Short Term Rental Regulations

[Abigail Schueler]

Hi all, I'm looking to get into short term rentals in Wisconsin (1-3 hours from the Madison area). I've been reading a lot about city and county ordinances and many of them aren't the most forgiving. For example many of them only allow a 6-7 day rental minimum, requires the owners primary residence or management company to be 25-30 miles from the property and permitting etc. I of course want to abide by these rules and run a legit business but I'm curious how strictly these are enforced–I know it probably varies by area. Do most of you follow the ordinances and get all of the permits or just take the risk?

[Moss Beach]

I would recommend abiding by their rules and regulations if you don’t you will get caught.  As long as you’re advertising via Airbnb and Vrbo or a platform like that they can catch you.  I personally wouldn’t buy in a place where the restrictions are too limited

[Carolyn Fuller]

You should abide by the regulations or have a backup plan when you are forced to abide by the regulations. 

[J-Ryan Stewart]

Very often even cities with strict regulations can only enforce those in certain city limits. Unincorporated areas for example can be free & clear or there can be zoning designations within city limits like multifamily that may allow slightly different applications of the regs. Every city is different & the info isn't super easy to find, but it's out there. 

It takes some digging but you should be able to find a few maps through city resources that can show you where those lines are drawn. Workers in planning, zoning, & permitting offices often have wildly different interpretations of the regs so you'll want to come to them with some researched questions about enforceability. 

[John Underwood]

Just go in with a plan to follow the rules. It doesn't matter if someone else is breaking the rules. 

You might want to consider starting out in a STR friendly area.

[Carlos Ptriawan]

Anything with any city inside Wisconsin gov. is very tough on rentals.  Maybe it's just me, but this is the biggest mistake I did invest in this state. Should just invest more in CA or AL.

[Lauren Stark]

Hi @Abigail Schueler, I am an investor and agent in Madison, WI. I work with many investors looking for STRs in Madison's surrounding areas. First we look for an available property that meets their specific criteria. Then either the investors or I as their agent call the city or county to verify ordinances and decide if it is something that is workable. As many others have also said, I suggest to abide by the ordinances. You want to make sure you have a healthy and thriving business on your hands! Please reach out if you have any questions or need assistance. Good luck!

[Luke Carl]

Can just call the city/county and ask questions! Simple as that. “Are you ok with me putting this house for rent on Airbnb” 

[Peter Falk]

Another good reference source for current short term ordinances would be short term rental managers- should be present in most tourist areas and likely happy to chat even if you decide to self manage and save the 20% ish short term rental management fee.  

[Abigail Schueler]

Quote from @Carlos Ptriawan:

Anything with any city inside Wisconsin gov. is very tough on rentals.  Maybe it's just me, but this is the biggest mistake I did invest in this state. Should just invest more in CA or AL.

Hi Carlos, I'd love to hear more about your experience. I just sent you a message.

[Keith Schulz]

Definitely check with the local municipality. Madison and many of the communities in Dane County are pretty restrictive (the 7 day min and 180 day max). It's been clear to me in conversations with some of these municipalities that some of the administrators are very anti vacation rental and will restrict as much as the Wisconsin law allows them too. Other areas are pretty flexible. I own a vacation rental in Oneida County WI. Even areas of northern Wisconsin are restrictive. Thankfully mine is zoned recreational, so I was able to get permitting that allows less than 7 day rentals year round, but still need someone within 25 miles. Bottom line, don't buy with short term rental intent without doing your research. 

[Kenneth Rolfe]

100% agree with all of the comments made regarding abiding by the rules!  And I’m with @Luke Carl, call the city and tell them what you’re planning to do.  Come prepared with questions.  This is a business, so look at every obstacle and try to come up with a solution (not to be confused with a short cut!).  I recently purchased a short term rental and ran into a similar regulation that required the owner or an agent to live within a certain distance from the property. I do not meet that requirement, but before I gave up on the area I did some homework and found a cleaning company that is willing to act as the agent.  I ran this by the city and they confirmed this would satisfy the requirement so I moved forward and found a property.

If you like a specific area, do your due diligence and if it works out great!  If not, move onto the next area.

Good Luck!

[Carlos Ptriawan]

If the ordinance is being regulated and monitored by DNS, good luck. I'd rather save money in Wells Fargo 0.2% CD.

[Wale Lawal]

@Abigail Schueler

I think you should consult an attorney to understand the rules and regulations so that you can abide by those rules and regulations.

Its always safe and good to follow the the rules and regulations.

Good Luck!

[Angelo Aguirre]

Hi @Abigail, I would never take a risk, especially since you want to run a legit business. 
Just call the county zoning department of wherever you are looking. For example, I was going to use my Portage, WI property as a short term rental, I called Columbia County zoning department and found out it was a $200 fee and an application and no other length-of-stay, primary occupancy, or any other regulations. Just the fee. County Zoning. Good luck!

