Negative Impact for Vacation Rentals Florida Law Makers Pass SB 280

Sarah KensingerPro Member

Real Estate Consultant · OH · Member since 2023 · 2k+ posts · 1k+ votes

[email protected]330-557-3021

We're watching this closely too. Hopefully it'll help balance out instead of hurting the entire industry badly.

@Adam Bartomeo Sorry you had a bad experience with STR! Florida is one of the best states to have one in! I wonder if it would help to connect with others who had a great experience running a STR company.

Andrew SteffensBusiness Member

Tampa, FL · Member since 2022 · 4k+ posts · 3k+ votes

[email protected]813-563-0877

I am not sure why you are so very negative, but I am sorry you have had bad experienced with it. We are still successfully finding positive ROI's for our clients.

Regarding the bill - Government Regulation is always concerning, but I do not think this bill will have any far reaching impacts on anything.

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John UnderwoodPro Member

Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes

This is strongly worded " But, the truth is that unless you bought before 2020 you are probably going to have an underperforming asset that is a negative cash flowing liability."

It is certainly a possibility, but I wouldn't say it probably will happen.

This depends on so many variables that are mostly controllable based on proper market research such as a quality property in a great location with great amenities. Then great property management (professional or self) is crucial.

4 Reply

Michael BaumPro Member

Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes

Exactly what @Andrew Steffens and @John Underwood said.

There are so many things that figure into STR management that you can't possible say that everyone will fail @Adam Bartomeo.

Adam BartomeoBusiness Member

OP

Real Estate Broker · Cape Coral, FL · Member since 2015 · 2k+ posts · 1k+ votes

@Andrew Steffens @Jason Wray @Sarah Kensinger

I appreciate your POV's but you have skin in that game. It is hard to paint an accurate picture of ones industry when it is putting food on the table. I have always been know to be pretty straight forward. Our belief is to provide the info and le the investor make the decision. I went to all of the owners and was clear and honest with them about their current returns, expenses, ROI and potential future returns, every single one of them transitioned out of that investment class. You cannot deny that although the demand for VR's is growing that it is not growing at a fast enough pace. The market is completely oversaturated throughout most of FL. But, the point wasn't about may beliefs, it was about making those that don't know about SB 280 aware of the increased regulation.

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Adam BartomeoBusiness Member

OP

Real Estate Broker · Cape Coral, FL · Member since 2015 · 2k+ posts · 1k+ votes

@Michael Baum Where did I say "Everyone will fail"? Again, the post wasn't to argue but to inform the reader about SB 280. Do you own VR's in FL?

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James Carlson

Real Estate Agent · Colorado | stan.store/JamesCarlson · Member since 2014 · 2k+ posts · 2k+ votes

@Adam Bartomeo

Interesting take.

Here in Colorado, gone are the days of buying any old STR and cash-flowing, but profitable Airbnb properties definitely still exist.

My successful vacation rental buyers find a home that's highly differentiated. The views have be great. Or it has to be awesome interior design. Or you gotta bring extra amenities. (One Airbnb client of mine outside Denver added a hot tub and barrel sauna and outperforms his competition by nearly 40%.) Or the home itself has to be something interesting. (Tiny A frames properly designed can kill it.)

In an ideal world, you're combing more than one of the above to stand out in an increasingly professionalized industry.

Adam BartomeoBusiness Member

OP

Real Estate Broker · Cape Coral, FL · Member since 2015 · 2k+ posts · 1k+ votes

@James Carlson Completely agree. I know investors nationwide that are killing it in their areas. But, here in FL where the #1 source of revenue is tourism, the state wants some of the action and Hotels are fighting back.

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Adam BartomeoBusiness Member

OP

Real Estate Broker · Cape Coral, FL · Member since 2015 · 2k+ posts · 1k+ votes

@John Underwood I would retarget what you said "It is certainly a possibility, but I wouldn't say it probably will happen" in reference to being profitable with a VR in FL.

