Please help me understand why STR is considered evil by locals?

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Please help me understand why STR is considered evil by locals?

Giani BrussichPro Member
New to Real Estate · Bedford, NY · Member since 2018 · 22 posts · 10 votes

If this is the wrong place for this, please remove it.

Recently, I have seen a lot of threads/posts come up on social media (I know, not very reliable or the truth) about how bad/hated STR is for local neighborhoods. With reasons such as taking away housing supply, greed, lack of interest in the local politics, taking away long term rentals, increasing overall home prices, rowdy guests, regular turnover, taking away opportunities/money from locals etc… What was most surprising is how many people agreed. In my opinion, It doesn't make sense. The arguments seem to be half thought out and I don't understand how most of the complaints are solely due to STR or even applicable except with some like high traffic/turnover or rowdy guests. I always try to be empathetic and understand the other points of views but still.

Am I missing something? Please help me understand if I am. Thank you

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Ryan MoyerBusiness Member
Property Manager · Orlando Kissimmee Davenport Salt Lake City, Park City · Member since 2019 · 991 posts · 1k+ votes
4y

All of my rentals are STRs so I have no reason to dump on them, but I don't really understand why you touched on and seemed to understand many of the issues people have with them, and then just shrugged them off.

I am active in my local community which is a moderate but growing STR market and in the communities of one of my STR locations which is a ruralish area where STRs have become popular (near National Parks). Trust me when I say the vitriol the locals have for STR is not just made up. They HATE it. That's not just a story. It's very real.

It differs by community, but for instance in the rural town near National Parks the main reason is the lack of affordable housing/rents. That's a big reason here locally as well (ski destination). It just doesn't make sense for anyone to use their place as LTR at traditional LTR rates when they can make literally 5x as much operating as an STR even if they pay a property manager. There's nowhere for the restaurant workers, retail cashiers, etc to live.

In the rural town there are literally ZERO places available to rent as LTRs with occupancy. The local FB groups people will post that they're looking for a place to rent and the response is just 100 people replying that everything in town is an STR now because of greedy owners, etc. The hate is real.

The free market just doesn't have any answer for it. Logically we should think that there is a dearth of affordable long term rental housing then someone will step in and fill that void to make that money. But the problem is there is no scenario where the money spent on that will bring in more profit than spending the same many on an STR in these vacation destinations. You could build some giant apartment complex with $700/mo 1br apartments and they'd be booked up to capacity on day 1 so that sounds great. But that place costs $10M to build and for $10M you could build some insanely awesome short term rentals that would make 5x as much.

That's not even to mention that the loan terms are going to be massively better on the STRs since you can buy them without an investment loan.

Granted all of this is less of an issue in urban centers like NYC where there is still plenty of long term housing, but in these vacation destinations the only reason for a LTR to even exist is if the owner is lazy, the owner hates money, or regulation deems that's the only type of rental they can have there.  Otherwise why would anyone just except 1/5th of the returns for an asset class that isn't really any safer, and can always be used as a fall-back in a worst case scenario?

This is all why I've always said that as STR becomes an accepted asset class (as it is very well on its way to being) regulation is going to massively rise. That's why the best and the brightest on this forum have always said from the beginning to focus on areas where STRs are ALREADY a regulated part of the economy, because this is something that every town in the world is going to have to deal with eventually.

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  • Lane Kawaoka
    Rental Property Investor · Honolulu, HAWAII (HI) · Member since 2011 · 4k+ posts · 2k+ votes
    4y

    you have a lot of random people coming in and staying at the house and it can upset neighbors as its not really that safe to them.

    Also you start to have a lot of remote buyers buying up and bringing up prices where the locals cannot afford. Plus you lose that neighborhood feeling that a lot of people want when its a vagrant house here and there.

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  • Collin HaysBusiness Member
    Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
    4y
    Quote from @Bruce Woodruff:
    Quote from @Collin Hays:

    I agree. But most all STRs are allowed by current codes and zoning. If people don't like it, they can change the laws/code/zoning... Otherwise they can go F themselves. Tired of whiners....



     If code allows it, then fine.  What gripes me is folks wanting to make a buck and try to find sneaky ways around the code, or complain that everyone living in R-1 is "against" them.  Darn right they are against STRs, and for a number of good reasons.

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  • Evan Polaski
    Cincinnati, OH · Member since 2020 · 4k+ posts · 3k+ votes
    4y

    @Giani Brussich, beyond the obvious rowdy guest issue and not knowing who is coming or going along property lines.

