The easy answer is “it depends”. You probably heard a lot of successful stories of people starting their own business with vacation rentals. And these are probably true. But there are scary stories too!
People who received huge fines from their city or even HOA because they did not follow the rules.
The most important thing in any real estate investment is: do a extent due diligence before start your business as a vacation rental owner. Are you sure that the HOA allows short term rentals? If they do, is this allowed in your city, county and state? If it is allowed, what are the rules, requirements, licenses and standards that you must comply to start your business?
I learned this in the hard way: about 10 years ago we bought an investment property in Hollywood, FL. We started running our own AirBNB business with that and it was giving a nice revenue. But we were pretty new and we didn’t realize that the association had a rule that only allowed rentals of 3+ months.
It took just one question about the swimming pool hours from our guest in the building front desk. The result: a $500 fine from the HOA. And also a warning that if we kept doing it the fine would become higher.
We had to stop doing AirBNB and, eventually, we sold the property. We had no losses, but also no earnings. I can easily say that we worked for free on that. And it happened because we didn’t research it correctly.
Vacation rentals and short term rentals are really profitable – normally 2x or even 3x times more than a normal rent. But they require more work! And that’s why you should consider getting help from a property manager (a good one!) if you don’t have time to make these researches. Don’t turn the dream into a nightmare.
First: check your federal and state vacation rentals laws
Checking the federal and state laws is the first thing – if the there are restrictions with those, there is no point in moving forward now. There is an interesting article on Lodgify about Short Term Rental Regulations: Laws, Licenses and Taxes.
Here in state of Florida, everything about short term and vacation rentals can be found at Chapter 509 of the Florida Statutes.
Second: check your local laws regarding short term rentals
Here in Florida each county has a different rule and even the cities has different rules. For example, Clearwater city allows only 30+ days (or a month) rent. Largo and Pinellas Park, which are really near, have no minimum days for rent. For our county (Pinellas) the REALTOR organizations gathered all the cities info and put it in the same page. Always check with your county and city.
Third: if you are inside an association, check the HOA rules
If you passed steps one and two, you can finally check with your homeowner association and see if there are specific rules regarding short term rentals. Maybe they require each guest to sign a form, maybe they do not allow STR at all.
If you passed all the previous steps…
You are good to go. But remember! All of those laws can change in no time. So keep always informed or ask a vacation rental manager to help you to manage your place. The good ones will always be up to date with the most recent law changes and they will be part of the Real Estate and Realtors organization of your area. If something is about to change, they will notify you in advance.