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Sarah KensingerPro Member

Real Estate Consultant · OH · Member since 2023 · 2k+ posts · 1k+ votes

@Andrew Steffens @Jason Wray @Sarah Kensinger

Quote from @Adam Bartomeo:

I appreciate your POV's but you have skin in that game. It is hard to paint an accurate picture of ones industry when it is putting food on the table. I have always been know to be pretty straight forward. Our belief is to provide the info and le the investor make the decision. I went to all of the owners and was clear and honest with them about their current returns, expenses, ROI and potential future returns, every single one of them transitioned out of that investment class. You cannot deny that although the demand for VR's is growing that it is not growing at a fast enough pace. The market is completely oversaturated throughout most of FL. But, the point wasn't about may beliefs, it was about making those that don't know about SB 280 aware of the increased regulation.

We do have very pointed conversations that design, and outdoor spaces need to be updated and designed in such a way that the property stands out. If the owner is not willing or can't put the money into their property, then yes, it's best for them to transition out of the industry.

[email protected]330-557-3021

Josh GreenBusiness Member

Realtor · Tampa/St Pete/Clearwater/Bradenton · Member since 2020 · 397 posts · 353 votes

[email protected]801-441-8891

Quote from @Adam Bartomeo:

For those of you that know or follow me you know that I am not a fan of vacation rentals in the state of Florida for a multitude of reasons. I have owned Vacation Rentals and my company managed about 20 and the experience was terrible. The guests are horrible, the expenses are very high, and the ROI is awful. People are enamored with vacation rentals because they get caught up in feelings instead of the true numbers. They feel like they will have a profitable investment AND be able to use this investment as a second home. But, the truth is that unless you bought before 2020 you are probably going to have an underperforming asset that is a negative cash flowing liability. The hard part is knowing how much you will make over the course of a year. Unlike an annual rental where the rent is locked in for a year, the prices and amount of vacancies have a high-rate fluctuation.

If you do not live in the state than you may not be aware of SB 280. So, I made a short video with a brief explanation. Over the years it has been up to the city and county to pass ordinances if they choose to regulate vacation rentals. A several cities have implemented rules with the minimum per night stay and registering as a VR. Key West has very strict guidelines for VRs for registration and minimum night stay. Ft Myers Beach regulates the minimum stay to daily, weekly, and monthly based in the street the property is on. Cape Coral has a very loose 7-day minimum stay that isn't heavily enforced. Now, the Senate has passed SB 280 which will involve state regulation of VR's. I highly advise you research the bill which can still be vetoed by the Governor.

This is a GOOD thing for investors. The state is overall pro-tourism and pro-landlord. Creating uniform and basic minimum standards is going to be better than allowing local cities and municipalities to make all kinds of overlays. Overall it should loosen regulation as it currently stands while also making the regulations more uniform across the state.

As for your blanket summary of STRs I have to disagree. I’m also in the Tampa Bay Area. I personally own and host 14+ high performing short term rentals. Most of those bought within the last 18 months and for market value. I even paid over appraisal value on one personally that was a flipped home so the opposite of a “unicorn deal”. That same property, with the high rates (7+%) is going to net me $40k+ on the first 12 months run. To bring that into perspective, that will be close to a 25-30% cash on cash return. Not to mention I got to write off over $175k from my income taxes using a cost-segregation study.

Why people fail is because these take a much higher level of skill, knowledge and upfront effort, and upfront capital. I’m a top operator and really understand the business from start to finished product to managing them well so I’m going to be able to push higher returns naturally than my competition. You can’t expect to get the same results as I mentioned above without the same level of skill and knowledge but it is absolutely possible to be very successful today with STRs here in the Tampa Bay Area.

Also: the guests tend to also be better the better the finished product is. Higher end = higher prices = higher end clients/guests (this is the case in any business generally speaking).

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Patricia Andriolo-Bull

Member since 2022 · 529 posts · 413 votes

Quote from @Josh Green:

Quote from @Adam Bartomeo:

For those of you that know or follow me you know that I am not a fan of vacation rentals in the state of Florida for a multitude of reasons. I have owned Vacation Rentals and my company managed about 20 and the experience was terrible. The guests are horrible, the expenses are very high, and the ROI is awful. People are enamored with vacation rentals because they get caught up in feelings instead of the true numbers. They feel like they will have a profitable investment AND be able to use this investment as a second home. But, the truth is that unless you bought before 2020 you are probably going to have an underperforming asset that is a negative cash flowing liability. The hard part is knowing how much you will make over the course of a year. Unlike an annual rental where the rent is locked in for a year, the prices and amount of vacancies have a high-rate fluctuation.

