27 Sep MIAMI’S SECOND HOME BUYERS SEEK INCOME PRODUCING PROPERTIES AS OPPOSED TO VACATION SPOTS
In the 1970’s and 80’s the goal for most people buying second homes was to have a place for the family to get away and spend most of their vacation time. Following the credit boom of the early 2000’s, vacation homeowners now expect their property to work for them and become an income-producing asset.
The advent of the Internet has had a substantial impact on this change from vacation home to investment property. Online access to the travel industry has broadened options for vacationers to explore the world rather than retreating to their own lake or beach house year after year, which was more the norm in decades past. The Internet has also opened the doors for just about anyone to become a landlord. Sharing platforms like Airbnb, HomeAway and VRBO have morphed from the original idea of renting out a spare room to becoming an easy way for owners to cover their costs and make their properties income producing. According to a new international survey “Spotlight: Second Homes – Global Trends in Ownership and Renting,” from real estate adviser Savills and HomeAway, 70% of U.S. owners completely cover the cost of ownership with rental income.
While this trend is allowing many people to find new avenues to owning vacation properties, as we have reported in the past, hotel operators and municipalities like Miami Beach are not fond of residential properties being used as rental properties. Many local governments have established strict rules for vacation rentals, and as with Miami Beach, there is an outright ban punishable by fines in excess of $20,000 and now a potential for jail time. Not surprising, Florida leads the U.S. as having the most second homes in the nation, accounting for 14% of all domestic second homes. What many regulators fail to realize is a great majority of second home ownership would not be possible if they were not income producing properties.
DEVELOPERS: IF YOU CAN’T BEAT THEM, JOIN THEM!
While many condo homeowners associations are staunchly against vacation rentals, several developers have come to embrace the practice.
“We acknowledged that, especially in downtown Miami, a large part of the ownership universe is not local,” said David Arditi, founding principal of Aria Development Group and developer of the YotelPad project. “It resides out-of-state and overseas. Absentee owners use their home for a few months over multiple years, and the ability to offer the buyer universe a flexible rental option is ideal. We know people want it. We know people like it. We said, ‘Why not be proactive about it?”
Developers like Arditi are partnering with platforms like Airbnb and actually helping owners facilitate the rental process. By being involved as opposed to simply allowing it, developers are able to have a hand in the control of the rentals. This enables them to ensure responsible practices as well as the payment of required taxes and licenses. Similar to condo-hotel properties, when buyers purchase a unit at the property they have the option to enter into the rental program. This allows the owners to have their condo professionally managed and maintained while producing income and having a place to vacation if they choose to.
NEW APPS & PLATFORMS MAKE RENTING SECOND HOMES EASIER
YotelPad and other short-term rental management services like Pillow are sprouting up to help mainstream the idea of income-producing second homes. Pillow focuses on multi-family property owners with five or more residential units. Using Airbnb as a base, Pillow allows owners and property managers to run everything from check-in, billing and even turnover with a housekeeping network for cleaning, linens and supplies.
Society is changing, as is the idea of homeownership. Contrary to how previous generations bought a home and settled there a majority of their lives, housing options today have become much more diverse. Some people prefer to rent and move frequently, some are involved in fractional ownership home-sharing, and some simply rent a single bedroom in co-living spaces. As economies change and new generations reevaluate what they consider important in their lives, we will continue to see an evolution of the housing market. While there are pros and cons of any situation, an increase in a diversity of options for home buying and housing will allow more people to achieve their goals and attain what works best for them.
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