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By: Luis Rodriguez
Business Development Manager at Trident Management
If you don’t live under a rock, you’ve heard about Miami’s meteoric rise in rental prices over the last year. According to a recent RentCafe article, “Miami-Dade County is now the hottest rental market in the nation, as the demand for apartments in Southern Florida is stronger than ever, putting apartment seekers in a tight spot to find a new place to call home, due to high occupancy, low supply, and record-high lease renewal rates.” They use Big Data to confirm what most of us in the business are seeing:
•97.6% of apartments are occupied.
•They are vacant an average of 27 days.
•There are 31 prospective renters per apartment
•75% of renters are renewing their leases.
With these and other indicators, it’s no surprise that investors and landlords are flocking to Airbnb and similar models, seduced by the prospect of high returns, less reliance on long-term tenants, and advertising to facilitate finding tenants.
There are also, however, drawbacks to taking the plunge into this increasingly-popular rental model. Specifically, upfront decorating and furnishing costs can be high, there are potentially higher operating costs, less security from long-term tenants, and some investors report that running a short term rental model such as Airbnb is a second job.
Savvy investors who take the time to analyze available data are also finding that returns don’t always measure up to the hype. According to AXIOS:
“Landlords in Miami can make roughly 77% more by renting out a one-bedroom unit as long-term rental property rather than a short-term, according to a new study by rental listing site RentHop.
By the numbers: The study found that landlords here can make nearly 36% more renting a two-bedroom long term than short term. For three-bedrooms, long-term rentals can bring in 2.4% more. But for properties with four bedrooms, the reverse is true: Those are better suited for short-term vacation rentals. Landlords can make almost 12% more that way.”
When evaluating the performance of an investment property, there is another key metric that should not be ignored. Vacancy rates can help investors determine the desirability of one type of property over another. This indicator is also useful in selecting a long-term tenant model versus the short-term vacation rental alternative.
It won’t come as a shock to know that occupancy in Miami is highest from winter through the spring. What many investors don’t realize is that Miami, as a whole, saw a 61.9% average Airbnb vacancy rate in 2021, Alltherooms.com analytics. Miami Beach, specifically, paints a more encouraging picture, but one that should still be viewed with caution. The median Airbnb vacancy rate for the period spanning July 2021 to June 2022 was 35% according to Getchalet.com, with vacancy shooting to 66% in September.
Every investor or landlord’s situation is different and their adversity to risk may vary greatly. Our market is appealing to national and global investors and those who take the time to evaluate these fact, not hype-based decisions in the Magic City.
For question contact www.tridentmiami.com
