Airbnb Rental Arbitrage in Miramar Beach | What You Should Know!

What is Airbnb Rental Arbitrage?

Airbnb rental arbitrage is a unique strategy that allows hosts to list and earn on the platform legally without directly owning property. The increasingly popular strategy is a type of subletting for Airbnb where you lease a property for the long term and list it on Airbnb, which is for the short term. You use the income from your Airbnb business to pay your rent; the rest is your profit.

Miramar Beach as a Tourist Destination

Miramar Beach is a census-designated place in Walton County, Florida that is due east of Destin in Okaloosa County. It is also many miles away from the city of Miramar in Broward County. A beach resort area that attracts heavy tourism, particularly in the spring and summer, Miramar Beach is a Florida Gulf Coast destination that offers year-round fun for families, friend groups, and couples.

Visitors can enjoy plenty of experiences on the water beyond sunning by the beach including deep sea fishing, snorkeling, parasailing, and jet skiing. For the more low-key sports enthusiast, there’s golf and tennis on nationally renowned courses and courts, and dolphin watching. Families will enjoy spending their days at marine parks, taking in a magic show at night, and even engaging in some axe-throwing. Apart from romantic walks on the white sandy beach or a cruise into the sunset, couples can enjoy a plethora of fine dining options, live music, and fantastic shopping. Miramar Beach is also known for its wine and beer festivals and makes an excellent stayover destination from which to make day trips to Destin, Santa Rosa Beach, and Sandestin.

Airbnb Rental Arbitrage Potential in Miramar Beach

AirDNA is the leading provider of data and analytics to the $140 billion short term rental industry worldwide. According to its data for short term vacation rentals (listen on Airbnb and Vrbo) in Miramar Beach in 2021:

• Average Daily Rate (ADR) is $361 (July)

• Average Occupancy Rate is 97% (July)

• Average Monthly Revenue is $8,000 (July)

Despite its reputation for short term rental apartments, of the nearly 4,000 active rentals in Miramar Beach, 99% are entire homes with 2-bedroomed residences being the most common.

According to Zumper, the average rent for a 2-bedroom apartment in Miramar Beach, FL is currently $2,300. Meanwhile, Realtor.com pegs rent for a 2-bedroom home in Miramar Beach at between $1,500 and $3,000.

Airbnb Rules in Miramar Beach

According to Section 509.242(1)(c), Florida Statutes, a short term vacation rental in Florida is 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.

Vacation Rental License

If you rent a vacation rental more than 3 times in a calendar year for periods of less than 30 days or 1 calendar month, whichever is less, you are required to obtain a short term rental license from the Department of Business and Professional Regulation (DBPR). This is also true if you only advertise it or hold it out to the public as a place regularly rented to guests.

According to Florida law however, renting a single room or rooms other than the whole unit does not fall under the classification of a public lodging and therefore does not require a license.

License Classifications

Short term vacation rentals are classified as either a

Vacation Rental – Condominium: A unit or group of units in a condominium or cooperative

or

Vacation Rental – Dwelling: A single-family house; a townhouse; or a unit or group of units in a duplex, triplex, quadraplex, or other dwelling unit that has four or less units collectively

with each requiring its own type of license.

Licenses are also issued based on the number and location of the property/ies or unit/s as well as who the operator is. These include:

• Single license which can include one single-family house or townhouse or a unit or group of units within a single building that are owned and operated by the same individual person or entity but not a licensed agent

• Group license which is issued to a licensed agent to cover all units within a building or group of buildings in a single complex

• Collective license which is issued to a licensed agent who represents a collective group of houses or units found on separate locations. A collective license is limited to 75 units or less and is restricted to counties within one district

If you operate both vacation rental condominiums and vacation rental dwellings, you cannot combine them on the same license in any of the three licensing categories.

Licensed Agent

A licensed agent is someone that the property owner has authorized, through a rental agreement or contract, to hold out the property for rent on a transient basis. As a rental arbitrage operator, you will be recognized as the licensed agent for the property. According to Florida law:

• The licensed agent does not have to hold a license from the Division of Real Estate

• Only a licensed agent can hold a group or collective license. A licensed agent cannot hold a single license

• The licensed agent is responsible for all violations cited during an inspection if the violations occurred while the unit or dwelling was listed under the licensed agent (or if the division records list the property under the licensed agent)

License Application

DBPR actively encourages online applications for obtaining a vacation rental license. Online applications are faster and are usually processed in one to two business days. The digital license is emailed immediately after approval.

