Flipping Hotels in Orlando and Kissimmee
Travis Vengroff paid $5.4 million for the long-closed Travelodge on U.S. Highway 192 in Kissimmee and plans a $3.1 million renovation to transform it into Backlot Apartments.
The business model was welcomed by Osceola County’s development authority for U.S. 192, Vengroff said. Authority members did not respond to calls or emails.
Unlike most affordable-housing entrepreneurs, Vengroff uses money from private investors instead of government subsidies and tax credits.
“The Vengroff model accomplishes three things: It quickly re-purposes older buildings like the Kissimmee hotel into housing for workers, provides units at a price point that is economical for hourly service workers and does this without housing subsidies,” said Edward Pinto, former executive vice president for Fannie Mae. “As an added bonus, these hotels are usually more conveniently located to the tenants’ jobs.”
Vengroff adds 300 units in Central Florida to 1,500 refurbished hotel rooms and single-family rentals in southwest Florida that his team has rented to felons and tenants with ruined credit. One tenant had been arrested 54 times, and a vehicular-homocide convict had been imprisoned for 20 years. His requirement: They must have jobs or disability income. He said one of his property managers is a reformed drug addict with the “street smarts” to help vet prospective renters.
Turning around properties has meant evicting about a third of renters who lost their jobs or abused drugs. That churn process usually takes six months but never really ends, he said. Even as new renters replace some of the old ones, about a third of the new arrivals will not make good tenants, Vengroff added.
“The Vengroffs’ subsidy-free approach is essential in order to address the shortage of economical rental housing,” said Charlie Wilkins of American Enterprise Institute, a public-policy think tank that looks at housing issues. “Relying on subsidies won’t work because the problem is too large and the amount of subsidy is never going to be sufficient to solve the problem or even to make significant progress toward solving the problem.”
Manatee County investor Rick Bisio on Friday was touring the old hotel he helped Vengroff purchase. The conversions have a good financial track record at this point, “and the numbers make sense,” he said.
“Quite honestly, it’s kind of nice to invest in something that can help people get back on their feet,” he added.