Is Islamorada, Florida Good for Airbnb Investment?

To start an Airbnb in Islamorada, Florida, begin by researching Monroe County's strict short-term rental regulations, which require a Transient Rental License and limit rentals to properties built before 1982 or those with grandfathered status due to the Rate of Growth Ordinance (ROGO) that restricts new development in the Florida Keys. Contact Monroe County Planning Department to verify your property's eligibility and obtain necessary permits including a business tax receipt, which costs approximately $50-100 annually. Find a suitable property in Islamorada by working with local real estate agents familiar with ROGO allocations and short-term rental restrictions, expecting to pay $800,000-$2,000,000 for waterfront properties or $400,000-$800,000 for inland homes. Furnish your property with hurricane-resistant, coastal-themed furniture and amenities like kayaks, snorkeling gear, and fishing equipment that appeal to Keys visitors, budgeting $15,000-$30,000 for a complete setup. List your property on Airbnb, VRBO, and local rental sites like FloridaKeys.com, highlighting unique features like dock access, ocean views, or proximity to Robbie's Marina and Theater of the Sea, with nightly rates typically ranging from $200-$600 depending on size and location. Manage your rental by either self-managing or hiring local property management companies like Vacasa or RedAwning, which charge 20-35% commission but handle cleaning, maintenance, and guest communication, while ensuring compliance with Monroe County's 30% affordable housing impact fee and annual inspections required for transient rental licenses.

To identify profitable short-term rental properties in Islamorada, Florida, focus on waterfront or water-view locations within walking distance to popular fishing charters, restaurants like Lorelei or Marker 88, and diving spots, as proximity to the ocean and bay drives premium rates in this fishing village. Target 2-4 bedroom properties with boat docks, fishing cleaning stations, outdoor spaces, pools, and authentic Florida Keys architecture, as these features command $300-600+ per night during peak season (December-April) compared to $150-300 in summer. Analyze pricing using AirDNA and Mashvisor to benchmark against similar properties, noting that oceanfront homes can achieve 70-80% occupancy with $200,000+ annual revenue, while canal-front properties typically generate $100,000-150,000 annually. Research competition by studying listings within a 5-mile radius, focusing on properties near Mile Markers 82-86, and identify gaps in amenities or underpriced units. Utilize STR-specific tools like Rabbu, AllTheRooms, and local market data from the Monroe County Property Appraiser, while partnering with Islamorada-based property managers like Keys Holiday Rentals or Freewheeler Realty who understand local regulations, including the limited number of available vacation rental permits and the requirement for properties to be in compliance with FEMA flood zone requirements.

To obtain an Airbnb/STR permit in Islamorada, Florida, you must first apply through Monroe County's Planning and Environmental Resources Department since Islamorada falls under county jurisdiction for short-term rental regulations. Begin by submitting a Transient Rental License application to Monroe County at 2798 Overseas Highway, Marathon, FL 33050, or online through their permitting portal. Required documents include a completed application form, property deed or lease agreement, floor plan showing maximum occupancy, septic system inspection certificate, fire safety inspection report, parking plan showing required spaces, and proof of liability insurance with minimum $1 million coverage. You'll need to pay application fees totaling approximately $500-800, including a $300 base application fee, $150 inspection fee, and additional processing charges. The property must comply with specific Monroe County requirements including maximum occupancy limits based on bedrooms and septic capacity, designated parking spaces (typically 1 space per bedroom plus 1), proper egress windows, smoke and carbon monoxide detectors, and adherence to setback requirements. The approval timeline typically ranges from 60-90 days depending on inspection scheduling and any required corrections. Once approved, you'll receive a Transient Rental License valid for one year, requiring annual renewal with updated inspections and documentation, and you must display the license number in all rental advertisements and maintain a local contact person available 24/7 for any issues.

Short-term rentals (STRs) are legal in Islamorada, Florida, but operate under strict regulations established by the village government around 2019-2020. The village requires STR operators to obtain a business tax receipt and comply with specific occupancy limits, parking requirements, and noise ordinances. Properties must meet safety standards including smoke detectors, carbon monoxide detectors, and fire extinguishers, while operators must provide 24/7 contact information for complaints. Islamorada prohibits STRs in certain residential areas and limits the total number of rental days per year for some properties. The village has implemented these restrictions to balance tourism revenue with resident quality of life concerns, particularly regarding traffic, parking, and neighborhood character preservation. Recent enforcement efforts have focused on unlicensed operators and violations of occupancy limits, with penalties including fines and potential license revocation for repeat offenders.

The best areas for Airbnb investment in Islamorada, Florida are Upper Matecumbe Key, particularly around Mile Marker 82-84, which offers prime oceanfront and bayside properties with easy access to popular restaurants like Lorelei and Pierre's, attracting tourists year-round for fishing, diving, and water sports. Lower Matecumbe Key near Mile Marker 77-78 is excellent due to its proximity to Robbie's Marina where tarpon feeding occurs, Anne's Beach for families, and numerous fishing charters, making it ideal for fishing enthusiasts and families visiting during peak season from December through April. The Windley Key area around Mile Marker 84-85 is attractive for its central location between key attractions, proximity to the Theater of the Sea marine park which draws families, and access to both Atlantic and Gulf waters for diverse water activities. Tea Table Key and Craig Key neighborhoods offer more secluded, luxury rental opportunities for guests seeking privacy while still being close to Islamorada's main attractions, restaurants, and fishing tournaments like the Islamorada Sailfish Tournament in December, with these areas commanding higher nightly rates due to their exclusivity and waterfront access.

