Short-Term Rentals in Miami (and Rental Arbitrage Potential)

Are you looking to dive into short-term rentals in Miami? Well, you're in luck!

In this article, we'll give you all the info you need about short-term rentals specifically tailored to hosts in the city that never sleeps. Whether you're looking for advice on navigating the market or embracing Miami's unique hospitality scene, we've got you covered.

Let's begin this exciting adventure into the world of Miami hosting!

Miami as a tourist destination

According to the Greater Miami Convention and Visitors Bureau, Miami, a popular vacation destination in Florida, the United States, attracted 26.5 million visitors in 2022. Overnight visitation increased by 20%, while day-time visits saw a 12% decline. Florida also saw an additional 300,000 visitors from key cities like Orlando, Tampa, and St. Petersburg, and Palm Beach.

Miami's year-round sunshine attracts a diverse range of guests, including celebrities, art enthusiasts, college students, and families. The city offers luxurious hotels, iconic Art Deco structures, extensive shopping, vibrant art festivals, wine extravaganzas, and sports tourism options like deep-sea fishing, sailing, major league games, boat shows, auto racing, golf, and tennis. Miami's nightlife is a melting pot of culture fueled by its famous Cuban coffee.

What is rental arbitrage?

In straightforward terms, it's a way to rent vacation rentals without actually owning them.

You rent a property and re-rent it to guests for a short time as a vacation rental. The rental arbitrage allows you to host all kinds of spaces without owning any of them, from a house to a tent cabin to a room. It's low-risk and allows you to scale much faster than the traditional route.

Rental arbitrage opportunity in Miami

Miami is one of the top twenty cities in 2023 for short-term rentals in the US, according to AirDNA, the leading provider of data and analytics for the short-term rental industry.

According to AirDNA data for Miami, the city enjoys an

Average Occupancy Rate of 32% (December 2023) ADR of $182.4 (December 2023) Average annual revenue of $15.7K (December 2023)

Meanwhile, according to AirDNA, in Miami

Effective rent is $2,299 STR premium is 96.4% Average Nights to cover rent 9.7

Short term vacation rental rules in Miami

State of Florida short term rental rules

The state of Florida defines a short term rental as

“any unit or group of units in a condominium or cooperative or any individually or collectively owned single-family, two-family, or four-family house or dwelling unit that is also a transient public lodging establishment but that is not a timeshare project.”

1. State license

• The state requires short-term vacation rentals be licensed.
• Apply for a license from the Florida Department of Business and Professional Regulation (DBPR),
• The state issues two types of licenses depending on the type of the building: Short Term Vacation Rental Condo License and Short Term Vacation Rental Dwelling License.
• Short-term vacation rental operators managing multiple listings can opt for a Group License. However, separate licenses must be obtained if you have listings of condos and dwellings.
• Licenses must be renewed annually.
• The licensing cost ranges from $90 for a half-year to an annual fee of $170, with a processing timeline extending over six weeks.

2. State taxes

Register with the Florida Department of Revenue to collect, report, and pay sales and surtax.

3. State health & safety regulations

Once you have registered your rented property as a vacation rental, you are responsible for ensuring the property meets several health and safety requirements to keep your vacation rental license. As the licensed agent, you will be held accountable for all violations cited during an inspection if it occurs while the property is listed under you.

For example:

• Clean, well-lighted, and well-ventilated hallways and entrances are essential
• If you provide dishes and glassware, they must be sanitized between guests, according to public food service establishment standards.
• The kitchen sink must have hot and cold running water under pressure
• Smoke alarms must be installed
• A properly charged and accessible fire extinguisher must be present
• If the vacation rental is three or more stories high and has railings, stairwells or balconies not in common areas, you must get a balcony inspection completed by a licensed inspector and renewed every three years.

County of Miami-Dade short term rental rules

Miami-Dade County defines a short-term rental as a,

“vacation rental”, or “any dwelling unit or group of units in a condominium, cooperative or apartment building that is rented in whole or in part to a transient occupant for a period of less than 30 days”.

