Are you thinking of investing in Virginia Beach short term rental in 2023? Read on to find out the current state of the rental market there.
It’s no doubt that short term rentals are revolutionizing real estate investing for investors. Many investors are now considering short term rentals due to the higher profit potential they offer. In addition, they give you the flexibility to decide your nightly rate, as well as choose the number of nights to make the property available for booking.
Table of Contents
- Real Estate Market Trends and Forecast in Virginia Beach
- Tourism and Travel in Virginia Beach
- Short Term Rental Laws in Virginia Beach
- How to Find a Profitable Short Term Rental Property in Virginia Beach
- Top 4 Virginia Beach Neighborhoods for Short Term Rentals
One major challenge the industry’s been facing in recent years is the COVID-19 pandemic. With the travel industry on its knees, there weren’t enough guests to book short term rentals two years ago. Fortunately, the industry is now slowly inching its way to full recovery.
Can the same be said about the short term rental market in Virginia Beach? Is the Virginia Beach housing market conducive for short term rental property investment? What are the future predictions for short term rentals in this market?
In today’s blog post, we seek to provide answers to the above questions. We’ll also look at the legal ordinances for short term rentals in Virginia Beach and learn how Mashvisor can help you. So, be sure to read to the end.
Real Estate Market Trends and Forecast in Virginia Beach
Virginia Beach is a hot market. It’s ranked as one of the top 15 real estate markets in the State of Virginia, where homes sell within three days of being listed. Buyers who are interested in investing there should be prepared to move fast.
According to the housing market report by Virginia REALTORS©, the median home price in Virginia was $390,000 in April. The amount represents a steep increase of $100,000 from four years ago (2018). The median sales price is also higher by over 9% from the same period in 2021.
In addition, there was a total of 11,991 home sales in Virginia in the same month, down 11.6% from the same period last year.
The slowdown in home sales can be attributed to reluctance from buyers due to inflation, rising home prices, and unfavorable mortgage rates. Due to the increasing interest rates, housing demand is expected decrease in the coming year, thereby slowing down price growth.
Virginia Beach Real Estate Market Forecast
As a real estate investor, you may find many different reactions and forecasts about investing in the Virginia Beach housing market. While there’s not much hype about real estate investment in the said market, the good thing is that there’s a variety of property types for you to choose from.
Virginia Beach is particularly good for short term rental investors since you can buy any property type depending on your target market. You can invest in a single family home if you’re looking to host large groups and families. You can also buy a condo or townhouse if you target individual travelers or couples.
In addition, there are various beachfront properties that you can convert into short term rentals and generate substantial returns.
Related: 2023 Real Estate Market Forecast: Top 10 Predictions
Tourism and Travel in Virginia Beach
Before investing in short term rentals, you must first establish whether your location receives enough visitors throughout the year for you to attract enough guests. One of the best bets for short term rental investment is investing in a tourist location.
Virginia Beach remains a popular tourist location in the US, even during the pandemic. In 2019, around 19 million people visited the destination city, setting a new record. The occupancy rate for hotel rooms during the summer of 2021 was 84.2%, which was higher than the rate in the summer of 2019.
Whether visitors are looking for a romantic getaway or a family vacation, there are many offerings in Virginia Beach for visitors to consider.
Located along the Atlantic Ocean, Virginia Beach is known for picturesque white sand beaches, breathtaking outdoor activities, a bustling art and entertainment scene, and outstanding seafood.
So, what actually brings visitors to Virginia Beach? Let’s break down some popular tourist attractions to justify investing in short term rentals in this market.
Virginia Beach Boardwalk and the Oceanfront
Most of the visitors to Virginia Beach come during the summer to enjoy the good weather and great beaches. The beachfront is one of the most popular destinations in the city, stretching from the Virginia Beach Fishing Pier and running in front of a throng of hotels.
The soft golden sand creates a conducive environment for a vacation or quick getaway, and it can be filled with people depending on the season.
