Airbnb Rentals Key West Airbnb: Why and Where Should You Invest? by Ramonelle Zaragoza January 25, 2022January 25, 2022 by Ramonelle Zaragoza January 25, 2022January 25, 2022 Key West Airbnb properties have always been top picks for investors for being a popular destination. But is it still worth investing in 2022? The island city of Key West is one of the most popular tourist destinations in Florida, and it is easy to see why. When you step out of the crowded Duval Street, you will discover more of its quirkiness, history, and irreverent attitude. Whether you are new to real estate investing or already have a few properties in your portfolio, you would know that Florida remains one of the most lucrative markets in the US. In this blog post, we take a closer look at Airbnb in Key West: Why you should invest in an Airbnb property in Key West this year Is Airbnb still allowed in Key West in 2022? How to choose the best Key West Airbnb investment 5 best Key West neighborhoods for Airbnb investment in 2022 If Key West is one of the Florida housing markets you are looking into, keep reading to learn more about it. Why Invest in Key West Airbnb in 2022 When determining whether a city is worth investing in for Airbnb and other short-term rentals, we look into three factors: The location itself and why people visit Performance of Airbnbs in the area in the past The local real estate market vs. 2022 US housing market Why Visit Key West, Florida? Located in the southernmost point in the US, Key West is well-known for its exciting watersports, thrilling nightlife, beautiful beaches, and quirky architecture. Those who are in the city for a weekend of shopping and dining can stick to Duval Street, where they can also visit Sloppy Joe’s, which is a favorite hangout spot of novelist Ernest Hemingway. Speaking of Hemingway, fans of the author could make a pilgrimage to the Ernest Hemingway Home and Museum. Visitors can explore the estate to learn about the lore surrounding the legendary writer’s life while keeping an eye out for six-toed cats that live in the area. Tourists can also join walking tours to discover the island’s quirky side, which features intriguing homes and irreverent writing on gravestones. Past Key West Airbnb Performance We have been recommending the Key West market for Airbnb investors since 2018 because of its consistent performance. Here are some quick stats from before the pandemic: The Airbnb demand was high, with occupancy rates in the 70% range Monthly Airbnb rental income was in the $8,000s Return on investment was solid at 7% Airbnb cash on cash return But when COVID-19 hit and disrupted the tourism industry worldwide, Key West and the rest of Florida were no exception. While the median property price stayed above $1 million in 2020 and 2021: Monthly Airbnb rental income went down to under $4,000 The average daily rate went from $694 to $592 Airbnb occupancy rate was at 47% Airbnb cash on cash return was critically low at 0.56% With these low numbers, why do we think Key West is worth investing in now? Even though people have been exhausted dealing with the pandemic, more of them are also feeling optimistic, and even excited about, traveling in 2022. According to Destination Analyst’s latest American Travel Trends & Sentiment report: 31% of Americans feel optimistic that the pandemic will improve in the next month Almost 80% have trips planned in 2022 More than 70% are dreaming about or making travel plans 70% are excited about an unplanned getaway 73% expressed higher levels of excitement for prospective travel in the future And because the US government now allows vaccinated travelers from abroad to visit the country, those who have been itching to come here would definitely do so this year. Because of these optimistic sentiments, we believe that tourism in Key West will return to–or even exceed–pre-pandemic levels in 2022 and beyond. Key West, Florida Real Estate Market Trends and Forecast for 2022 Now we know the investment potential in Key West for this year. But what about the local housing market? Will beginner investors be able to afford an Airbnb income property here, or will it only be established investors with a lot of capital? This is what the Key West real estate market looks like as of mid-January: 53 Key West, FL homes for sale (-21% from December 2021) The median property price is $1,629,043 (+16%) The price per square foot is $1,040 (+3%) Homes for sale spent an average of 53 days on the market before selling (+71%) Sales in Key West are more or less the same as how the overall US market is going. Even though the median property price is above $1 million, the lowest-priced home for sale on Mashvisor is $199,000, so beginner investors can start investing here. But even though it takes a property 53 days from listing to selling, the low supply of homes for sale in the city may not give a lot of options. Still, you may be able to find a lucrative rental that is in your price range. Is It Legal to Run a Key West Airbnb? While Airbnb and other short-term rentals are legal in Key West, they are heavily regulated. The city grants two types of licenses: Transient license: Issued to properties in certain Key