If you do not live in the state than you may not be aware of SB 280. So, I made a short video with a brief explanation. Over the years it has been up to the city and county to pass ordinances if they choose to regulate vacation rentals. A several cities have implemented rules with the minimum per night stay and registering as a VR. Key West has very strict guidelines for VRs for registration and minimum night stay. Ft Myers Beach regulates the minimum stay to daily, weekly, and monthly based in the street the property is on. Cape Coral has a very loose 7-day minimum stay that isn't heavily enforced. Now, the Senate has passed SB 280 which will involve state regulation of VR's. I highly advise you research the bill which can still be vetoed by the Governor.

This is a GOOD thing for investors. The state is overall pro-tourism and pro-landlord. Creating uniform and basic minimum standards is going to be better than allowing local cities and municipalities to make all kinds of overlays. Overall it should loosen regulation as it currently stands while also making the regulations more uniform across the state.

As for your blanket summary of STRs I have to disagree. I’m also in the Tampa Bay Area. I personally own and host 14+ high performing short term rentals. Most of those bought within the last 18 months and for market value. I even paid over appraisal value on one personally that was a flipped home so the opposite of a “unicorn deal”. That same property, with the high rates (7+%) is going to net me $40k+ on the first 12 months run. To bring that into perspective, that will be close to a 25-30% cash on cash return. Not to mention I got to write off over $175k from my income taxes using a cost-segregation study.

Why people fail is because these take a much higher level of skill, knowledge and upfront effort, and upfront capital. I’m a top operator and really understand the business from start to finished product to managing them well so I’m going to be able to push higher returns naturally than my competition. You can’t expect to get the same results as I mentioned above without the same level of skill and knowledge but it is absolutely possible to be very successful today with STRs here in the Tampa Bay Area.

Also: the guests tend to also be better the better the finished product is. Higher end = higher prices = higher end clients/guests (this is the case in any business generally speaking).

I was about to say the same thing. I think this will help level the playing field across the state. There are some towns and counties with outrageous STR regulations. I have two properties in Marco Island (Which are doing very well BTW, even with high expenses, and I also count on appreciation and since it’s an island, will always have some attraction). Marco Island continues to try to push crazy regulations. The state law will prevail and not allow the over-reaching legislations some towns/counties are trying to pass. Personally, I have no issue with a registration and paying a fee. I also live in Marco Island and believe some sort of regulation will help with the terribly monitored vacation rentals. Counties are now concerned about home rule and not setting their own guidelines. Anyway, I think for the most part, this will benefit investors and I’m sorry you had a hard time with vacation rentals but I expect Cape Coral is likely a very different market than many in Florida and wouldn’t make a blanket statement on the Florida vacation rental market being terrible.

Adam BartomeoBusiness Member

OP

Real Estate Broker · Cape Coral, FL · Member since 2015 · 2k+ posts · 1k+ votes

@Patricia Andriolo-Bull That isn't how it works... The state sets the minimum guideline, the county builds upon that, and the city build on that. It is exactly the same with building codes and professional licensing. There are state codes, county codes, and city codes. There are many places throughout the state that do not have any regulation but now they will now have regulation. For the smaller areas, like Marco, this will allow the rules to get even tighter.

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Michael BaumPro Member

Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes

Quote from @Adam Bartomeo:

@Michael Baum Where did I say "Everyone will fail"? Again, the post wasn't to argue but to inform the reader about SB 280. Do you own VR's in FL?

Well I guess you didn't say exactly that.

But, the truth is that unless you bought before 2020 you are probably
going to have an underperforming asset that is a negative cash flowing
liability

Not exactly saying everyone will fail, but it does intimate that in this sentence.

3 Reply

Patricia Andriolo-Bull

Member since 2022 · 529 posts · 413 votes

Quote from @Adam Bartomeo:

@Patricia Andriolo-Bull That isn't how it works... The state sets the minimum guideline, the county builds upon that, and the city build on that. It is exactly the same with building codes and professional licensing. There are state codes, county codes, and city codes. There are many places throughout the state that do not have any regulation but now they will now have regulation. For the smaller areas, like Marco, this will allow the rules to get even tighter.

