Rental arbitrage is the mechanism of renting a property long-term and re-renting it short-term on online vacation rental sites. Much like subletting, rental arbitrage is the act of renting out an already rented property.
To put it lightly, you lease a long-term rental (usually for at least a year) and list that property on vacation rental platforms such as Airbnb,VRBO,Expedia to re-rent it out on a short-term basis to travelers and holiday makers.
The fact that there are no down payments, no closing costs, and no expensive mortgage loans required to list a property and get started, as opposed to ownership, makes rental arbitrage popular among vacation rental managers.
If you have long term rented a property in Fort Lauderdale and you’re wondering what to do with it, this article might come in handy for you.
Located on the southeastern coast of Florida and known for its beaches and boating canals, Fort Lauderdale is named the Venice of America. It is no surprise that the city is a top tourist destination, making it a top location for vacation rentals and Airbnb real estate investing.
Together with Miami, Fort Lauderdale is one of the most visited places in all of the US, allowing tourists to enjoy its warm weather and numerous attractions throughout the year. In other words, demand for Airbnb Fort Lauderdale is strong and isn’t affected by seasonality.
As a result, Fort Lauderdale assures a high Airbnb occupancy rate which is important to assure a good return on investment in terms of both cash on cash return and cap rate. According to Airbnb data, short-term rental properties in Fort Lauderdale have an average Airbnb occupancy rate of 53%.
The increasing popularity of Airbnb rentals in the US has led many cities that are considered to be top vacation destinations to set drastic restrictions. For example, Airbnb Los Angeles is only legal for primary residences, and Airbnb Las Vegas is not allowed for a period of fewer than 30 days. But what about Airbnb Fort Lauderdale? Are short term rentals legal and unrestricted?
The great news is that Florida prevents any city from creating new Airbnb rules. Additionally, the state also prevents cities from enforcing any existing local law, ordinance, or regulation that bans or limits the length of vacation rentals. This means that Fort Lauderdale is one of the few markets where renting out on Airbnb is legal for both owner-occupied (primary residences) and non-owner occupied properties (rental arbitrage properties).
However, Florida does allow local governments to regulate Airbnb rentals.
Short-term rentals have always been popular in South Florida, which has only soared ever since short-term listing sites and apps like Airbnb and VRBO emerged, making these rentals available to national and global guests.
While this is the case it is always important to check and comply with Fort Lauderdale Airbnb regulations prior to carrying out a rental arbitrage.
The most important laws and regulations to keep in mind are:
- Registration: Fort Lauderdale vacation rentals must be registered with the city on an annual basis. You need to pay a $350 registration fee for up to 4 rental units under the same roof. The renewal registration fee for non-owner occupied vacation rentals stands at $160.
- Business License: Operators of Fort Lauderdale Airbnb rentals need to obtain a business license as the city considered running short-term rental properties as a business strategy. Depending on the time of the year, the cost of a business license in Fort Lauderdale, FL ranges between $78 and $236.
- Taxes: Similar to other Florida vacation homes, those in Fort Lauderdale have to pay the 6% Florida transient rental tax, 6% Broward County tourist development tax, and 0.5-1.5% Florida discretionary sales surtax. You could also read up on Florida airbnb laws and taxes.
- Others: It’s important to understand and abide by other rules that may exist. For instance, many condo complexes ban short-term rentals in their housing units. So it might be essential to check HOA’s rules and regulations in this regard.