Short-term rentals can be a great investment, particularly in markets such as South Florida. In fact, short-term rentals typically generate about 30% more income annually than long-term rentals. Since the pandemic and subsequent prevalence in virtual workspaces, sites such as VRBO.com and Airbnb.com have grown substantially in popularity. Although owning short-term rental properties can be a great investment yielding impressive returns, it is important that investors are aware of key considerations first.
Top things to consider
- Know the location: It is not as simple as buying any property in South Florida because so many people vacation in the area. Factors such as zoning can be a significant issue. In addition, some municipalities might prohibit short-term rentals or dictate how many properties within certain boundaries can be used as short-term rentals. Of course, it is also critical that the identified property is appealing to a variety of travelers and has various amenities. For example, a South Florida single-family home with a pool that is located close to the beach, shopping, & restaurants might be a good option.
- Obtain the required business licenses: Before preparing a short-term rental, you need to ensure that you obtain the proper business licenses and registrations where applicable. It is important to note that regulations may differ from one community to the next. It is imperative that you learn all these requirements prior to listing a short-term rental.
- Fully furnish & equip the property: An often overlooked detail about equipping short-term rentals is the extent to which the property must be properly equipped. Of course, fully furnishing the property is an absolute requirement. With this said, items such as silverware, cooking utensils, linens, and basic everyday living supplies must be included. As a best practice, the investor may want to stay at the property for a brief period in order to determine all that is needed to be included.
- Pay the applicable taxes: Renting short-term rentals is considered a business by most local governments and therefore owners must comply with specific workplace regulations and business licensing rules established in their local communities. 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.
- Establish and adhere to safety protocols: In order to protect both the property owner and any renters, it is extremely important to have various safety protocols for the property. For starters, property owners must always change the lock codes or re-key the locks after each guest departs. Basic home safety features such as ensuring there are functioning smoke and carbon monoxide detectors should always be adhered to. In addition, it is recommended that the property be equipped with security cameras and/or doorbell cameras for added security. If the property has a pool, it is best to treat it like a hotel pool. Pool rules should be posted in a central location so that all renters can easily see them. As an added safety measure, you may want to include depth markers for the pool as well.
The vacation rental market in South Florida has exploded in recent years. In addition to many Americans opting to vacation in The Sunshine State, these short term rentals also offer the opportunity to test drive a particular market before permanently relocating to the area. Although most of these investors tend to be cash buyers, financing an investment property may also be an option. If financing, it is important to disclose that they property will be utilized as a short-term rental. It is also important to note that many lenders will not finance short-term rental properties. Furthermore, insurance needs will also be different for short-term rentals. Do you have further questions? We can help. Contact 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 recently launched “Florida Home Search” app is now 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!