To apply, you must first create a DBPR Online services account.

To obtain a vacation rental license apply online.

Other Licensing Requirements

• License must be current and renewed annually

• Any changes in the number of units noted in the license must be reported. The number can only be updated online through your DBPR online service account

• A license is not transferrable from one place or individual to another

• Licenses or copies of licenses must be displayed conspicuously within each short term vacation rental premises

• License fees can be determined by using DBPR’s fee calculator

Vacation Rental General Rules

Short term rentals are subject to a number of requirements with regard to hygiene, sanitation, and general safety to ensure the unit is maintained to be clean, safe, and in good physical condition. These include but are not limited to:

• Clean, ventilated, and well-lit halls, entrances, stairways – day and night

• Clean and well-maintained appliances

• Ensuring the establishment is free of vermin

• Toxic items properly labeled and stored

• Potable water and adequate sanitary facilities such as showers, sinks, and toilets to be provided

• Kitchen sink with hot and cold running water under pressure

• If water is obtained from a nonpublic system such as a well, it must be sampled and tested annually to meet state water quality regulations with the most recent report made available upon request

Additional Rules for 3 or more storied buildings

• Unless common elements of a condominium, a Certificate of Balcony Inspection for exterior balconies and stairs must be filed every 3 years. Proof must be provided to gain exemption

• Automatic fire sprinklers must be installed if the majority of the rental units are located within a single building of three stories or more or greater than 75 feet in height. (If 50% or fewer of the units within the building are rented transiently, a fire sprinkler system is not required.)

Human Trafficking Regulations

Any short term rental that employs workers for housekeeping duties or to work at the reception where guests check in and check out must provide annual training on human trafficking awareness. New employees must receive training within 60 days of beginning their employment.

Vacation Rental General Safety

• Railings should be installed on all stairways and around all porches and steps.

• Heating and ventilation must be kept in good repair or installed to maintain a minimum of 68 degrees Fahrenheit throughout the building.

• A boiler certificate is required if a boiler or other water heating device exceeds a maximum heat input of 400,000 BTUH, a water temperature of 210 degrees Fahrenheit, or a water capacity of 120 gallons is located not in a common area.

• High hazard areas like boiler rooms and laundry rooms must be kept clean and free of debris and flammables.

• At least one approved locking device is required that cannot be opened by a non-master guest room key on all outside and connecting doors. (Cannot be a sliding chain or hook and eye type of locking device.

Vacation Rental Fire Safety

Short term rentals are required to adhere to general fire safety guidelines including but not limited to:

• Having a properly charged and accessible fire extinguisher

• Installing smoke detectors in every living unit

• Installing specialized smoke detectors for the hearing impaired at a rate of one per every fifty rental units with a maximum of five required

• A proper and safe electrical system that does not use extension cords

• Full compliance with the NFPA 101 Life Safety Code

Any violations of fire safety requirements found during inspections will be reported to the Florida State Fire Marshal and local fire safety authorities.

Airbnb Taxes in Miramar Beach

Short term vacation rentals are subject to state taxes which must be collected and remitted to the Florida Department of Revenue (FLDoR). Airbnb however collects and remits the below-mentioned taxes on behalf of hosts:

• Florida Transient Rental Tax 6%

• Florida Discretionary Sales Surtax: 0.5%-1.5%

However, even Airbnb operators are required to register with FLDoR as ‘Active – Not Required to File’.

Airbnbs located in Miramar Beach are also subject to County taxes:

• Walton County Tourist Development Tax 2-5%

Airbnb however takes no responsibility for collecting and remitting a tax to Walton County, placing the responsibility fully on the host.

All taxes are calculated on the full listing price including any cleaning fees.

Conclusion

With an average monthly revenue of $8,000 during the high summer season and rents averaging at less than 50% of that, popular tourist attractions, and a lack of regulation on the county and city levels, Miramar Beach offers good potential for rental arbitrage. New legislation from Walton County however is likely on its way due to complaints from locals. The draft ordinance so far mostly focuses on parking, noise, trash, and crowding though some fear occupancy limits could lead to lower ADR and lower spending overall. It could also lead to visitors choosing to stay in Destin over Miramar Beach.