West locations. This permits the licensed property to be rented out nightly or weekly. Non-transient license: Permits the property to be rented out for a minimum of 30 days. Any single-residential home can get this license, but condos and other properties that are part of an HOA may have different guidelines. Because a transient license is available in limited numbers and costs $225,000 as of January 2021, properties that already have this license are highly sought after. If this is not viable for you, you can start your investment journey in Key West by applying for a non-transient license instead. License Requirements for Transient Lodgings But if you do manage to buy a property with a transient license or is eligible for one, you can apply for or renew this license by providing the city with the following information: The complete street address and RE number of the house to be rented out Proof of ownership, which includes your name, address, and phone number An approved inspection report from the fire marshall verifying compliance with the fire department’s criteria for a residential home that will be used as transient lodging The gross square footage of the property, which includes the number of bedrooms, kitchens, and on-site parking spaces that will be used by guests A valid and current Florida Department of Revenue sales tax identification number, which you can get from the state’s Department of Revenue website The name, address, and phone number of the person overseeing the property’s operations Signatures of all the owners, authorized representatives, and property managers Other Requirements for Transient Lodgings Each Key West Airbnb that is issued a transient license must prominently display on the outside of the property a medallion, which informs the public that it is a transient lodging. The city’s licensing division will issue this medallion as well as detailed instructions on how to display it. The person overseeing the property’s operation must be available 24 hours a day, seven days a week for responding promptly to complaints regarding guests’ conduct. Their name and phone number must also be displayed outside of the rental home and accessible to the public. Each Airbnb unit must comply with the occupancy limits of the Florida Building Code, which may depend on the square footage of the property. Applicable homes must also comply with the Americans with Disabilities Act. Airbnb hosts must also maintain a tenant and vehicle log, which should include the name and address of each tenant as well as the make, year, and tag number of their vehicle. As for parking, each Airbnb unit must have one off-street parking unit unless it is in a historic district. In this case, the host must inform the guest of the historic district’s residential parking program and direct them to a lawful and appropriate parking space. Lastly, owners of short-term rental properties–whether transient or not–are required to hold a business tax receipt issued by the city. A state or county license is not enough to legally operate in Key West; you must also obtain a transient or non-transient license first. How to Choose the Best Key West Airbnb Investment Property It is no secret that investing in a short-term rental property would be a big boost in your real estate portfolio. And with Key West being one of the hottest tourist destinations in Florida, there is no doubt that you will enjoy a positive cash flow if you get a rental property there. Before you get swept up dreaming about 10% returns, here is a step-by-step guide to finding the best Key West Airbnb property. Step 1: Pick a Neighborhood When finding a rental property to invest in, searching an entire city may be too overwhelming. Some neighborhoods are more optimal for Airbnb rentals, while others are better for traditional leases. When deciding on a neighborhood, find out what would make it popular among your target market. Is it near a popular attraction, or does it offer a hideaway from the bustling crowds? You would have a faster time finding a good neighborhood that would fit your investment goals if you use a real estate investment tool that provides analysis while you search for a property. Mashvisor’s heatmap feature, for example, highlights which parts of the city have the highest in any of the following categories: Cash on cash return (Airbnb or traditional) Rental income (Airbnb or traditional) Listing price Airbnb occupancy rate Start Using Our Real Estate Heatmap Step 2: Find Out the Neighborhood’s Regulations While Key West has its own set of short-term rental regulations separate from the county and the state, neighborhood HOAs may have their own guidelines and prohibitions on this. Ignoring this and violating their rules would get you in trouble legally, and you may have to pay fines or even be banned from investing in real estate and other businesses in the area. The best way to find out whether Airbnb is legal in a neighborhood is to contact the HOA in charge. Step 3: Determine the Best Property Type for Airbnb in the Area Once you have selected a neighborhood where you want to buy a rental home, you must now find out what type of property would make you the most money