Vacation rentals have become quite popular in recent years, particularly in markets such as South Florida. In fact, the widespread adoption of remote working environments by many employers has contributed to the popularity of vacation or short-term rentals. Vacation rental sites such as airbnb.com and vrbo.com have gained in popularity as a result as well. With this said, investing in vacation rentals may provide an option for real estate investors. We discuss some helpful tips to keep in mind below.
Factors to consider
- Location, Location, Location: As with all things related to real estate, location is critical to success. Besides identifying various locations that would appeal to short-term renters and those on vacation, it is important to be well versed in the various zoning requirements and restrictions. In addition, some cities or municipalities may prohibit short-term rentals or even dictate the amount of short-term rentals allowable in a given area.
- Business licence(s): Oftentimes, many investors fail to realize that certain business licenses and registrations are required prior to renting out short-term rentals. Furthermore, these requirements may vary from city to city. It is imperative that these requirements are researched and fulfilled prior to listing a short-term rental for rent.
- Appropriately furnish the unit: Although this may seem like an obvious consideration for any short-term or vacation rental, it is easy to overlook some items. With this said, items such as silverware, cooking utensils, linens, and basic everyday living supplies must be included. A good tip for anyone considering offering short-term or vacation rentals is to stay at the property for a period of time to determine the everyday needs for the unit.
- Implement appropriate safety protocols: Perhaps the most important item to consider when turning over short-term rental units between tenants is to re-key the door lock(s). In order to complete this quickly and efficiently, some lock providers now offer the ability to re-key locks on your own without having to hire a locksmith. After all, it only takes one incident of a prior tenant entering the unit with a previously provided key to cause a potential disaster. Of course, basic safety items such as operating smoke alarms, fire detectors, and security cameras and/or systems are also important features of the home. If the property has a swimming pool, consider treating it like a hotel pool by posting appropriate safety rules and regulations and placing them in a central location where they are easily visible.
- Pay the appropriate taxes: As with any investment, there are appropriate taxes associated with them. Short-term rentals are considered a business by most local governments and therefore there are workplace regulations that must be adhered to. In addition, it is important to know that transient occupancy taxes will also be apply to short-term rentals. These are the same types of taxes that are charged by hotels. Property owners will want to collect these taxes from their renters.
Although higher home prices and now higher mortgage rates are making it more difficult to make the numbers work out for investment properties, there are still some opportunities. In particular, South Florida continues to be one of the most popular vacation destinations in the country. In fact, we don’t see this trend changing anytime soon. Are you ready to add a short-term rental to your real estate investment portfolio? We can help. Contact Natasha at Live South Florida Realty, Inc. today!
At Live South Florida Realty, Inc. we have assisted many clients with their real estate needs. Are you looking to buy or sell a property in South Florida? Now more than ever, it is critical to have a qualified real estate team and the proper search tools behind you. Live South Florida Realty, Inc., has been a leader in the South Florida market for many years. Let our team of professionals assist you with buying or selling your piece of paradise today! In addition, our trusted “Florida Home Search” app is available on the Apple App Store and Google Play Store. With real-time MLS feeds, this app lets you set your own alerts to notify you as soon as a property meeting your needs hits the market. Furthermore, it will also let you know of recent closed sales in your area so that you may be even more educated on the market. Be sure to download this app for your smartphone or tablet today!