[Bruce Woodruff]

Abide by the regulations, you may be able to hide for a while, but in todays world you will get caught eventually. And why would you want to do business in a locality that doesn't want you? There are plenty of STR friendly places to invest your money....go find them.

[Jordan Moorhead]

@Abigail Schueler I would recommend you follow the regulations. If they catch you and shut you down you could be in trouble. Alternatively make sure the deal at least works as a long term rental.

[Corina Eufinger]

I would follow the regulations.  The fines aren't worth the risk since in most cases they can be pretty hefty.  

There are a few markets in Wisconsin that don't regulate STRs as closely as some other ones do.  In fact there are still a few places without any laws on the books pertaining to them.  Most commonly you will find a limit on the number of days a unit can be rented out total through the year and there is usually a minimum/max stay length.  I.e. 3-21 days anything over 21 days in some municipalities defaults to a long-term tenant (totally different set of rules).  

[Ryan Seib]

Good morning, the regulations can be stressful to operate under. That said, doing so from the beginning is by far better. The compliance philosophy of many agencies today works to your benefit if you make a mistake. It allows the agency to ask for compliance as the outcome of an infraction. It means you have to have a good faith effort to comply from the beginning. And that should I hope be built into your pricing model when buying into that market. I have clients who are not in compliance and it is a major issue. Be careful as well to check the HOA regulations. HOAs may not disallow STRs, but in some cases they pick the property manager and add other rules. Be aware of how that HOA is structured as well. Compositin of the HOA board changes after all. Some turnover can give the HOA legal rights to further restrict STR operations. Best wishes with this. I hope you got some of the help you were seeking so far Abigail.

[William Anderson]

Let me give you an example of not following the regulations. One of the cities on the Mississippi Gulf Coast hates STR's. There are casinos with hotels and they have leverage. People continue to defy the regulations which are zoning based. I often learn of real estate agents who sell properties in this city to people they know are going to do STR. I tell my clients where they can and cannot buy for STR. If they want to do an illegal, we have a face to face and I get them to acknowledge in writing that I told them the property was not zoned for it.

To the good stuff. One of the code enforcement agents called a vendors of mine who owns a few condos in that city. He wanted to look at a condo before he rented it for STR, he found it on ABB. They met and when he was finished looking he asked them for their permits. Fortunately they had permits (were not posted). This was one of the very few places where they allowed STR. They were fined for not displaying the permits in each of their units. He told them that he regularly goes through the online platforms and finds people every day. If they are operating an illegal STR there is a $500 per day fine. Yes, he does collect lots of revenue for the city.

My point here is that you need to stay clear of any government agency with police authority. Don't even think about turning a house in a development into an STR without getting the planning and zoning department approval signed in blood.

[William Anderson]

Let me give you an example of not following the regulations. One of the cities on the Mississippi Gulf Coast hates STR's. There are casinos with hotels and they have leverage. People continue to defy the regulations which are zoning based. I often learn of real estate agents who sell properties in this city to people they know are going to do STR. I tell my clients where they can and cannot buy for STR. If they want to do an illegal, we have a face to face and I get them to acknowledge in writing that I told them the property was not zoned for it.

To the good stuff. One of the code enforcement agents called a vendors of mine who owns a few condos in that city. He wanted to look at a condo before he rented it for STR, he found it on ABB. They met and when he was finished looking he asked them for their permits. Fortunately they had permits (were not posted). This was one of the very few places where they allowed STR. They were fined for not displaying the permits in each of their units. He told them that he regularly goes through the online platforms and finds people every day. If they are operating an illegal STR there is a $500 per day fine. Yes, he does collect lots of revenue for the city.

My point here is that you need to stay clear of any government agency with police authority. Don't even think about turning a house in a development into an STR without getting the planning and zoning department approval signed in blood.

[Joshua Messinger]

Hey @Abigail Schueler! 

I would always follow the rules and regulations of an area or HOA if you are in them as you can lose your property's ability to rent out at all in certain states for not filling out their permit. This has been the trend in PA, especially in Poconos and Philly with new ordinances/rules and regulations being updated almost every week making it impossible to keep up with unless you're working actively in the space.

Otherwise, as for enforcement I have noticed most states haven't been able to enforce these rules and regulations as much as they would like because they just can't keep up with the demand and they have a lack of employees to actually take care of this. But, as tech/software gets better and things become more efficient for them they will be able to keep track of everything so you need to be ready for future changes and new ordinances being put into effect with tighter restrictions and harsher penalties as in my opinion it is inevitable. 

I hope this helps and if you have any more questions please don't hesitate to reach out! 

All the best,

Josh 

[Stephen Johnston]

Quote from @William Anderson:

Frank is a tough cookie!