large US city, so more than six in ten households rent. That is a deep tenant pool and the real strength of the market. It sits next to a median household income of $72,336 and a poverty rate of 14.7%, which caps what that pool can pay before you set the rent.

The 1% rule and the median house

The 1% rule asks a rental to bring in about 1% of its price in monthly rent. One percent of the $414,726 median sale price is $4,147 a month. A comparable Orlando single-family house rents closer to $2,300, above the $1,529 apartment median but far under the target. That works out to roughly 0.55%, better than a coastal Florida market, still failing the rule outright.

Orlando gets sold as the market where growth carries the deal, so the cash-flow gap gets waved off as something appreciation will cover. Take a clear position on that. Appreciation is a bet, not income, and it does not pay the mortgage in a month the tenant moves out. On a financed median house the rent does not cover the costs today, and the two lines below are the reason the gap is wider than the price alone suggests. Underwrite the house on the rent it earns now, and treat any growth as upside you did not pay for.

The first line: the highest insurance in the country

Florida homeowners pay more for insurance than any state in the nation. The Census Bureau put the median annual premium for a Florida home with a mortgage at $2,273 in 2023, the highest in the country, against $1,442 for a home owned free and clear. Hurricane exposure, litigation and reinsurance costs drive it, and the figure has climbed since.

For an investor that is about $190 a month on an average house, and often more on a rental, which insurers price higher than an owner-occupied home, and far more on an older roof or a flood-zone parcel. This is not a line you can trim with a better vacancy assumption. It is a fixed monthly cost near $200 that many out-of-state buyers underestimate by half because they quote their home state's premium. Get a bound quote on the specific address before you sign, because a single roof age or flood-zone finding can double the number.

The second line: the tax resets to what you paid

Here is the mechanic almost every out-of-state buyer gets wrong. Florida caps annual assessment increases at 10% for non-homestead property, so people assume they inherit the prior owner's low, capped assessment. They do not. When a property changes ownership, the assessed value resets to full market value the first January 1 after the sale, and the 10% cap starts over from that new, higher baseline, per the Pinellas County Property Appraiser. The cap also does not apply to school district taxes at all.

Run the arithmetic so the surprise does not land after closing. Say a long-hold owner's house is capped at a $250,000 assessed value while it is worth $414,726 on the open market. Their tax at 0.78% is about $1,950. You buy at $414,726, and the next January your assessment jumps to the full price. Your tax becomes about $3,235, up roughly $1,285 a year, or $107 a month, on day one, and it keeps rising with the 10% cap and the uncapped school portion. Pull the property appraiser's record for any Orlando target, and underwrite the tax on your purchase price, never on the line the seller is paying now.

A monthly pro forma, line by line

Put both lines on the page with everything else. Here is the median house at $414,726 with a $2,300 rent, financed with 25% down at a 30-year rate near 7%, with the tax set to the reset value and insurance at the Florida median. Change the reserves for your own parcel.

The rate comes from Freddie Mac's survey, which put the 30-year fixed at 7.03% for the week ending September 24, 2026. Read the two ways this funds. Financed, the median house loses about $675 a month. Pay cash and it clears roughly $1,401 before debt, about 4% cash-on-cash on $414,726. Orlando does better than a market like Las Vegas, where the same exercise loses more, but the median financed house still bleeds, and the insurance and tax lines are two thirds of why.

A renter city, on tourism wages

The demand side is the reason to keep reading. With homeownership at 39.5%, Orlando is a renter city, and a growing one, which is the profile that keeps units full and rents firm over time. The problem is what those renters earn. The metro's payroll leans on leisure and hospitality, the theme parks, hotels and restaurants that serve those 76.7 million visitors, and those are not high-wage jobs.

That combination, strong occupancy and a capped wage base, is why Orlando rents rise steadily but not sharply. Apartment List put the median asking rent at $1,529 in August 2026, actually down 1.53% year over year as new supply landed. A deep tenant pool protects your vacancy line. A soft wage ceiling limits how fast you can raise rent to catch the insurance and tax lines climbing underneath you. Plan for occupancy, not for aggressive rent growth.

The short-term rental temptation

The obvious move is to skip long-term rent entirely and run a short-term rental against the largest visitor market in the country. It is a real strategy in the vacation-home zones of Osceola County and southwest Orange County, where nightly rates on theme-park traffic can beat monthly rent by a wide margin.

It is also the most regulated version of this business. The City of Orlando restricts short-term rentals sharply, county rules and HOA covenants vary block to block, and Florida's licensing and tax regime applies on top. An STR carries cleaning, management, furnishing and seasonal vacancy that a long-term lease does not, and a rule change can strand the model after you buy. Underwrite it as a licensed hospitality business with its own cost stack, confirm the ordinance for the exact parcel, and never treat it as a shortcut around the numbers above. Our guide to the BRRRR method shows why a 7% rate makes any refinance-and-hold exit harder, and running comps keeps your rent and value assumptions honest.

Find the deal before it lists

The margin in Orlando is in the purchase price, because the MLS is where you pay the median for a sub-1% yield the insurance and tax lines then eat. The investors who make it work buy below the median, off-market, from owners who want out before they list. That is where a ranked, mail-first approach earns its keep. Farmrix scores every owner in an Orlando zip on how likely they are to sell in the next 6 to 12 months, ranks them, and prints and mails postcards to the top of that list, so your first call is with a seller already leaning toward the door instead of a bidding war on a listing. Pair it with clean owner data and you are underwriting a specific house at a specific discount. The smallest package is 500 ranked owners and 500 postcards for $1,195, with data, printing and postage included.

Do three things before your next Orlando offer. Quote the insurance on the specific address, not your home state's rate, because it is the largest fixed line and the easiest to underestimate. Set the property tax to your purchase price, since it resets there the year after you buy. Then source the deal below the median and off-market, because an Orlando house bought at the retail median, financed, is a growth bet dressed as a rental, and the two lines will remind you of that every month.