I absolutely love this question! It’s so loaded and really what people mean when they ask this question is – “will my city allow Airbnb and short term renting.” It’s an important question to ask before getting started on any short term renting platform! After all, who wants to spend all that time and effort just to be shut down after just getting started?
Airbnb Explained
It is SUPER interesting to me that people refer to short term renting (STR) as specifically Airbnb. That’s amazing for Airbnb because there have been platforms doing exactly what Airbnb has done for many more years – VRBO for example would be a major one! Airbnb has gained so much attention around the world – good and bad – that people who didn’t know and possibly still don’t know about VRBO refer to all STR’s as Airbnb’s! It’s incredible! For the purpose of education and understanding I am here to tell you that STR’s are not Airbnb’s specifically – Airbnb is just a renting platform that support STR’s and vacation type stays. With that being said, cities are starting to regulate STR’s as many suburban neighborhoods are turning into hotel chains and disrupting long term residents and home owners. As a property manager I understand and appreciate keeping neighborhoods homely without the disruptions that can sometimes be caused by guests. It’s drawn alot of attention to the market of STR and I am here to help educate you so you can make the best informed decisions in future ventures with STR regardless which platform you choose to market your property on.
Can I manage my own home and expand my portfolio to manage other properties as well?
The answer is yes and no. The answer also depends on your state laws regarding property management. Let me break it down. I live in St. Pete Florida so I will explain in regards to my own city and state.
#1. You can manage your own property absolutely. These are your funds – so there are no commissions or rents to distribute to someone other than yourself.
#2. People love to argue about this one – but you DO need a Real Estate License to manage other properties that are not your own here in FL. Some states do no require you to be licensed but most do. Call any local brokerage in your area and ask someone there. Anyone currently managing properties that are not their own in FL are doing so ILLEGALLY. All it takes is one phone call to the city and DBPR and you will definitely incur some pretty hefty fines. Think about it folks. You need an ESCROW account which is basically a Trust Fund Account created by the brokerage in charge of management to put your rents into. The account is based on TRUST alone and legally binding to do right by said client. Keeping track of funds is no easy task. As a brokerage, accounting is suppose to be accurate down to the PENNY. The brokerage gets audited randomly to ensure quality and care is being taken when managing other peoples funds. Airbnb disburses funds unequivocally depending on how many properties each client has (duplex or +) and don’t even get me started on refunds and how they are disbursed. Are you really going to put your assets in charge of someone unlicensed? What’s stopping them from taking all the rents and running away to Mexico? If you have suspicions that things are not being handled correctly who are you going to call? Are you going to do your own accounting to cover yourself? At that point you might as well manage the property on your own. I know some of you are reading this going pshhhh I can and I do a great job managing others properties without being licensed. Well, I’m sorry to break it to you – but real estate 101 any monies you get from real estate transactions (rents) is considered commissions and you need to be licensed to gain a real estate commission. End of story.
#3 Expanding your illegal business without the proper licensing is a recipe for disaster. Sure 1 property won’t cause too much attention but the more homes you add to your illegal operation the higher your liability to incur such disastrous events. Your client could technically SUE you if things go South. Then surely you’ll never be able to do things properly or get licensed through the state.
#4 You might be reading this and going – awesome, I’m licensed! Property management of STR or Vacation Homes is really up to your brokerage as the broker is in charge of the escrow accounts. Accounting is no joke. book keeping is stressful and it’s super expensive! Maybe your brokerage already does property management and they can help you and break down the costs of book keeping and accounting. Not only that – but brokers don’t let you work for free. They will be wanting a cut out of your commissions. Just something to consider.
Wait a second Kosta! How are YOU able to run a successful property management operation?
I’m so happy you asked! So, to put it plainly – my significant other and I started our own brokerage during covid times. The perks of having your own brokerage are amazing! I am able to hire agents for my team Kosta Coast Vacations Team with Mitchell Dean Realty and we are able to host and do full service property management. When you are operating properly there are different ways to properly scale the business so everyone wins – and most importantly, our clients!
If you’re interested in joining the team send me an email @ Kostadenaa@gmail.com or click any email link on my website.
Ok, I'm not licensed but I am going to rent and manage my own property. That's allowed right?
Yes! As long as it is legal per your city. The best way to find out is to go to the city yourself and simply as them the rules regarding short term renting. They will tell you everything you need to know! Here in St. Pete the rules are super strict – but if you go onto Airbnb for instance you wills see hundreds of Airbnb’s operating illegally according to the city zoning that we have. This will soon change as I have seen the city already implementing changes and not in the way that favors STR or Airbnb. There shouldn’t be any restrictions against you renting out a room – which is a great option especially if you have a guest house or a room with a private entrance! However, you do need to have a Hotel or Motel license to operate in St. Pete specifically if you bought a home or a multi with the intentions of turning it into a STR. You will eventually be shut down, fined and possibly even cited by the DBPR. All it takes is one unruly guest and nosey neighbor to complain to the city and all of a sudden you have a spotlight on your home. The city will slap you with a $20,000 fine – that’s not a typo!
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