The Virginia Beach Boardwalk runs along the beach for about three miles. It allows visitors to walk, run, bike, skateboard, hang out with friends, or simply enjoy a quiet time on a park bench overlooking the ocean.
Virginia Aquarium and Marine Science Center
After spending a considerable amount of time at the beach, visitors who want to take a break can visit the Virginia Aquarium.
The aquarium is home to many sea species and water life, including sharks, sea turtles, seals, rays, otters, and other marine life. You can also come across unexpected wildlife, such as Komodo dragons. It comes with beautiful outdoor areas overlooking the water.
The large complex is also home to displays that show you what Virginia probably looked like centuries ago and the living conditions in the area as time passed by. A few highlights here include a dinosaur exhibit, a walkthrough red sea tunnel, an otter exhibit, and a 3D movie theater.
For visitors looking for some adrenaline rush, Adventure Park will tickle their fancy. The park is set within the Virginia Aquarium and Marine Science Center grounds. It’s a large forested park with platforms and ropes dangling from the trees.
Visitors can test their skills on the swinging chairs and breathtaking aerial walks, all high up in the trees. For newbies, there are staffers to instruct them on how to use the equipment and then release them to explore on their own. There are also spotters to help visitors if need be.
Adventure Park is perfect for families with older children.
Military Aviation Museum
Virginia Beach also packs a punch for visitors who love aviation history. The museum houses historic military aircraft from all over the world. You can find approximately 60 aircraft from the WW1 and WW2 eras, including fighter jets, bombers, seaplanes, and trainers.
Even more mind-blowing is that almost all of them are flight-worthy and are used during flight demonstrations and air shows throughout the year.
There are also other activities in the museum, such as aircraft rides, summer camps, a Jurassic Park for dinosaur scavenger hunts, and many other exhibits to help you learn more about aviation history.
Short Term Rental Laws in Virginia Beach
One of the most important processes investors must go through before investing in short term rentals is finding out the location’s laws and regulations on short term rentals. You don’t want to invest your hard-earned money only for you to fall into legal trouble down the line.
Back in July 2021, the Virginia Beach City Council banned all new short term rentals. The city council’s move came after a series of complaints from residents due to parking issues, uncontrolled parties, and overall disruption within the neighborhoods.
In September 2021, however, the ban was lifted and new rules and regulations were put in place. Here’s what you need to know about starting a short term rental business in Virginia Beach:
Related: Is Airbnb a Good Investment Considering All of the Regulations?
What Is a Short Term Rental in Virginia Beach?
The city of Virginia Beach describes a short term rental property as “an entire dwelling leased for less than 30 consecutive days for compensation.”
The Virginia Beach City Council doesn’t consider a room rented in an owner-occupied residence as a short term rental property.
Now that we’ve looked at and understood the basics, how do you legally operate a short term rental in the city?
The City Council allows certain property owners to own and operate short term rentals in Virginia Beach. You must meet the following criteria to be eligible:
- The property must be located in the Sandbridge Special Service District.
- The property should be located in Oceanfront Resort Short Term Rental Overlay District.
- The property must be grandfathered in. Grandfathered properties must have been registered with the Revenue Commissioner and pay transient occupancy taxes before July 1, 2018.
- The investor must have an approved short term rental conditional use permit (CUP) obtained before September 7, 2021. All permits expire five years from the date of adoption. The Planning Department oversees the permit renewal and the property must adhere to all ordinances and codes.
Investors whose properties aren’t compliant with the above provisions are prohibited from operating short term rental properties in Virginia Beach.
More Short Term Rental Ordinances in Virginia Beach
You must adhere to the following rules and regulations if you desire to run a short rental in Virginia Beach legally:
- Parking: Your property must have a minimum of one parking spot per bedroom. Each spot must be 16 ft. long and 9 ft. wide. If your property lacks a parking spot, you can create a parking plan and get it approved by the Zoning Administrator. Keep in mind that street parking doesn’t count.
