Miami is and always has been a popular attraction for real estate investors and has been since 2010. The city has much to offer its investors, including Florida's no tax-status making property investments a lot more profitable and investment-worthy. However, residents enjoy quite a few perks such as access to world-class beaches, resorts, a vibrant lifestyle, and various investment opportunities as Miami is a popular tourist destination.
Here, we compare short-term vs. long-term rentals in Miami to determine which is a better investment option.
Short Term Rentals
As mentioned earlier, the countless beaches and various other recreational activities in the city make it a popular tourist attraction. Thus, the demand for short-term rentals, such as Airbnbs, is relatively high. Investing in short-term rentals does present a significant number of benefits.
- You can potentially earn a lot more as the comparative per-day rent for short-term rentals is higher than that of long-term rentals.
- Miami attracts a substantial number of visitors, so you will never truly run short of renters.
- The occupancy rate for Airbnb's in Miami before the pandemic was over 50%.
- You can expect an average cash return of around 1.7% on Airbnbs in Miami.
Currently, though, Miami's short-term rental industry has taken a significant hit because of COVID19 and the ensuing lockdown. Thus, investment in short-term rentals may not be an excellent option at the moment. You may also want to look into legal regulations on short-term rentals in Miami.
Though Airbnbs are legal in Miami and you have to pay tax on your earnings from them. There are certain areas where the owner is legally obligated to reside in the Airbnb. You will also have to obtain a few licenses to run an Airbnb in Miami legally.
Given the current situation, investing in long-term rentals might be a more profitable option. In fact, nearly 70% of all Miami residents live in rentals, indicating a high demand for long-term rentals in the city. The demand is bound to grow as an increasing number of people are forced to delay purchasing a house because of COVID19. There are several other benefits that long-term rentals offer investors.
- You will get a regular monthly income instead, allowing you to calculate your total income and plan your expenses accordingly.
- You will not have to deal with multiple tenants making long-term rentals an ideal option for investors who prefer a hands-off approach.
- You will be able to find tenants even amid the pandemic.
- You can expect a nearly 1.2% cash return on your long-term rentals.
Long-term rentals come with their legal obligations, such as minimum housing code, tenant-landlord laws, and other legal requirements. However, they are a more stable source of earning and are quite profitable in the long run.
From the above discussion on short-term vs. long-term rentals in Miami, it is clear that given the current situation, long-term rentals are ideal, especially for those looking for a stable source of income. Contact Novel Management for all real estate and property management inquiries in Miami.