Florida is king for short-term rental investors: Study

florida coast

At Inman Connect Las Vegas, July 30-Aug. 1, 2024, the noise and misinformation will be banished, all your big questions will be answered, and new business opportunities will be revealed. Join us.

Enviable weather, ocean views and a lengthy list of landmark tourist destinations have made Florida a treasure chest for short-term rental investors.

A Clever Real Estate market analysis published on Tuesday revealed strong property values, robust population growth, and year-round tourist demand have made Tampa, Orlando, Jacksonville and Miami top-tier cities for short-term rentals on Airbnb and other platforms.

“For 2024, Tampa, Florida, earned the distinction of the nation’s best short-term rental market, followed by nearby Orlando and Jacksonville,” the report read. “All three enjoy strong demand and an above-average number of properties suitable for Airbnbs.”

Tampa, Orlando, Jacksonville and Miami have above-median total active inventory and inventory suitable for short-term rentals. For example, Tampa has three times the active inventory of the 50 largest metros in the U.S., and a share of short-term suitable listings that’s 160 percent above the median.

“Tampa’s affordable property value may be tied to how many properties are on the market — 16,020, according to Zillow. That’s more than 3x the median city (5,297),” the report read. “About 2.06 percent of them are suitable to be Airbnbs, the seventh-highest among cities studied and a whopping 160 percent above the median.”

Each city also had high occupancy rates and solid annual revenues.

Orlando had the highest occupancy rate (46 percent) of Florida cities, thanks to a high number of theme parks, including Walt Disney World, Universal Orlando, SeaWorld Orlando and LEGOLAND Florida. Meanwhile, Miami ($62,957) led Tampa ($52,705), Orlando ($42,338) and Jacksonville ($56,878) in average annual Airbnb revenues.

“The greater Miami area is the most populated in Florida, providing a combination of warm weather and metropolitan living for recent transplants from other major cities,” the report said of Miami’s hearty average annual revenue. “These new arrivals to the region have helped propel home prices up 66.1 percent over the past five years, second-best behind only Tampa.”

“Add in a steady flow of tourists, as well as domestic and international business travelers, and investors have all the makings of a top short-term rental market,” it added.

Although Florida had an outsized presence on the list, it’s not the only place short-term rental investors can find their golden goose. Boston; Buffalo, New York; Columbus, Ohio; Chicago; Providence, Rhode Island; Kansas City, Missouri; San Diego; Hartford, Connecticut; Nashville, Tennessee; Phoenix; and Cleveland rounded out the top 15, thanks to high occupancy rates, average annual revenues and property value growth.

On the other end of the spectrum, San Jose, California; Birmingham, Alabama; San Antonio, Texas; Houston; Sacramento, California; Raleigh, North Carolina; Riverside, California; San Francisco; Oklahoma City; and Pittsburgh were ranked as the worst markets for short-term rental investors.

“Not every city is well suited for Airbnb investors, whether that’s because of high costs, low demand, a lack of appropriate housing, or strict local laws and regulations,” the report read. “Those familiar with California’s sky-high real estate prices likely aren’t surprised to see the Golden State take four of the bottom 10 spots.”

“What’s worse, there are relatively few properties, even for investors who can afford them,” the report continued. “San Jose has 1,296 listed properties, according to Zillow, the second-fewest among cities in our study and 76 percent fewer than the median city.”

“Of the property listings evaluated, San Jose (0.41 percent) has about half as many as the average city (0.79 percent) that are suitable for Airbnbs.”

Beyond market performance indicators, Clever said investors must keep an eye on overall consumer sentiment about Airbnb and other short-term rental sites.

Seventy-six percent of travelers Clever surveyed said they have a positive evaluation of short-term rentals; however, higher rental costs and associated fees have pushed a growing majority of travelers to choose hotels when traveling solo (58 percent), traveling to a new country (48 percent) or traveling to places they’re unfamiliar with (47 percent).

Respondents said greater listing description accuracy, better safety and security protocols and quicker host responsiveness would make them more keen to begin choosing short-term rentals over hotels again, meaning there’s still room for success on Airbnb, VRBO and other platforms when customer service is prioritized.

“Overall, only 57 percent of respondents say they look at Airbnb listings before booking a trip,” the report said. “This is true even as they say they’re over 2x more likely to report a bad experience at a hotel (54 percent) than at a short-term rental (25 percent).”

“Some might see this as a sign of continued difficulty in overcoming the old habits of travelers who only consider hotels,” it added. “However, it’s also evidence of how much untapped demand for short-term rentals could potentially be out there, ready for diligent investors to turn into cash.”

Email Marian McPherson

Source link

About The Author

Scroll to Top