A buyer falls in love with a canal-front three-bedroom in Islamorada. The listing photos show a pool, a tiki bar, maybe a boat lift. The listing description mentions strong nightly rates and a busy calendar. The buyer runs the math on gross rental income, closes, changes the locks, and calls a property manager to get the calendar open again.
That's the moment they learn the license stayed with the seller.
In Islamorada, a vacation rental license is not a feature of the house. It's a permission granted to a specific owner, and under Village code it terminates the day the deed changes hands. The new owner starts from zero, competing for a spot inside a cap the Village has never raised and, based on its own licensing history, is in no hurry to expand.
The License Follows the Owner, Not the Deed
This distinction matters more in Islamorada than almost anywhere else in the Keys, because Islamorada's vacation rental ordinance predates the 2011 Florida law that stripped most municipalities of the power to regulate short-term rentals. Because the Village's ordinance was already on the books before June 1, 2011, state law grandfathered it in, and Islamorada kept authority that places like Marathon and unincorporated Monroe County largely lost. That authority is why the Village can cap licenses at all, and why the cap has teeth.
The practical result for a buyer: a currently licensed vacation rental does not transfer its license at closing. The new owner has to file a new application through the Village's CityView portal, pass a fire and life safety inspection, and prove eligibility all over again, with no guarantee the file gets approved before the previous license expires or before the property's window to compete for one of the remaining slots closes.
The Math Behind the Cap
The Village limits the total number of vacation rental licenses village-wide to 331. That number isn't arbitrary. It's the ceiling the Comprehensive Plan set years ago, and it has not moved since.
What has moved is how close the Village has crept to that ceiling.
| Year | Active licenses | Source event |
|---|---|---|
| 2008 | 164 | First year of the Village's vacation rental program |
| March 2021 | 243 | Village licensing snapshot |
| September 2023 | 260 | Village Council session raising the annual fee |
Run those numbers forward and the trend is clear: the Village has been adding roughly a dozen net new licenses a year, and every one of them shrinks the pool a future buyer can compete for. At the September 2023 session, held at the Founders Park Community Center, the Council voted to raise the annual license fee from $1,000, a figure set back in 2007, to $1,325, citing inflation. That's a fee increase on a program the Village is actively trying to make harder to enter, not easier.
None of this means licenses are unavailable. It means a buyer who assumes one is theirs for the asking, because the seller has one now, is assuming something the ordinance doesn't promise.
A Second Gate: The Assessed Value Floor
Even if a license slot exists, not every house qualifies for one. When the Village wrote the ordinance, it built in a valuation floor specifically to keep the least expensive homes out of the vacation rental pool, on the theory that those homes should stay available as long-term workforce housing rather than convert into part-time rental income properties.
The mechanism: a property in residential high or mixed-use zoning has to carry an assessed value equal to at least 600 percent of the Monroe County median income. In 2023, that worked out to an assessed value requirement of $582,600, based on a Monroe County median household income of $97,100 that year. The threshold isn't fixed. It recalculates every year off updated Monroe County Property Appraiser figures, with proposed values going out in late August and certified values finalized in October, meaning the number a buyer qualifies against in the fall can be different from the number quoted to them in the spring.
A buyer who purchases a property that's currently just under that line doesn't get a license by promising future income. They wait for the assessed value to climb to the threshold on its own, which can take more than one tax cycle.
Why Enforcement Got Sharper
The 2023 Council session wasn't only about the fee. Village leadership also approved bringing in third-party monitoring software called Rentalscape, built by a company called Deckard Technologies, specifically to track short-term rental activity the Village couldn't otherwise see. One councilman pointed to Port Antigua, a community zoned single-family residential, as an example of how widespread unlicensed rental use had become in a neighborhood where it technically isn't supposed to happen at all.
That detail is useful context for a buyer, not because it should scare anyone off, but because it explains why the Village has gotten more aggressive about verifying license status rather than less. A listing that describes itself as a turnkey rental, with a calendar full of past bookings, is not the same as a listing with a license the Village will still recognize as active once the sale records.
The Village also maintains a public GIS map layer showing which properties currently carry a licensed vacation rental. It's a five-minute check that tells a buyer more than any listing description will.
What This Means If You're Comparing a "Turnkey Rental" to a Straight Second Home
For a buyer weighing an investment property against a personal second home, the license question changes the comparison entirely.
- A licensed rental with the seller's name on the file is not a licensed rental once you own it. Budget for the reapplication timeline, not the current owner's calendar.
- Check the property's assessed value against the current year's threshold before assuming eligibility. The number resets annually and isn't retroactive to when you signed the contract.
- Pull the Village's GIS license layer before writing an offer that leans on projected rental income. A property advertised as an active rental with no visible license on the map is a property you should ask about directly.
- If the deal only works with rental income from year one, treat that income as unconfirmed until the Village issues your license, not the seller's.
None of this changes how good Islamorada is for the buyer who simply wants a place on the water, a boat in a lift, and a house that's theirs alone to use. It only matters if the return math depends on renting it out, because in that scenario, the house and the right to rent it are two separate things the Village treats very differently.
A Few Questions Worth Asking Before You Write an Offer
Does the seller's current license transfer to me at closing? No. Village code treats it as owner-specific. You file a new application after closing and it is evaluated independently of the seller's history.
How long does a new application typically take? The Village requires a completed life safety inspection along with state and county documentation before it will issue a license, and processing depends on that inspection queue. Build in weeks, not days, if your financing or timeline assumes rental income starting immediately.
What if the property doesn't meet this year's assessed value threshold? You wait for a future certified valuation to clear the bar, or you buy the property as a long-term rental or personal residence and revisit vacation rental eligibility later. There's no fast-track option written into the ordinance.
If you're comparing an Islamorada waterfront property as an income property against a straight second home, that distinction is worth working through before you're under contract, not after. Pierre-Marc Bellion has spent years watching how the Village's licensing math actually plays out for buyers on both sides of that decision, and can walk you through what a specific property's assessed value and zoning mean for your plans. Reach out for exclusive listings and a straight answer on what a given house can and can't do under current Village rules.
