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Top 6 Reasons Why You Should Invest in Miami Short-term Rentals

Eyeing a sunny, seaside city for your next real estate investment? Consider Miami short-term rentals.

This sparkling seaside city has always been a top US tourist destination. Its perpetual summers, miles and miles of beaches, epic nightlife, and vibrant food and culture keep it on every vacationer’s radar.

It made TripAdvisor’s Best of the Best list this year and ranked #5 on its top summer destination list.

Its tourism draw isn’t just appealing; it’s convenient. Major international air and cruise ports are situated there, and the city metro is very easy to navigate. Miami is the 5th most walkable city in the country. It has plenty of good public transportation and trolley options, too. Plus, it’s a biker’s paradise.

Investing in Miami Short-term Rentals

The city attracts massive amounts of visitors at any time of the year. You’ll never run out of short-term renters in this bustling tropical oasis.

But Miami’s diverse economy and easy access to international markets also make it a gateway to foreign business. It’s a veritable mecca for housing and real estate investment.

According to real estate investing advice company MillionAcres, the city attracts lots of highly educated, high-income professionals like doctors, lawyers, bankers, financial consultants, and investors. They come either to visit, work, or play, with some eventually settling.

All of those folks need furnished rentals in Miami, whether for short, medium, or long-term stays.

In 2020, Greater Miami made it to both Rented.com’s and Realtor Magazine’s lists of top 20 places to buy a vacation rental. They took into consideration the cost of home ownership, short-term revenue potential, the cost to acquire, annual appreciation, and projected changes in asset value.

Here’s why this magical city has an edge on STR investing over many other places in the country:

Balanced housing market. Miami has over 5 times the housing inventory than the national average. At a time when the majority of the country is facing a housing shortage, this city has more than enough properties to supply the local demand. But the inventory has also decreased over the past year.

Miami is densely populated with a population of 6.1 million after an increase of 0.74% in 2021. Real estate value is high and consistently increasing. The Price to Rent ratio is at 23, making it an attractive market for rental property investment.

But while home values may be affordable for many buyers, prices have increased by 20% year over year. The market is definitely trending upward.

Good rates. The city’s rental rates are also higher — around 9% — than the national average. It’s pricey to live here, but that doesn’t dissuade many from coming whether on a short-term or long-term basis.

Local papers have reported a 3 to 4% rise from last year’s rates, while an analysis of Craigslist apartment listings has placed the increase at 14.9%.

Miami-Dade County ranks in the top 20% of the most expensive short-term rental markets in the United States. A 2-bedroom furnished rental in the county, for example, cost an average of $237 per day in March 2021.

High occupancy. The occupancy rate for airbnbs in Miami before the pandemic was over 50%. In December 2020, the city’s short-term rental industry reported occupancy levels higher than those of hotels since the pandemic started early in the year. Occupancy for the last quarter of that year was at 83%.

Currently, rental vacancies are at their lowest point in 5 years.

Tax advantages. Florida is a very tax-friendly state that requires no state tax, no personal income tax, no capital gains tax, and no estate tax. Property taxes rank below the national average, but those in Miami-Dade are slightly higher than the state average. The low mortgage rates also bring additional benefits to both real estate buyers and sellers.

Robust economy. Investments have been pouring into Miami in recent years, and continue to do so despite the pandemic. Tech CEOs from Silicon Valley and venture capitalists from New York have been migrating to the city in recent years, bringing with them countless jobs and opportunities.

Greater Miami saw nearly $2 billion in funding for companies in 2020 alone. Biscayne Times called the city the new “tech haven”, reporting a 45% increase in tech jobs since 2015. Indeed.com ranked it as the #1 city to find employment in 2017.

As could be expected, the job market drew a steady stream of job-seekers. And as more and more tech and other companies open, with all-out support from the local government, the demand for real estate is surging.

This year, multi-billion companies like The Blackstone Group, Founders Fund, and Softbank Group secured office spaces in different parts of the city.

It’s also worthwhile to note that starting 2022, Formula One will be holding its Grand Prix races in the city for the next 10 years.

Even billionaire Elon Musk is setting his sights on Miami. He proposed to build a tunnel underneath the Miami River to alleviate the city’s traffic congestion, and the governor and mayor are very open to that.

Overall, Miami ranks the 4th best place to start a business after the pandemic, based on economic indicators like funding opportunities, business-tax environment, growth in entrepreneurship, and quality of the labor pool.

Great environment and livability. Miami’s warm temperature — typically within 61 and 88 degrees even during the winter — is primarily why snowbirds and retirees flock there. But did you know that vast numbers of Millenials are drawn there as well? Realtor.com called Miami a “Millenial Magnet”, placing it at the #2 spot where young people want to be in 2017.

Overall, the city ranks high in the global livability index based on factors like healthcare, education, infrastructure, culture, work-life balance, and the environment.

It was listed as the #1 healthiest North American city in 2020 by MindBodyOnline, a wellness technology platform. The website listed factors like residents’ overall health, fitness attitudes and habits, and the success of the gym and spa business. Miami is also one of the most environmentally friendly cities in the US.

With year-round warmth, 35 miles of beaches, and over 800 parks to explore, folks seeking to stay active and healthy throughout the year will find it irresistible to come here.

Not to mention that the city’s 365 days of sunshine, with its loads of natural Vitamin D, can be a wholesome, all-natural therapy to boost the immune system and avoid getting Covid-19!

The Bottom Line

All the above factors combine to make Miami a viable place to invest in. The city offers opportunities for business growth, financial freedom, and even personal health and wellness.

Do your diligence and study the factors that affect a market’s profitability. You can use sites like AirDNA, Transparent, BiggerPockets, and AllTheRooms to find solid numbers and important data to help you.

With enough research, you’ll see that many places present lots of possibilities for short-term rental investing. You’ll also find that while many new destinations have even emerged since the pandemic, not a lot can offer as many promising benefits as Miami.

If you think this southern gem is the right place for you, we’d be happy to help. Cohostit.com offers complete short-term property management services from marketing to cleaner scheduling to issue resolutions. Click here to book a call to see if you qualify.