Are you thinking about diving into the world of rental arbitrage in the sunny city of Tampa? If so you're in the right place.
Let’s walk through what you need to know about rental arbitrage in Tampa, breaking down the essentials and sharing tips to help you make the most out of your investment. So let's get into it!
It might sound like Wall Street jargon, but it's actually pretty straightforward. Rental arbitrage is the practice of renting a property long-term and then subletting it as a short-term, vacation-style rental.
The idea is to lease at a lower long-term rateand rent it out at a higher short-term rate and pocketing the difference. Pretty neat right?
Tampa, Florida is more than just a city in the second most “fun state” in the United States with theme parks and water parks. Tampa has its own vibe. With its mix of history, modern sights, amazing Cuban food and buzzing nightlife it's a magnet for tourists. Even when the world was doing the post-pandemic shuffle Tampa's tourism didn't just survive, it thrived, making impressive money even in 2021.
Only a short drive to the beaches, the city is attractive to all kinds of travelers. Visitors can enjoy the lively music and late night dancing in the historic Ybor City, shop till they drop at the upscale Hyde Park, hike, bike or paddle through the Hillsborough River State Park, take in impressive art at the Tampa Museum of Art, enjoy a concert at Curtis Hixon Park, get a glimpse of a manatee at the Manatee Viewing Center, ride a thrill-coaster at Busch Gardens or enjoy a pro football game.
Also, not only is Tampa a major business center but a top startup location in the world attracting business travelers and digital nomads. All this makes Tampa a great location for a short-term vacation rental with significant potential for growing revenue.
Data from AirDNA throws a spotlight on Tampa as a goldmine for rental arbitrage. Think robust average daily rates, impressive occupancy levels and monthly revenues that are sure to put a smile on your face. This is more than just chatter. Data shows Tampa is one of the prime destinations in the U.S. for diving into the short-term rental market.
According to AirDNA data as of March 2024,
According to Mashvisor:
Florida State law defines a vacation 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.”
As the licensed agent, you are expected to hold a vacation rental license from the Department of Business and Professional Regulation (DBPR). There are two types of licenses:
However, because the State of Florida defines condominiums and dwellings as separate types of short-term vacation rental housing you cannot combine the operations in one license.
Licenses must be renewed annually and displayed in the vacation rental or made available when requested.
If you are listing a short-term rental such as a single room or rooms other than the whole unit while the host remains in the home you don’t have to get a license from DBPR.
Once the property is registered with the state as a vacation rental you will be held responsible for meeting all applicable health and safety rules as well as any violations. These range from ensuring hygiene and cleanliness, providing a safe, sanitary and comfortable environment to guests as well as scheduling and passing regular inspections.
As the owner of the vacation rental business, you are responsible for submitting all state taxes to the relevant authorities in time. These include the Florida Transient Rental Tax and Florida Discretionary Sales Surtax. If you list your short-term vacation rental on Airbnb taxes will be collected directly from the guests and remitted to the state authorities on your behalf.
Hillsborough County does not directly regulate short-term vacation rentals. However, if you rent your property for less than 7 days at a time you will be required to be zoned properly or face fines.
You will also owe the county the Hillsborough County Sales Tax and Tourist Development Tax.
Tampa is a promising location if you’re considering rental arbitrage. With careful planning, compliance with local regulations and a focus on providing a great experience for guests you can look forward to possibly thriving in Tampa's short-term rental scene. Considering giving Tampa's rental game a go? Just remember to play it smart and aim high.