Thinking about turning an Ocean City getaway into dependable income? You’re smart to look closely at this resort market before you buy. Ocean City and Worcester County are highly seasonal, so the right property, setup, and plan can make the difference between a strong summer and a year-round performer. In this guide, you’ll learn how the market works, what guests expect, the permits and taxes to plan for, and how to run real numbers with an example proforma. Let’s dive in.
Ocean City market basics
Ocean City is a classic coastal resort market. Most bookings and revenue concentrate from Memorial Day to Labor Day, with shoulder demand in May, early June, September, and October. Off-season months from November through March see lower leisure travel, but you can tap mid-term demand from snowbirds, seasonal workers, and traveling professionals.
Holiday weekends and special events can lift rates and occupancy. Think Memorial Day, July 4, and Labor Day, plus festival and motorcycle week-type events. Many owners earn a large share of annual revenue during these peak periods.
What to analyze before you buy
- Monthly occupancy and average daily rate by property type and location, including oceanfront, bayside, and areas near the Boardwalk.
- Weekend versus weekday performance, especially for smaller condos that book midweek in summer.
- Booking lead times, last-minute trends, and cancellation patterns.
- The competition mix, including professional managers versus owner-managed listings, and any HOA restrictions that limit rentals.
Guest expectations and setup
Vacation renters expect a turnkey experience. Delivering the right essentials and comforts will drive reviews and repeat stays.
- Strong Wi-Fi, multiple TVs, air conditioning, and a full kitchen with cookware and utensils.
- Washer and dryer, quality mattresses, and plenty of linens and towels, including beach towels.
- Beach gear such as chairs, an umbrella, and a cooler, plus clear parking information.
- Family-friendly touches like beach toys, a pack-n-play, a high chair, and secure outdoor space.
- Hospitality details such as keyless entry, a welcome binder with house rules and local tips, defined cleaning protocols, and responsive communication.
Mid-term rental adjustments
If you plan to host 30 to 90 day stays in the off-season, keep comfort and practicality front and center.
- Provide a comfortable workspace or desk, expanded linens and closet storage, and full kitchenware.
- Offer clear month-to-month terms and define responsibilities for utilities and maintenance.
- Utility-inclusive pricing is common for mid-term stays, and tenants expect a quieter, residential feel.
Furnishing budget checklist
Build a realistic setup budget and a replacement reserve.
- Furniture for each room, including durable seating and dining.
- Appliances and small electrics for the kitchen.
- Linens and towels, with backups for quick turnovers.
- Kitchenware, cookware, and utensils.
- Electronics like TVs, routers, and streaming devices.
- Safety items such as smoke and CO detectors and fire extinguishers.
- Outdoor gear for the beach and balcony or patio.
- Professional photography and listing assets.
- A reserve for replacements and unexpected repairs.
Permits, zoning, and taxes
Compliance comes first. Requirements can vary between Worcester County and the Town of Ocean City, so confirm details for the exact address and building.
- Short-term rental registration or licensing may be required by the municipality. Expect safety and occupancy rules and possible inspections.
- Zoning and HOA rules can limit short-term rentals, set minimum stay lengths, and cap occupancy. Review condo documents and bylaws before you write an offer.
- Safety often covers smoke and CO alarms, egress, fire extinguishers, and building and electrical compliance. Some locations require periodic inspections.
- Noncompliance can mean fines, a suspended license, or required corrective work.
Taxes to plan for
- Transient occupancy or lodging taxes may apply and are often separate from platform settings. Learn the filing frequency and who remits.
- Sales or use tax can apply to cleaning or optional fees. Verify with Maryland state and county guidance.
- Rental income is taxable at the federal and state level. Consider your entity type with a tax professional.
- Property tax should be sourced from the county assessor, and investment properties can be assessed differently.
Verify before you buy
- Confirm whether a short-term rental license is required and if an existing license is transferable.
- Check HOA rules, minimum night requirements, occupancy limits, and any fines for violations.
- Ask for recent occupancy or tax remittance statements from owner-managed properties or manager reports if professionally managed.
Operations and management
Decide how you will manage the asset and day-to-day operations, especially during summer.
- Full-service short-term rental managers often charge 15 to 30 percent of rental revenue, depending on services and seasonality.
- Mid-term or long-term managers usually charge lower percentages, often 8 to 12 percent, with different scope.
- À la carte services like cleaning, linens, and maintenance can be billed per service. Compare total costs, not just the headline fee.
Evaluate managers on marketing reach, pricing strategy, guest communication, emergency response, and knowledge of local permits. In peak season, ensure they have turnover staffing, parking and trash plans, and 24-7 support for issues like AC, plumbing, or lockouts. Dynamic pricing that accounts for events, weekends, and last-minute gaps is critical in a seasonal market.