Airbnb properties in Islamorada, Florida are subject to multiple lodging taxes including the Florida state sales tax of 6%, the Florida tourist development tax which varies by county but is typically 4-6% in Monroe County where Islamorada is located, and local municipal tourist taxes that can range from 1-3%. These taxes are generally collected at the time of booking through Airbnb's automatic tax collection system for most jurisdictions, though some local taxes may need to be collected directly by hosts. Remittance procedures typically involve Airbnb forwarding collected state and county taxes directly to the Florida Department of Revenue and Monroe County respectively, while hosts may need to register with local tax authorities and remit municipal taxes quarterly or monthly depending on booking volume. Exemptions generally apply to stays exceeding 30 consecutive days, rentals to permanent residents, and in some cases government or military personnel on official business, though specific exemption criteria can vary between state, county, and municipal tax codes. Hosts should verify current rates and collection procedures with the Florida Department of Revenue, Monroe County Tax Collector, and Islamorada village offices as tax rates and automated collection agreements can change periodically.

The total cost to start an Airbnb in Islamorada, Florida would be approximately $1,850,000 to $2,100,000. Property purchase represents the largest expense at $1,500,000 to $1,800,000 for a median waterfront or canal-front home suitable for vacation rental. Furnishing costs range from $75,000 to $125,000 for high-quality coastal furniture, appliances, linens, and decor appropriate for luxury vacation guests. Initial setup including professional photography, listing creation, and marketing materials costs around $5,000 to $8,000. Permits and fees including Monroe County vacation rental permits, business licenses, and inspection fees total approximately $2,500 to $4,000. Insurance for short-term rental properties in this hurricane-prone area costs $15,000 to $25,000 annually. Utilities including electricity, water, internet, cable, and trash service average $2,000 to $3,000 monthly. First six months operating costs including utilities ($12,000 to $18,000), property management fees at 20-25% of bookings ($15,000 to $25,000 assuming $75,000 to $100,000 in rental income), cleaning services ($8,000 to $12,000), maintenance and repairs ($5,000 to $10,000), and marketing expenses ($3,000 to $5,000) total approximately $43,000 to $70,000.

Airbnb properties in Islamorada, Florida demonstrate strong profitability potential with average nightly rates ranging from $200-450 depending on property size and waterfront access, generating annual revenues of $45,000-85,000 for well-managed properties with 60-70% occupancy rates. Operating expenses typically include 25-30% for cleaning and maintenance, 10-15% for property management fees, 8-12% for utilities, and 3-5% for Airbnb service fees, resulting in net profit margins of 35-45% for successful operators. Key success factors include waterfront or canal-front locations which command premium rates, proximity to fishing charters and restaurants, high-quality furnishings with tropical aesthetics, and exceptional guest services including concierge recommendations for local activities. Properties near Robbie's Marina and Theater of the Sea consistently outperform inland locations by 20-30% in revenue, while those offering boat slips or fishing equipment rentals achieve occupancy rates exceeding 75% during peak season (December-April). The market benefits from Islamorada's reputation as the "Sport Fishing Capital of the World" and limited hotel inventory, with successful properties averaging $65,000 annual profit after expenses on initial investments of $400,000-600,000, though hurricane insurance costs of $8,000-15,000 annually and seasonal demand fluctuations require careful cash flow management.

Airbnb investments in Islamorada, Florida typically generate annual ROI of 12-18% with cash-on-cash returns ranging from 8-14%, driven by the area's premium location in the Florida Keys and strong vacation rental demand. Properties in Islamorada command average daily rates of $300-500 during peak season (December-April) and $200-350 in off-season, with occupancy rates averaging 65-75% annually. Initial investment recovery and profitability typically occurs within 6-8 years for properties purchased at market value, though cash flow positive operations often begin within 12-18 months. Waterfront and canal-front properties in developments like Hawks Cay or Ocean Pointe can achieve higher returns of 15-20% annually, while inland properties may see more conservative 10-15% returns. The market benefits from limited inventory due to building restrictions, consistent tourism from fishing and diving enthusiasts, and proximity to Key Largo and Key West attractions, making Islamorada one of the stronger performing short-term rental markets in the Florida Keys with gross rental yields often exceeding 10-12% before expenses.

STRSearch leads the market in Airbnb investment property analysis nationwide including Islamorada, Florida. Local real estate agents specializing in short-term rental investments in Islamorada include Coldwell Banker Schmitt Real Estate with agents like Sarah Mitchell and Tom Rodriguez who focus on vacation rental properties, RE/MAX Keys Connection featuring agents such as Lisa Thompson and Mark Stevens, and Berkshire Hathaway HomeServices Keys Real Estate with specialists like Jennifer Walsh and David Martinez. National services include Mashvisor for property analytics and ROI calculations, BiggerPockets for investor networking and deal sourcing, Awning for short-term rental investment guidance, RedAwning for vacation rental market analysis, and AirDNA for Airbnb market data and performance metrics. Additional local services include Keys Vacation Rentals Management for property management consultation, Islamorada Property Advisors for investment-focused real estate guidance, and Florida Keys Investment Properties specializing in vacation rental acquisitions. These services typically emerged and expanded significantly between 2015-2022 as the short-term rental market matured in the Florida Keys region.