Savannah GA is no stranger to tourism. A coastal and historic city, Savannah is perfect for Airbnb investing. However, there is more to the Airbnb success of a location than simply having a strong tourism sector. For starters, a location needs supportive Airbnb regulations. The market also needs to be profitable (in more ways than one). So, does the Airbnb Savannah market have these characteristics? Why should you invest in Airbnb rentals in the Savannah real estate market? Keep reading to find out!
Why You Should Invest in Airbnb Savannah in 2020
Let’s explore the 4 reasons why you should invest in Airbnb Savannah.
1. Non-owner occupied rentals are legal in Savannah
With many US cities outlawing the use of a non-owner occupied rental property for Airbnb, one major reason to consider investing in Airbnb Savannah is the supportive legal framework. There is a lot to discuss when it comes to the city’s short-term rental regulations. In this blog, we’ll focus on the most important aspects for Airbnb Savannah rental properties.
Brief History of Savannah STVR Laws
Savannah has regulated its Airbnb industry for years now. In January 2015, the City Council passed its first short-term vacation rental (STVR) ordinance. The ordinance limited STVR activity to the Historic District, Victorian District, and Mid-City District. While it was helpful for taxing, licensing, and certifying STVRs, the ordinance was also seen as controversial. This was true even among the city’s government officials. Bret Bell, assistant to the city manager, described the ordinance as “a horrendous bill”. The ordinance received widespread complaints from residents, Airbnb Savannah hosts, and city staffers. As a result, the ordinance was revised in 2017. This 2017 ordinance is the most current version of Savannah Airbnb laws.
Related: The Trend of Legalizing Airbnb Rentals
Current Savannah Airbnb Laws
What exactly is an STVR according to the ordinance? Savannah vacation rentals are rentals of an entire dwelling unit for 30 days or less. As a result, non-owner occupied rentals are permitted for STVR use. However, STVRs should not be confused with the following:
- Bed and Breakfast Homestay: short-term rental of a room within a dwelling unit
- Bed and Breakfast: rental of 2-5 rooms
- Inn: rental of 6-15 rooms, requires either owner-occupancy or 24/7 onsite management
Savannah short-term rentals require an application, business tax certificate, and STVR certificate. These documents will verify that hosts have met all zoning and ordinance requirements. You can learn more about the application on the Savannah Government website.
Savannah vacation rental properties are permitted within the STVR overlay district. This includes the Downtown, Victorian, and Streetcar local historic districts. They are also allowed outside of the overlay. In this scenario, STVRs are only permitted in specific Business and Agriculture zoning classifications (B-C, B-N, B-L, and A-1).
There is another zoning requirement specific to the Downtown and Victorian districts. Each ward in a residential district has a 20% cap for new STVRs. A ward, in other words, is a historic division that is roughly equal to a square with its surrounding blocks. However, owner-occupied parcels are free from this cap. In addition, a 20% pre-ward cap is applicable to non-owner occupied properties in the Downtown Historic District.
Airbnb Savannah GA occupancy requirements are fairly straightforward. Properties with no more than 2 bedrooms cannot have more than 4 adult guests. STVRs with 3 or more bedrooms cannot exceed 2 adults per bedroom.
Hosts must also abide by advertising rules. In every advertisement, an STVR’s certificate number and exemplar rental agreement must be published.
Airbnb Savannah hosts must also pay two taxes. Each tax is due on the 20th day of each month. The two taxes include:
- A 6% Local Hotel/Motel Tax
- A 7% State Use and Sales Tax
Related: 20 Cities with No Airbnb Legal Issues in 2020
2. Airbnb Savannah vacation homes are lucrative
Savannah STVRs are very profitable. You can verify this claim by looking at Mashvisor’s Airbnb Savannah data below:
- Monthly Airbnb Rental Income: $3,409
- Airbnb Cap Rate / Cash on Cash Return: 4.2%
- Airbnb Occupancy Rate: 61.3%
The Savannah housing market is obviously lucrative for Airbnb. And properties in the city are also more profitable than the average short-term rental in the Georgia real estate market:
- Monthly Airbnb Rental Income: $2,270
- Airbnb Cap Rate / Cash on Cash Return: 3.9%
- Airbnb Occupancy Rate: 46.3%
It is important to note one thing about Mashvisor’s data. It only represents the averages of Airbnb Savannah. In other words, investing in Airbnb Savannah can yield more profit than the mentioned data. As a result, there is no doubt that the city is a profitable one for Airbnb in 2020.
3. Savannah has a well-established and growing tourism industry
Savannah is continuing to benefit from its rock-solid tourism. As Georgia’s oldest city, it is rich with history. Millions visit for its historical sites, which include the Georgia Historical Society, the First African Baptist Church, and the birthplace of Juliette Gordon Low. Savannah also offers access to coastal islands, such as Tybee Island, and the Savannah Riverfront. Overall, the city was ranked 3rd in the “Top U.S. Cities” by Travel + Leisure Magazine. Most recently, over 14 million tourists visited the city. This figure has grown year after year and is expected to increase in 2020. As a result, the Airbnb Savannah market has grown as well.
4. The Savannah real estate market has a high appreciation rate
Home prices and appreciation are vital when buying an investment property for any rental strategy, including Airbnb. Therefore, Savannah investors should be familiar with the market’s pricing data. Once again, we’ve got that covered:
- Median Property Price: $391,500
- Price per Square Foot: $907
- Price-to-Rent Ratio: 25
So, what about the market’s real estate appreciation? For years, appreciation was not Savannah’s strong suit. According to NeighborhoodScout, Savannah’s appreciation rate in the last 10 years was near the national average. However, things have changed recently. According to Zillow, Savannah home prices increased by 4.6% in 2019. This trend is expected to continue in 2020. According to Zillow, real estate properties in the market will appreciate by 3.2% this year. Because investors buy and hold Airbnb properties, they will benefit from this increasing property value.
Related: 5 Best Cities for Real Estate Appreciation in 2020
All in all, Airbnb Savannah is top-tier for short-term rental investing. Its reasonable laws, profitability, and Airbnb demand will aid its growth in 2020.
So, now you might be wondering how to find Airbnb properties for sale in Savannah? Well, look no further! With Mashvisor, you can find and analyze the best investment properties in any US rental market! To start your FREE trial with Mashvisor, CLICK HERE!