    The home value one is easy: look at these forums. Airbnb has made it easy for everyone to own a hotel. This subform alone gets lots of "I can make so much more in a STR than a long term rental". That let's people bid higher for a property and still make a reasonable return (based on their likely misguided underwriting), which is now a new sale for that market, and a comp that others will use to price their own property, regardless of end use.

    I fully understand that the larger dynamic is overall supply and demand of real estate. COVID had more households start splitting up, which made more units needed overall, but there were not new units supplied. But one house, used as a hotel room instead of someone's full-time residence, means one less house for someone seeking a full-time residence to choose from. Don't get me wrong, I am not anti-Airbnb, but I does constrain supply for other uses and therefore drives up prices overall, combined with what I mentioned. But even if you take well underwritten properties: if the only option was buy a long term rental in this market, there would not be a lot of investor demand, as current prices for SFRs in most markets will not truly cash flow. But when you can gross $3,500, instead of $1,400 in monthly rents, all of a sudden investors will be willing to pay today's prices and run as an STR.

    Also, my personal opinion is many hosts are greedy.  This isn't negative specifically, but the last few Airbnb's I have stayed in I would equate to the hosts being equivalent to slum lords in the LTR space.  Effectively, they do the absolute minimum.  They are not trying to be in the hospitality business and offer guests a good experience.  And unfortunately, the Airbnb platform does not truly allow for honest feedback, since both hosts and guests review each other.  I.e. as a guest, if I leave a neutral review of a host (because it is dirty, there were not enough towels, etc) the host can then leave me a negative review and limit my ability to stay in any airbnb again.

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  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    4y
    Quote from @Evan Polaski:

    And unfortunately, the Airbnb platform does not truly allow for honest feedback, since both hosts and guests review each other.  I.e. as a guest, if I leave a neutral review of a host (because it is dirty, there were not enough towels, etc) the host can then leave me a negative review and limit my ability to stay in any airbnb again.

    Not exactly true.....the Guest and Host do not see each other's reviews until after they are both posted. It is not wise to give an unnecessarily bad review because you never know what the other has already said about you...


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  • Joshuam R.
    Rental Property Investor · FL · Member since 2016 · 271 posts · 92 votes
    4y

    I would be little sad also watching you laughing all the way to the bank $$$$$$ lol

    I have not yet done STR but once there the goal is to give excellent product, customer service. That should be it. See you at the bank!

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  • Bob E.
    Queen Creek, AZ · Member since 2014 · 2k+ posts · 1k+ votes
    4y

    Our community is working on banning STR's. Not popular with the people living near them, the noise and partying are annoying when it is every weekend.

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  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    4y
    Quote from @Bob E.:

    Our community is working on banning STR's. Not popular with the people living near them, the noise and partying are annoying when it is every weekend.


     Bad owners.....that is not common for STRs, the majority of them are well run.

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  • Jeffrey Albaum
    Investor · Austin TX · Member since 2018 · 151 posts · 165 votes
    4y

    Hey @Giani Brussich!

    Great question and great thread. In general I think it comes down to the "idea" of a STR. If you have young kids that need to get to bed early to wake up for school the next day, and your "neighbor" is throwing their third party of the week (but it's actually STR guests because you live in a happening area), I could see how that would be frustrating.


    The other side to that is, if you live in a happening area, you can't expect it to be quiet on a Friday night....

    I can see both sides and love that you asked the question! I also really liked @John Underwood's response and @Sara Frank's response!

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  • Bob E.
    Queen Creek, AZ · Member since 2014 · 2k+ posts · 1k+ votes
    4y
    Quote from @Bruce Woodruff:
    Quote from @Bob E.:

    Our community is working on banning STR's. Not popular with the people living near them, the noise and partying are annoying when it is every weekend.


     Bad owners.....that is not common for STRs, the majority of them are well run.


     Call it whatever you want i made life living hell for some of our neighbors.

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  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    4y
    Quote from @Bob E.:
    Quote from @Bruce Woodruff:
    Quote from @Bob E.:

    Our community is working on banning STR's. Not popular with the people living near them, the noise and partying are annoying when it is every weekend.


     Bad owners.....that is not common for STRs, the majority of them are well run.


     Call it whatever you want i made life living hell for some of our neighbors.


    That stinks. They should definitely hold those hosts accountable....without unfairly punishing all of the good hosts (99%) out there. Hopefully your neighbors called the police constantly?

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