Vacation rentals do not include a hotel, motel or bed-and-breakfast.

4. Occupancy regulations

The County stipulates a maximum overnight occupancy of two persons per bedroom plus two additional persons per property, up to twelve persons, excluding children under three years of age.

5. HOA authorization

Suppose the property listed as a short-term vacation rental is part of a condominium or homeowners association. In that case, the County requires written authorization from the relevant association for the property to be operated as a short-term vacation rental.

6. County certificate of use (CU)

Business owners are required to obtain a Certificate of Use to ensure their operations are legal, safe, and in accordance with the vision set forth by the City.

• Obtain a Certificate of Use from the county’s Department of Regulatory and Economic Resources which requires the DBPR license and insurance to cover guest liability.
• You must schedule an inspection within ten business days of applying to prove full compliance before receiving your Certificate of Use.
• This certificate must be renewed annually.

7. County zoning compliance

Determine if your property aligns with short-term rental regulations through the City of Miami Zoning Application and the guidelines of the City of Miami Beach.

• Short-term vacation rentals can only be located in appropriately demarcated zones.
• Properties in designated Estate or Low-Density Residential areas require the host to reside in the property for over six months of each calendar year.
• The CDMP Land Use Plan Map can be referenced to identify these designated areas.

8. Guest register

Hosts are obligated to maintain a register, including guest names and stay dates, which is accessible for inspection by Miami-Dade County in compliance with zoning requirements.

9. Swimming safety

Short-term Vacation rentals with swimming pools must have at least one safety feature (pool safety barrier, pool safety cover, pool alarm or door latch/alarm) if they allow children under the age of six. This does not apply if it is a community swimming pool.

10. Predator search

Property managers are also required to obtain confirmation of a nationwide search from the County Police Department or other law enforcement agency that prospective occupants are not registered sexual offenders or sexual predators as a result of a conviction of a sexual offence as defined in Section 21-280.

City of Miami short term rental rules

The city of Miami considers a short term rental as lodging use for less than 30 days.

11. City Zoning Regulations

• The city of Miami only permits short term vacation rentals in Transect Zones in structures approved by the Building Department.
• To check the permitted land use (residential, lodging, commercial) and transect zones in Miami, refer to the official zoning map.
• Miami recognizes three types of transect zones where short-term vacation rentals are permitted by right, by warrant and by exception.
• If your property is a transect zone that permits its use for lodging but has a different land use approval, you can apply for a change of use with the Building Department.

Allowed Lodging Zones

Lodging is allowed in specific zones with certain conditions:

• T4-R: allowed by warrant
• T4-L & T4-O: allowed by right
• T5-R: allowed by exception
• T5-L & T5-O: allowed by right
• T6-R: allowed by exception
• T6-L & T6-O: allowed by right
• CI-HD: allowed by right
• D1: allowed by right

12. City certificate of use

The City of Miami requires short term vacation rental operators to obtain a Certificate of Use.

13. Business tax receipt

Obtain a Business Tax Receipt (BTR) from the city where your property is located, whether it's in Miami or Miami Beach, to comply with local taxation regulations.

14. Non-lodging use

The city of Miami also permits Apartment Hotels and Condo Hotels, which are defined differently to lodging and residential use and are permitted only in specific transect zones. Both require a Certificate of Use and a Business Tax Receipt.

If a building or unit is found to be operating a short-term rental illegally, the tenants/visitors will be evicted and fines assessed against the owner.

Responsible hosting in residential areas

Hosting responsibly means managing household waste, controlling noise, ensuring safe parking, and using ethical marketing practices.

Aside from that, strict adherence to local, state, and federal laws is essential.

One last thing

You can run a profitable short-term vacation rental business with minimal risk by engaging in rental arbitrage. In addition to being a popular holiday destination, Miami is a great spot for rental arbitrage, offering lots of investment opportunities.

Updated Dec 20, 2023