- Taxes: To maintain a property’s eligibility as a short term rental, you must keep your taxes and registration updated with the Commissioner of Revenue’s office.
- Events: If your guests wish to host 50-100 people, you must obtain a special event permit. You’re only eligible for three such permits in a calendar year.
- Responsible party: You must provide the name and contact details of a responsible party who is available to address any concerns on the property within 30 minutes.
- Signage: The annual zoning permit you obtain every year needs you to post a four-square-foot sign on the property to identify it as a short term rental.
- Rental contracts cap: You can only accept up to two rental contracts within seven consecutive days.
- The number of guests: Your short term rental can only host a maximum of three people per bedroom after 11 p.m. and before 7 a.m.
- Liability insurance: You must obtain liability insurance for $1,000,000 for your short term rental. You must provide proof of insurance for filing in the Zoning Office.
- Fire safety: You must install interconnected smoke alarms, carbon monoxide detectors, and a fire extinguisher on your property.
If you want to learn more about ordinances in any city in the US, visit Mashvisor’s short term rental regulations page.
How to Find a Profitable Short Term Rental Property in Virginia Beach
By now, you might already be interested in buying a short term rental property in Virginia Beach.
The process doesn’t need to be complicated. However, you should know what to do or check. Besides, you also need to use the right online tools for each process. It is why we created the simple guide below to walk you through the steps.
Follow the crucial steps below to get started:
Pick a Good Neighborhood
Your location can make or break your investment. It determines how much you can earn from your short term rental property.
We’ve already established that Virginia Beach is a good location for short term rental property investment. However, you need to analyze the specific neighborhoods, too, since different neighborhoods in the same city offer different returns.
Studying and analyzing neighborhoods can be overwhelming, especially for newbie investors who may not know what to look for. That’s why we recommend that use a professional online tool to help you pick a profitable neighborhood.
Mashvisor already offers the best tool for your needs. Our heatmap tool will help you spot lucrative neighborhoods in Virginia Beach.
For starters, a heatmap is an analysis tool that helps you find and analyze various neighborhoods in a certain location. Just like the weather heatmap, a real estate heatmap uses colors to display data.
Our heatmap allows you to set your search criteria using various filters. The filters include:
- Listing price
- Short term rental income
- Short term cash on cash return
- Short term occupancy rate
Once you’ve set up your search criteria, the heatmap will then display the top-performing neighborhood in Virginia Beach based on the set filters. The color green represents active neighborhoods, while red is for the dormant ones.
Search for Lucrative Short Term Rental Properties
Now that you’ve identified one or two potential investment neighborhoods, it’s time to look for potential investment properties.
Before you can start searching for potential short term rental properties, you need first to set your budget. Most investors only consider the listing price when setting their investment budget. However, you should also account for other expenses, such as closing fees, inspection, taxes, repairs, mortgage, and any other fees.
Once you have a budget in place, you can now start your search for profitable short term rental investment properties. The best way to find one is by using an online property database. This is where our investment property search feature comes in.
The tool allows you to search for listings across the US housing market. You can also customize your search by using the following features:
- Listing price
- Cash on cash return
- Cap rate
- Number of bedrooms
- Number of bathrooms
- Property type
The tool will then show you the best-performing properties based on your search requirements. In short, the property results will be ranked by order of profitability.
Calculate the Potential Income
Finding a few potential investment properties isn’t enough. You need to further scrutinize the individual properties to make sure they make financial sense. The short term rental property should generate a positive cash flow. It will help you avoid paying for the expenses from your pocket in case of low occupancy rates.
The truth is that finding short term rental data to conduct an investment property analysis can be an uphill task. Doing it manually can also expose your results to human errors. The good thing is that using Mashvisor can help you take all the burden from your shoulder.
