Vacation rentals have always been popular in Florida. With the advent of Airbnb, they become even more popular. Short term vacation rentals generate much more revenues than regular annual rentals will. There are also a lot more work involved. Unless you hire a property manager and property management fees can be steep. I run my own vacation rental in Pompano Beach and have managed several other for my customers in the area. Here are some things to consider when you go to purchase a South Florida vacation property.
Location
Any home could be a short term rental. Vacation rentals do best when they are located next to local amenities tourists flock to like the beach, golf course or other attraction?
Type of Property
In my experience, those that do the best are homes with four bedrooms, a swimming pool and are located within walking distance of the beach. These homes have gotten very scarce these days and are quite pricey.
Condos - The vast majority of condos will not allow short term rentals. Most of those that will allow it are what we call condo hotels and they're just exactly as they sound. There are hotels that have a property and reservation manager on site. The Q Club, a Hilton property and Ritz Carlton are examples located on the beach in Fort Lauderdale. They may only allow you to use the property for three to six months per year, so check the rules prior to signing any contracts.
Permitting & Regulations
Every municipality in Florida is going to require you to have a short term rental permit. The requirements will vary from city to city. As well as the costs. You can count on somewhere around $1000 in permitting fees to get started. Then a few hundred per year for renewals. You will need a license from the Florida Dept of Professional Regulation.
Short term rentals are subject to sales tax. You will have to collect the tax and then submit it to both the county and state every month. To both. Currently it's 13% total in Broward County. If you are marketing your home on Airbnb or VRBO, or another platform like that. Then they will collect the sales tax and submit it to the municipalities. You are still responsible for reporting, however.
Homeowners Associations
Before you purchase is a home in subject to a homeowners association be sure to check the rules to make sure that short term rentals are allowed. It is best to avoid homeowners associations completely.
Marketing
I found it's best to use a platform like Airbnb or VRBO. To manage your rental rather than advertise on, say, Craigslist. The platforms will take a sizable cut. But they also offer insurance, credit card payments and they can be a great help determining proper rates to charge.
Property Managers
Management fees to run a single family home will run you between 17 and 30% of collected revenue. Now that seems steep. But it is very labor intensive. Be sure you know whether they are providing you with the basics like linens, toiletries, paper products and that kind of thing. With condo hotels that have management on site, they do everything and they usually take somewhere around 50% of the total revenues.
The great thing about short term rentals is allows you to use the property and rent it out when you are not going to be using it. You can vacation in paradise and cover all or most of your costs. If you have no intention of using the property, consider renting on an annual basis. It is a lot less work and generate almost the same amount of net profit after management fees than short term rentals.
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Serving The Greater Fort Lauderdale area since 2006
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