Are there too many vacation rentals?

There are becoming more and more vacation rentals, though the demand for vacation rentals seems to continue to be high. The rent does fluctuate with the market and seasonal attraction to the area.

That's a smart question, Celine. In a lot of markets, yes, the vacation rental space is more crowded than it was a few years ago. After the pandemic boom a wave of new hosts jumped in thinking it was easy money, and that extra supply has pushed nightly rates and occupancy down across many areas. It's not a bad investment, but you have to be a lot sharper about it now than you did in 2021. Before you buy anything, research the local short-term rental regulations in the specific area you're targeting. Some cities and counties have capped permits, added licensing requirements, or banned them entirely in certain zones. Finding that out after you've already closed is an expensive problem to have. Then run your numbers conservatively. Factor in realistic vacancy, cleaning costs, property management fees, maintenance, insurance, and the fact that you're competing with significantly more listings than you would have a few years ago. If it only works when everything goes perfectly, that's a red flag. If it still cash flows with conservative assumptions, you might have something worth pursuing. Get with a local agent who understands the investment side and knows the short-term rental landscape in your target market. The right guidance before you buy is what keeps a vacation rental from becoming a money pit. Barrett Henry Broker Associate | REALTOR® RE/MAX Collective · The NOW Team Tampa Bay, Florida nowtb.com

Hi Celine - I agree with Chris Yochum; there are more and more vacation rentals. It also depends on where you are looking. In Amelia Island, Florida, many properties are zoned for short-term / vacation rentals. Depending on the time of year, holiday or special events depicts the rental rate. I have recently noticed that many rentals here are booked almost a year out.

While there are a lot of vacation rentals, different municipalities are starting to change zoning and not allow short term rentals. (Short term is often considred less than 30 days). That helps the rentals in municipalities who do still allow short term get filled up even faster. Some municipalities do have a "grandfather clause" for current owners who rent to vacationers. Check with the town where you want to buy to see what they are planning for vacation rental zoning.