Condos as Short Term Rentals?

Renting a Condo as a Short Term Rental may not be as easy as it sounds

Regulations, HOA rules, insurance and taxes need to be considered before you buy a condo to use as a Short Term Rental.

Online condo rentals via Airbnb and VRBO, has become increasingly popular especially in Florida. A lot of owners rent for a few months to help defray the costs of ownership and allowing the owner to still use their condo for part of the time.

While it can be very rewarding financially to rent out your condo on a short time basis, there are several risks and drawbacks associated with renting out your condo, especially to complete strangers. Considering these risks before deciding to rent can save condo owners many headaches and possible future expenses. Most of these issues apply to both long term and Short Term Rentals, but some are only applicable to Short Term Rentals.

Five things to consider before deciding to rent out your Condo

HOA Rules, Regulations and Restrictions- The first thing you need to do when deciding to purchase a condo is to figure out all of the Rules, Regulations and Restrictions. The condo almost will certainly have rules that you must adhere to, and this includes rules relating to renting, pets and parking of vehicles. The last thing you need to do is to buy a condo and then learn that you cannot rent the unit for 2 years if you intend on the rental income from the unit.

City, County and State Rules & Regulations- Before deciding to purchase a condo, you need to know the rules regulations and restrictions to be imposed by your local City, County as well as State authorities. For example, in Fort Lauderdale, the City imposes certain fire code restrictions that must be complied with for Short Term Rentals. You should assume that there will be some restrictions that must be complied with.

Tax Regulations- Taxes relating to rentals come in many forms. Most areas in Florida will charge a special tax (sales tax) on Short Term Rentals, especially in areas where there are a lot of hotels. You will also have to deal with Uncle Sam for the income that you receive from your rent collections. Many owners of condos have also found themselves in situations where their real estate taxes have increased because of the condo being used as a rental, under the theory that a condo is worth more if used a s a rental.

Insurance Issues- Condo owners are always advised to have an insurance policy that covers contents and liability. There may be exclusions for rentals, especially for Short Term Rentals. It is better to be safe than sorry, so you will want to confirm that you are covered for unforeseen liabilities. This may include considering an Umbrella Policy.

Management Issues- Renting your condo to strangers can cause problems that involve you time and money. Damages to your condo are almost guaranteed to occur and if you are not on top of things, over the long run these types of expenses can add up. Getting phone calls at all hours of the day should be expected, especially for Short Term Rentals.

The bottom line is that Renting your condo is not as easy as it may appear. Ask your Realtor to do some leg work for you to know all of the Rules and Regulations. Consider hiring a professional manager to help with all of the issues relating to renting and maintenance.