Are two Keys homes with the same dockage and views worth the same if only one can legally operate as a short‑term rental? If you are eyeing a vacation rental investment in the Upper Keys, local rules are not just paperwork. They shape revenue, risk, and the price you should pay. In this guide, you will see how licensing, zoning, inspections, and enforcement in Islamorada, unincorporated Monroe County, and Marathon affect underwriting and market value. You will also get a practical checklist to verify a specific address before you write an offer. Let’s dive in.
The rules that move investor pricing
Local rental rules drive both income and risk. When you price an offer, account for the following levers:
- Licensing and registration. Application fees, renewals, and inspection schedules reduce NOI and can delay go‑live.
- Zoning and eligibility. If a parcel is not eligible for STR use, your marketable use is smaller and value is lower.
- Operating rules. Minimum stays, occupancy caps, parking and trash rules, and a required local contact all change revenue and management cost.
- Taxes. State sales tax, local tourist or bed taxes, and municipal business tax receipts reduce net yield and add compliance work.
- Inspections and safety upgrades. Smoke and carbon monoxide detectors, fire extinguishers, pool fencing, septic or sewer tie‑ins, and life‑safety certifications add upfront capex and ongoing cycles.
- Caps or moratoria. Limited issuance supports higher ADR for licensed units. Liberal issuance can compress ADR and values.
- Enforcement and penalties. Strong enforcement and fines increase risk and call for a pricing discount or higher reserves.
- HOA or condo restrictions. Private rules can be stricter than the city or county and can block STR use entirely.
Model each of these as explicit line items in your pro forma so you can compare properties on true after‑rule performance.
Islamorada vs. Monroe County vs. Marathon
Town of Islamorada
Plan to verify:
- Town registration or business tax receipt for rentals.
- Proof of an on‑island contact or manager with a 24/7 local phone number.
- Safety requirements such as smoke and CO detectors, extinguishers, and pool fencing where applicable.
- Parking and occupancy limits that may tie to bedroom count or square footage.
- Proper tax registrations and posting of the rental license number in advertising.
Market impact to price:
- Strong enforcement and local contact requirements raise operating costs and management complexity.
- Screening guests and clear house rules can reduce complaints. Budget for proactive compliance and response.
Where to confirm:
- Islamorada Planning and Zoning, Business Licensing, and Code Enforcement. Review the zoning map and the Town’s STR registration resources.
Unincorporated Monroe County
Plan to verify:
- County STR registration or license and any island‑specific overlays.
- Zoning and land‑use rules for the parcel’s island and neighborhood.
- Septic or utility requirements that may trigger upgrades for rental use.
- County rules for noise, parking, waste handling, and complaint response.
Market impact to price:
- County rules set the floor. City rules can be stricter, but county policy on license issuance affects total supply.
- Utility or septic upgrades can be a major conversion cost. Include this in your initial offer assumptions.
Where to confirm:
- Monroe County Planning and Environmental Resources, County Code, Property Appraiser parcel records, and county STR registration resources.
City of Marathon
Plan to verify:
- City STR registration or business tax receipt and required building and fire inspections.
- Limits on signage, occupancy, and parking that can be tighter in dense areas.
- Owner or manager contact information and complaint procedures.
Market impact to price:
- Marathon’s rules and demand patterns differ from Islamorada and county areas. If you are diversifying across the Keys, underwrite each city on its own terms.
Where to confirm:
- City of Marathon Building and Permitting, Business Licensing, and Code Enforcement, plus municipal code sections on transient rentals.
Note: In all jurisdictions, your HOA or condo rules can override municipal permissions. Always verify private covenants.
How rules translate to your numbers
Turn policy into pro forma inputs so you can price with confidence:
- Direct fees. Annual registrations, business tax receipts, and filing services decrease NOI. Spread them monthly.
- Upfront capex. Safety upgrades, septic tie‑ins, parking changes, and similar items increase your basis and may delay marketing.
- Revenue shifts from operating rules. A minimum stay of 3 to 7 nights can smooth turnover but reduce shoulder‑season occupancy. Occupancy caps, parking limits, and quiet hours can lower ADR for larger groups.
- Supply constraints. If new licenses are capped or phased, licensed properties trade at a premium. If issuance is open, competition can compress rates.
- Enforcement risk. High fines or the potential for suspension justify a regulatory risk discount and a reserve for compliance.