Once you’ve found an interesting property on our search tool, simply click on it to reveal the property page where you’ll find every important detail you need to know about the property.
The property page includes key property details, such as cash on cash return, cap rate, estimated monthly income, and expected expenses. You will also get an insight into the real estate comps and short term rental analytics.
Related: What Are Real Estate Comps and Why Are They Important for Real Estate Investors?
Using the Investment Property Calculator
Afterward, you can use the investment property calculator to carry out an in-depth property analysis. The calculator helps you estimate a property’s income after expenses and other costs.
The best thing about the tool is that it’s interactive. You can customize the financing options and tweak the expenses to generate a more personalized result. This way, you can see whether the property matches your financial and investment goals or not.
One other reason why our calculator stands out from other online tools is that it shows you metrics for both long term and short term rental strategies. The provided data allows you to choose the most profitable strategy for your property.
You also don’t need to worry about data accuracy and reliability when using our tools since we pull our data from reliable sources, such as Airbnb.
To learn more about Mashvisor’s tools, sign up for a 7-day free trial now.
Top 4 Virginia Beach Neighborhoods for Short Term Rentals
As promised, here’s a list of neighborhoods in Virginia Beach to consider for short term rental investment. The neighborhoods are ranked from the highest to the lowest cash on cash return, based on Mashvisor’s end-November 2022 location report.
- Median Property Price: $474,501
- Average Price per Square Foot: $1,164
- Days on Market: 74
- Number of Short Term Rental Listings: 412
- Monthly Short Term Rental Income: $3,703
- Short Term Rental Cash on Cash Return: 4.84%
- Short Term Rental Cap Rate: 4.90%
- Short Term Rental Daily Rate: $279
- Short Term Rental Occupancy Rate: 41%
- Walk Score: 5
2. Linkhorn Park
- Median Property Price: $510,739
- Average Price per Square Foot: $823
- Days on Market: 51
- Number of Short Term Rental Listings: 424
- Monthly Short Term Rental Income: $3,494
- Short Term Rental Cash on Cash Return: 4.68%
- Short Term Rental Cap Rate: 4.75%
- Short Term Rental Daily Rate: $275
- Short Term Rental Occupancy Rate: 41%
- Walk Score: 15
3. Rudee Heights
- Median Property Price: $396,688
- Average Price per Square Foot: $298
- Days on Market: 49
- Number of Short Term Rental Listings: 345
- Monthly Short Term Rental Income: $3,067
- Short Term Rental Cash on Cash Return: 4.68%
- Short Term Rental Cap Rate: 4.75%
- Short Term Rental Daily Rate: $271
- Short Term Rental Occupancy Rate: 42%
- Walk Score: 28
4. Camp Pendleton
- Median Property Price: $549,900
- Average Price per Square Foot: $182
- Days on Market: 8
- Number of Short Term Rental Listings: 128
- Monthly Short Term Rental Income: $3,351
- Short Term Rental Cash on Cash Return: 2.98%
- Short Term Rental Cap Rate: 3.01%
- Short Term Rental Daily Rate: $217
- Short Term Rental Occupancy Rate: 39%
- Walk Score: 3
Start your search for lucrative short term rental properties in Virginia Beach.
Investing in a Virginia Beach short term rental is a great investment decision that promises handsome returns. Virginia Beach is a tourist destination that offers a number of attraction sites and activities. Many people flock to the city, especially during summer, to enjoy the white sand beaches and the warm weather.
They are good reasons for investing in short term rentals in the city. Since it receives many people throughout the year, you’re assured of a good occupancy rate and rental income.
However, just buying any short term rental in Virginia Beach isn’t an assurance that you will receive a substantial income. You must carry out in-depth research and analysis to understand the existing ordinances and whether the property is worth your time and finances.
Using the right tools is the best way to conduct an accurate and reliable analysis. Mashvisor provides you with the best tools for the job.
Be sure to schedule a demo to find out how our tools can walk you through your investment journey.