in that area. This highly depends on the type of guests that visit the city. While studio apartments and one-bedroom homes may not charge as high, they may get a high occupancy rate from couples on a romantic getaway. Meanwhile, bigger houses may charge more, but they may not get booked as often. You can also use Mashvisor to determine which property type is optimal in a neighborhood. On our Property Search page, after typing in “Key West, FL”, click on the neighborhood name found under each listing address on the search results. You will be directed to a page filled with our rent analysis about the neighborhood you selected. Click the “Insights” tab and you will find the optimal property type, number of bedrooms, and platform in that area. Step 4: Estimate Your Income, Expenses, and Cash Flow Once you find the optimal property type, you may start searching for homes for sale that matches your criteria. Aside from the property price, you also need to take into account the closing costs, initial expenses, and running expenses that will affect your return on investment. Unlike traditional rental properties, you have to furnish the place and pay for cleaning and maintenance. Here are other expenses to include in your calculations: Property taxes Insurance Property management fee, if applicable Vacancy costs License application and renewal The easiest way to do this is by using an Airbnb calculator. On Mashvisor, you can find this on any home listed on our website. Our AI predicts the type of costs you will need to spend and estimates the amounts based on what was spent in the area. It also estimates the monthly rental income by collecting data from reliable sources. This way, you will be able to determine whether you will get a positive cash flow and the returns you can expect in a few years. Try Our Rental Calculator for Free 5 Best Key West Airbnb Neighborhoods in 2022 These are the five best neighborhoods in Key West for Airbnb investment based on cash on cash returns, according to Mashvisor’s latest data: #1: Duval Street Airbnb Rental Income: $7,293 Airbnb Cash on Cash Return: 6.74% Airbnb Daily Rate: $398 Airbnb Occupancy Rate: 63% Median Property Price: $724,333 Average Price per Square Foot: $543 Days on Market: 53 Walk Score: 94 #2: Historic Seaport Airbnb Rental Income: $7,293 Airbnb Cash on Cash Return: 6.27% Airbnb Daily Rate: $397 Airbnb Occupancy Rate: 63% Median Property Price: $1,422,988 Average Price per Square Foot: $648 Days on Market: 53 Walk Score: 93 #3: The Meadows Airbnb Rental Income: $5,973 Airbnb Cash on Cash Return: 5.69% Airbnb Daily Rate: $402 Airbnb Occupancy Rate: 63% Median Property Price: $1,012,500 Average Price per Square Foot: $1,216 Days on Market: 53 Walk Score: 84 #4: Truman Annex Airbnb Rental Income: $6,568 Airbnb Cash on Cash Return: 4.92% Airbnb Daily Rate: $399 Airbnb Occupancy Rate: 63% Median Property Price: $795,000 Average Price per Square Foot: $1,169 Days on Market: 10 Walk Score: 84 #5: Upper Duvall Airbnb Rental Income: $11,223 Airbnb Cash on Cash Return: 3.65% Airbnb Daily Rate: $402 Airbnb Occupancy Rate: 63% Median Property Price: $1,883,000 Average Price per Square Foot: $1,295 Days on Market: 53 Walk Score: 94 Find Your Next Airbnb in Key West Using Mashvisor Making money in real estate can be easier when you invest in Florida. And despite COVID-19 disrupting the entire travel industry, there is no doubt that Key West Airbnb properties will bounce back soon if they have not already. If you want to buy a rental here, you should do so as soon as possible so you can take advantage of low-interest mortgage rates and be ready for the summer peak. But you have to make sure that the property you get is eligible for a license. Whether you are set on investing in Key West or would like to explore other cities in Florida, you need a tool that will give you accurate information to help you make important decisions. Mashvisor has been providing key analysis on neighborhoods and properties in the US to help investors discover lucrative opportunities. To get access to our real estate investment tools, click here to sign up for a 7-day free trial of Mashvisor today, followed by 15% off for life. Start Your Investment Property Search! START FREE TRIAL Airbnbairbnb rentalsFloridaKey West FL 0 FacebookTwitterGoogle +PinterestLinkedin Ramonelle Zaragoza Ramonelle Zaragoza is a Content Manager for Mashvisor. She helps property investors and first-time homebuyers and sellers learn more about the US real estate market with in-depth research and easy-to-understand articles. Previous Post How to Boost Airbnb Profitability in 2022: 7 Tips Next Post What Is The Ideal Rate Of Return On A Rental Property? Related Posts Where Should You Invest in Airbnb Rentals in Florida? Investing in Airbnb Savannah Rental Properties in 2018: Yes or No? Traditional and Airbnb Investments in the Colorado Real Estate Market Why Are Short-Term Rentals So Popular in the Real Estate Market Today? How to Access Airbnb Occupancy Rate Data in 2022 Don’t Invest in Short-Term Rentals Here: The Places with the Worst Airbnb Legal Issues Tampa Real Estate is a Hot Market in 2018! 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