- Insurance and financing. Some insurers and lenders treat STRs as a different risk. Confirm availability and costs before you finalize price.
- Liquidity and resale. Properties without STR eligibility sell to a smaller buyer pool, which can lower value relative to licensed peers.
Address‑level due diligence checklist
Use this step‑by‑step before you go under contract or during your inspection period:
- Parcel zoning and permitted uses. Pull the parcel in the Monroe County Property Appraiser, then confirm zoning and STR eligibility with the correct Planning and Zoning office. Ask about overlays and any grandfathered status.
- Jurisdiction check. Confirm whether the address sits in Islamorada, Marathon, or unincorporated Monroe County.
- License or registration status. Request the seller’s current STR license or Business Tax Receipt and ask the issuing office about transferability.
- Tax compliance. Verify registrations and remittance history for state sales tax and local tourist or bed taxes. Check for unpaid returns or liens.
- HOA or condo rules. Review recorded covenants and any rental amendments. Do not rely on verbal permission.
- Inspections and upgrades. Ask for safety, building, septic, and fire inspection records. Confirm pool, dock, septic, and accessory structures are compliant.
- Operating obligations. Document required local contact details, complaint response times, parking, trash, signage, and quiet hours.
- Enforcement history. Search for prior complaints, violations, and fines tied to the property.
- Insurance and lender. Confirm availability and cost of STR‑appropriate insurance and lender acceptance for your loan type.
- Financial modeling. Stress test minimum‑stay scenarios, occupancy shifts, local management fees for 24/7 coverage, and a regulatory reserve.
- Transferability and timeline. Ask how long new registrations and inspections take so you can forecast your first revenue date.
- Written guidance. For edge cases, request a written determination from Planning or Code Enforcement to avoid surprises post‑closing.
Permitting and enforcement dynamics to know
- Transferability. Some licenses are property specific and transferable. Others require a new owner application. Treatment affects value and timing.
- Grandfathering. Older lawful uses may be allowed to continue if there is no lapse. Confirm records that show continuous use.
- Complaint‑driven enforcement. Active neighborhoods often see more complaints. Plan for rapid response procedures and clear guest communications.
- Appeals and hearings. Understand the local administrative process and timeline. Pending cases can delay financing and transfers.
- Caps or moratoria. Being licensed before a cap can create a durable premium. If caps are under consideration, expect pricing volatility.
Price your offer around regulatory risk
Use these steps to translate rules into a number you feel confident presenting:
- Build three cases. Model base, best, and worst outcomes that reflect minimum stays, occupancy caps, and realistic ADR ranges.
- Assign a licensing premium. If a property has a valid, verifiable license that is transferable, value it against unlicensed comps.
- Add a risk discount. In strong enforcement areas or with uncertain eligibility, reduce your offer or require seller credits.
- Fund a compliance reserve. Hold cash for inspections, life‑safety items, and utility or septic work if needed.
- Protect your timeline. Add contingencies tied to receiving written eligibility confirmation and passing required inspections.
Ready to evaluate a Keys rental property?
If you want a clear, actionable path from first showing to licensed, income‑producing asset, you deserve a local advisor who pairs lifestyle insight with rigorous due diligence. Pierre‑Marc at Islamorada Life Realty helps you confirm parcel eligibility, estimate conversion costs, and model real revenue under local rules. When you are ready, reach out to explore available opportunities and receive exclusive listings that fit your goals.
FAQs
How Upper Keys rental rules affect pricing
- Local licensing, zoning, minimum stays, occupancy caps, and enforcement intensity all change revenue and risk, which directly impact your offer price and cap rate.
Islamorada short‑term rental requirements at a glance
- Expect town registration, a 24/7 local contact or manager, safety measures, occupancy and parking limits, and proper tax registrations. Verify details with Town offices.
Monroe County unincorporated areas and septic upgrades
- Some neighborhoods require septic updates or utility tie‑ins for rental use. Treat this as potential capex and verify early with County staff.
Marathon STR inspections and operations
- Plan for city registration with building and fire inspections, plus rules on occupancy, parking, and complaint response. Confirm specifics with Marathon departments.
Transferability of an existing STR license when buying
- Do not assume it transfers. Ask the issuing office whether the license is property specific and transferable or if a new owner must apply and re‑inspect.