Insurance and risk planning
Standard homeowners policies often exclude short-term use. Line up coverage that fits your strategy.
- Short-term rental policies or endorsements for dwelling, liability, and contents.
- Supplemental liability through an umbrella policy and loss-of-income coverage.
- Flood insurance is often advisable for coastal properties and may be required by lenders. Review FEMA flood maps and options through the National Flood Insurance Program, along with private carriers.
Line up local cleaners, laundry services, handypeople, HVAC and plumbing contractors, and landscapers. Use keyless entry and lockboxes, and manage access securely.
Model the numbers
Use market data for your exact property type and location, then stress test for seasonality. Here is an illustrative example to show how the math works.
Assumptions for a 3 bed near the Boardwalk:
- Purchase price 600,000 with 25 percent down.
- Full-service management fee 20 percent of gross revenue.
- Cleaning fee charged to guests and passed through to cleaners.
- Owner pays utilities, insurance, property taxes, HOA, maintenance, and reserves.
Seasonality and rates (illustrative):
- June to August peak: average daily rate 450, occupancy 80 percent. About 24 nights per month. Gross per month about 10,800.
- May and September shoulder: average daily rate 300, occupancy 50 percent. About 15 nights per month. Gross per month about 4,500.
- October to April off-season: average daily rate 120, occupancy 25 percent. About 7.5 nights per month. Gross per month about 900.
Estimated annual gross revenue:
- Peak: 3 months x 10,800 equals 32,400.
- Shoulders: 2 months x 4,500 equals 9,000.
- Off-season: 7 months x 900 equals 6,300.
- Total about 47,700 for the year.
Estimated annual operating expenses (illustrative):
- Management fee at 20 percent about 9,540.
- Utilities around 4,800.
- Insurance around 3,000.
- Property tax based on county assessor records. Example placeholder 6,000.
- HOA example placeholder 3,000.
- Maintenance and capital reserve 5 to 10 percent of gross revenue, roughly 2,400 to 4,800.
Net operating income before debt service equals gross revenue minus operating expenses. Subtract your mortgage payment to estimate pre-tax cash flow.
Cash-on-cash return
Cash-on-cash return equals annual pre-tax cash flow divided by total cash invested. Total cash invested includes down payment, closing costs, and initial furnishing and setup. Use conservative assumptions for rates, occupancy, and expenses, then run best case, base case, and downside scenarios.
Choose your strategy
Every property and building has different rules and economics. Align your plan to the asset and your risk tolerance.
- Short-term only: higher peak revenue potential with more turnover, higher operating costs, and more operational complexity.
- Mid-term or long-term: lower gross revenue with steadier occupancy, fewer turnovers, and simpler operations.
- Hybrid plan: operate as a short-term rental in peak months, then shift to mid-term leases in the off-season. This can smooth cash flow but requires different marketing and documentation.
Your next steps
- Underwrite with monthly ADR and occupancy by property type and location. Do not smooth summer revenue across the year.
- Validate permits, zoning, and HOA rules before you make an offer. Ask about license transferability.
- Budget for higher wear and tear, linens, HVAC service, and replacements in a beach rental.
- Compare professional managers, confirm peak-season staffing, and evaluate pricing tools and guest communication standards.
- Plan for climate and flood risks and carry appropriate insurance.
If you want help identifying Ocean City area properties that fit your numbers and risk profile, I’m here to guide the search and negotiation. Let’s map a strategy that works for your goals. Connect with Brian McCarty to schedule a free consultation.
FAQs
Are short-term rentals allowed in Ocean City, MD?
- Many resort towns require registration or licensing for short-term rentals. Confirm requirements for the Town of Ocean City and Worcester County for the specific address, including any inspections and occupancy limits.
What months are best for Ocean City rental income?
- Peak demand runs from Memorial Day through Labor Day, with strong weekends and holiday spikes. May, early June, September, and October are shoulder months, and November through March is typically the off-season.
How should I furnish an Ocean City beach rental?
- Provide durable, easy-to-clean furnishings, strong Wi-Fi, a well-equipped kitchen, ample linens including beach towels, beach gear, and family-friendly items. Add keyless entry and a clear welcome guide.
What fees do property managers charge for vacation rentals?
- Full-service short-term rental managers often charge 15 to 30 percent of rental revenue, while mid-term managers may charge 8 to 12 percent with a different scope. Compare total cost, services, and peak-season capacity.
Do I need special insurance for a beach short-term rental?
- Yes. Short-term rental use often requires a specialized policy or endorsement. Consider an umbrella for added liability and review flood insurance options, especially in coastal zones.
Can I combine short-term and mid-term strategies in one property?
- Yes. Many owners run short-term rentals in summer and mid-term leases in the off-season. Align pricing, marketing, and lease terms to each season and confirm that local rules and HOA policies allow both.
