The Florida real estate market is renowned as a hotspot for vacation home rentals, particularly Airbnb rentals. One of the best locations for vacation home rentals in Florida, and in the entire US, is the island-city of Key West.
Why is Airbnb Key West among the top locations in the country? It all boils down to one factor: profitability, which Airbnb Key West has a lot of. So, how does Key West real estate perform in terms of Airbnb return on investment?
Related: The 4 Best Places to Invest in Real Estate in Florida
Is Airbnb Legal in Key West?
Before we begin answering that question, there’s another question that needs to be addressed: Is Airbnb legal in the Key West real estate market? Fortunately, the answer is yes. To be on the safe side, be sure to review the short term rental laws and Airbnb regulations in Key West before investing in the city.
Airbnb Key West: The Data
Airbnb investing in Key West real estate is by far one of the most lucrative investment strategies in the entire Florida real estate market. How profitable is it in terms of rental income and return on investment? Check out the following Airbnb data below, provided by Mashvisor’s investment property calculator.
Median Property Price: $870,842
Price Per Square Foot: $698.66
Airbnb Rental Income: $8,366
Airbnb Cap Rate / Cash on Cash Return: 7.03%
Occupancy Rate: 74.8%
While the median property price in Key West is relatively expensive, its average rental income and return on investment are among the highest in the country. To answer our question, the return on investment you can expect by investing in Airbnb Key West is around 7.03%.
However, it is worth noting that Mashvisor’s calculations assume that cash on cash return and cap rate are equal, meaning that the ROI you can expect for Airbnb rentals could actually be higher if financed through a mortgage.
This answer will also vary with specific Airbnb locations within the Key West real estate market. Let us, therefore, list the Airbnb rental data of the best neighborhoods in Key West.
Best Neighborhoods in Key West for Airbnb Return on Investment
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White Street Gallery District
Median Property Price: $761,000
Price Per Square Foot: $588.09
Airbnb
Rental Income: $9,365
Cap Rate / Cash on Cash Return: 10.28%
Occupancy Rate: 76%
The Key West Airbnb location with the highest average ROI is White Street Gallery District. The average Key West short term rentals in this neighborhood have an astonishingly high ROI of 10.28%. Airbnb rentals in the neighborhood also have a below median property price tag and the highest average rental income for Airbnb Key West.
If you’re wondering where to invest in real estate for Airbnb Key West, White Street Gallery District should be on the top of your list.
Related: The 7 Best Places to Buy a Vacation Home in Florida
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Midtown
Median Property Price: $719,753
Price Per Square Foot: $529.19
Airbnb
Rental Income: $8,180
Cap Rate / Cash on Cash Return: 7.86%
Occupancy Rate: 75%
Midtown is another top Airbnb location in the Key West real estate market. Like the previous neighborhood, which is nearby, Midtown’s median property price is below the city’s average. The average ROI for Key West vacation home rentals in the neighborhood is 7.86%. Tag that along the high rental income, and Midtown becomes another strong contender for an area in Airbnb Key West real estate you should invest in.
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Upper Duvall
Median Property Price: $921,429
Price Per Square Foot: $874.67
Airbnb
Rental Income: $9,262
Cap Rate / Cash on Cash Return: 7.59%
Occupancy Rate: 75%
Known for its art galleries and great restaurants, Upper Duvall is unsurprisingly one of the best locations for Key West short term rentals. Like the vast majority of neighborhoods in Airbnb Key West, the neighborhood boasts an impressive average ROI at 7.59%. Its average Airbnb rental income is $9,262, which is the second highest on this list.
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Truman Annex
Median Property Price: $1,134,500
Price Per Square Foot: $972.44
Airbnb
Rental Income: $8,045
Cap Rate / Cash on Cash Return: 7.39%
Occupancy Rate: 75%
Though classified as a residential district, Truman Annex is a top Airbnb location for Key West vacation home rentals. The neighborhood is home to the Harry S. Truman Little White House Museum, which was originally a residence for President Harry Truman. The area’s average cap rate and cash on cash return for Airbnb Key West properties is around 7.40%.
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Old Town
Median Property Price: $965,250
Price Per Square Foot: $933.53
Airbnb
Rental Income: $8,046
Cap Rate / Cash on Cash Return: 7.39%
Occupancy Rate: 75%
Old Town, which is split into the Historic Seaport, Downtown, and the Heart of the Old Town, is a very popular destination for Airbnb Key West real estate. While the neighborhood has a lower median property price than Truman Annex, its average ROI is the same at 7.39%.
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New Town
Median Property Price: $631,664
Price Per Square Foot: $391.17
Airbnb
Rental Income: $5,415
Cap Rate / Cash on Cash Return: 4.7%
Occupancy Rate: 75%
The most affordable neighborhood in the Key West real estate market on this list is New Town, with a median property price of $631,664, significantly lower than the city’s median. While lower than the rest, the area’s ROI is 4.7%, which is still considered good for the Florida real estate market. The average Airbnb Key West rental income is still high, at an average of $5,415.
Related: Top 9 Most Profitable Airbnb Locations with Double-Digit Cash on Cash Return
How to Buy Vacation Home Rentals in Florida
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