Are you thinking about entering the world of rental arbitrage in Tampa, Florida? 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 of your short-term rentals in Tampa. So let's get into it!
It might sound like Wall Street jargon, but it's actually pretty straightforward. Rental arbitrage is 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 rate, rent it out at a higher short-term rate and pocket 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 spotlights 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 entering the short-term rental market.
According to AirDNA data as of May 2024,
Number of listings: 6,244 listings
Occupancy Rate: 55%
Average Daily Rate (ADR): $193.4
Revenue Per Available Rental (RevPAR): $106
Annual Revenue: $38.8k
According to Mashvisor:
Number of properties available for rent: 2667
Median Rent Price: $2941
Average Cap Rate: 3.50%
Average Rental Income: $2855
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 must hold a vacation rental license from the Department of Business and Professional Regulation (DBPR). There are two types of licenses:
A Group License covers all units within a building or group of buildings in a single complex that are licensed to a licensed agent. (Multiple group licenses may be issued to different licensed agents for units on the same property.)
A Collective License is issued to a group of houses or units found in separate locations that are represented by the same licensed agent. (A collective license may have a maximum of 75 houses or units per license and is restricted to counties within one district.)
However, because the State of Florida defines condominiums and dwellings as separate types of vacation rental housing you cannot combine the operations under 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.
Tampa is a popular tourist destination with attractions like theme parks, historic districts, and beaches. It's also a major business center and a top startup location, attracting both leisure and business travelers. This diverse demand makes Tampa a profitable market for short-term rentals.
AirDNA shows Tampa has robust average daily rates and impressive occupancy levels. For instance, the average daily rate is around $193.4, with an annual revenue potential of approximately $38.8k per property.
In Florida, vacation rentals must be licensed by the Department of Business and Professional Regulation (DBPR). There are specific licenses for different types of properties, and these licenses must be renewed annually. Additionally, Hillsborough County, where Tampa is located, requires proper zoning for rentals shorter than seven days.
Yes, you need a vacation rental license from the DBPR if you are renting out an entire unit. However, if you are renting out a single room or rooms while remaining in the home, you do not need a license from the DBPR.
You are responsible for submitting state taxes, including the Florida Transient Rental Tax and the Florida Discretionary Sales Surtax. If you list your property on platforms like Airbnb, these taxes may be collected from guests and remitted on your behalf.
Challenges include complying with local regulations, maintaining high occupancy rates, managing guest expectations, and ensuring the property meets health and safety standards. Proper planning and attention to detail are essential for success in Tampa's short-term rental market.