That’s not how I understand it and read it. Specifically, key items will be pre-empted to the state level and new ordinances limiting rentals cannot be approved unless they were in place prior to 2014. Perhaps I’m reading something incorrectly?

Todd Goedeke

Contractor · Sheboygan, WI · Member since 2016 · 921 posts · 266 votes

@Sarah Kensinger what types of unique outdoor designs do you employ. There are no photos on your website.

Sarah KensingerPro Member

Real Estate Consultant · OH · Member since 2023 · 2k+ posts · 1k+ votes

[email protected]330-557-3021

Quote from @Todd Goedeke:

@Sarah Kensinger what types of unique outdoor designs do you employ. There are no photos on your website.

That site is only for our co-hosting services. I would recommend going on Airbnb/VRBO and looking at some of the properties that pop up on the first to third pages. See what their outside areas look like, match what they have and then take it another notch above. Depending on the area you may need a pool or hot tub since in some locations pretty much every STR has one option. But it's always great to have a nice seating area including throw pillows, dining area, outdoor lawn games like the oversized connect four, Jenga etc., definitely string lights somewhere that makes sense, and other decorative accessories like plants. To level up you could add mini golf or the good old pickleball that is taking the STR space by storm right now!

Jason WrayPro Member

Banker · Nationwide · Member since 2020 · 2k+ posts · 1k+ votes

@Andrew Steffens @Jason Wray @Sarah Kensinger

Quote from @Adam Bartomeo:

I appreciate your POV's but you have skin in that game. It is hard to paint an accurate picture of ones industry when it is putting food on the table. I have always been know to be pretty straight forward. Our belief is to provide the info and le the investor make the decision. I went to all of the owners and was clear and honest with them about their current returns, expenses, ROI and potential future returns, every single one of them transitioned out of that investment class. You cannot deny that although the demand for VR's is growing that it is not growing at a fast enough pace. The market is completely oversaturated throughout most of FL. But, the point wasn't about may beliefs, it was about making those that don't know about SB 280 aware of the increased regulation.

Adam,

Just to clarify I think your post was good to establish the changes coming and it does help to offer insight. My questions was more or less asking you what your thoughts were since we are both in Florida. Hopefully you didnt take my post as negative....

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Account Closed

Investor · FL · Member since 2016 · 332 posts · 388 votes

I sent a letter to Governor DeSantis last week requesting a veto. The bill itself does not bother me, but after serving almost 30 yrs in the military I know government rules are like kudzu, it is well meaning when planting but after a few years can turn into a nightmare. It is interesting that Sevier County TN (smokys market) has a new more intrusive ordinance requiring inspections. There I am hoping it weeds out some poorly maintained properties. In my Florida market I don't believe about 30% are operating properly and submitting tourism tax.

As for profitability I have picked up magnificent cashflowing properties in FL over the past 3 yrs. Profitability depends on location, product, pricing, marketing and management. If any one of those five things is not good then profitability could be effective. In my Florida market I see most failing due to marketing, management and pricing. Since management usually controls marketing and pricing you could argue it is a 3 legged stool Location-Product-Management. So if you have a great location and a decent product for the area then it is a management issue (self or professional). That is the largest elephant I see STR owners do not want to address. Firing professional management or accepting they are failing at their job as a self manager.

Michelle Elsaid

Real Estate Agent · Orlando, FL · Member since 2015 · 127 posts · 39 votes

Why do some believe the SB280 will shut down STR listings immediately, like what happened in NYC. When I read about it and look for information online, it seems like additional rules and paperwork but I'm not sure about true and immediate enforcement. What will happen to illegal airbnbs where permits dont exist?

Adam BartomeoBusiness Member

OP

Real Estate Broker · Cape Coral, FL · Member since 2015 · 2k+ posts · 1k+ votes

@Michelle Elsaid

I don't think that the VR business will shut down but I do think that it will have a negative impact. It will also open the door for more government intervention, laws, ordinances, and regulation. None of which are good for the industry.

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