Rental Property Investor · Boise, ID · Member since 2017 · 220 posts · 101 votes
Short-term rentals can be a great investment, but only if you invest in markets with high restrictions. Choosing markets that have tight regulations on short-term rentals would mean that there is a higher demand for them. This means that you can charge more for your rental and are likely to have a higher occupancy rate. What is your take on this one? Which markets with restrictions are you eyeing to invest in or currently investing in?
Rental Property Investor · Mississippi Gulf Coast · Member since 2022 · 205 posts · 168 votes
4y
One thing to consider about areas with tight restrictions is resale. In my area there are a couple of cities with some tough rules and the zoning make's it hard to locate an STR. There are fewer as a result. The problem is that upon sale, the permit goes away. The new owner has to apply and there is no guarantee it will be approved. My guess is that's 50/50. If that were not enough, the buyer can not apply until after the deed is recorded.
This makes for a big risk on the part of a buyer acquiring the property for the purpose of using it as an STR.
People that come from far away don't have any issues with staying at properties in adjoining cities without any rules (couple of miles away). I have not see any real differences in occupancy rates. The premise is a good one, I believe it depends upon the location and situation.
Short-term rentals can be a great investment, but only if you invest in markets with high restrictions. Choosing markets that have tight regulations on short-term rentals would mean that there is a higher demand for them.
This could be true, but not in all cases. I have some STRs in areas with very light, if any, regulations.... and they do incredibly well. So it just all depends......
Short-term rentals can be a great investment, but only if you invest in markets with high restrictions. Choosing markets that have tight regulations on short-term rentals would mean that there is a higher demand for them. This means that you can charge more for your rental and are likely to have a higher occupancy rate. What is your take on this one? Which markets with restrictions are you eyeing to invest in or currently investing in?
this is an interesting topic. Is the idea to find places with restrictions and find legal loopholes to get around them?
Realtor · Avalon NJ · Member since 2020 · 21 posts · 11 votes
4y
Def super market specific. Where i am agent in a shore town in NJ there is basically no restrictions and clients have done extremely well. It is a bit more expensive so tenants are families and heavily vetted so it does help limit complaints to boro i would imagine.
On the contrary the poconos in PA is coming out/has with some very limiting restrictions on occupancy limits. Especially in HOA's, when researching we look through minutes to previous few meetings in HOA and township to see what has been in conversations. That said, there are many top performing properties in these HOAs still and returns as still solid.
Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
4y
I don't. I don't look for loopholes or anything else. I just stick with places that don't have any restrictions.
I am not sure I agree with your premise @Michael Porche. I think it is too close to trying to break the law frankly. I don't think that is what you are advocating, but too many folks of late have come into the forum looking for ways to break the law and expecting us to help them figure it out.
If you are working within the law on your STR in an area with some restrictions, it can go one of two ways. One, you do just fine and no one get annoyed. Two, and I think it is more likely, you will see more complaints and more restrictions and you are then doing a LTR or selling.
I don't. I don't look for loopholes or anything else. I just stick with places that don't have any restrictions.
I am not sure I agree with your premise @Michael Porche. I think it is too close to trying to break the law frankly. I don't think that is what you are advocating, but too many folks of late have come into the forum looking for ways to break the law and expecting us to help them figure it out.
If you are working within the law on your STR in an area with some restrictions, it can go one of two ways. One, you do just fine and no one get annoyed. Two, and I think it is more likely, you will see more complaints and more restrictions and you are then doing a LTR or selling.
My 2 cents.
Yeah, I don't think he is advocating anything squirrelly, but I see the point....get a house that already is a STR in an area that has tight restrictions. Brilliant! But anyone selling that property is going to want TOP DOLLAR so there goes the ROI.....
Short-term rentals can be a great investment, but only if you invest in markets with high restrictions. Choosing markets that have tight regulations on short-term rentals would mean that there is a higher demand for them.
This could be true, but not in all cases. I have some STRs in areas with very light, if any, regulations.... and they do incredibly well. So it just all depends......
I have STR'S oin areas with no or light regulation. I don't want a STR in an area where there is already heavy regulation, they could easily make it harder or impossible with more changes.
Rental Property Investor · Mississippi Gulf Coast · Member since 2022 · 205 posts · 168 votes
4y
One thing to consider about areas with tight restrictions is resale. In my area there are a couple of cities with some tough rules and the zoning make's it hard to locate an STR. There are fewer as a result. The problem is that upon sale, the permit goes away. The new owner has to apply and there is no guarantee it will be approved. My guess is that's 50/50. If that were not enough, the buyer can not apply until after the deed is recorded.
This makes for a big risk on the part of a buyer acquiring the property for the purpose of using it as an STR.
People that come from far away don't have any issues with staying at properties in adjoining cities without any rules (couple of miles away). I have not see any real differences in occupancy rates. The premise is a good one, I believe it depends upon the location and situation.
One thing to consider about areas with tight restrictions is resale. In my area there are a couple of cities with some tough rules and the zoning make's it hard to locate an STR. There are fewer as a result. The problem is that upon sale, the permit goes away. The new owner has to apply and there is no guarantee it will be approved. My guess is that's 50/50. If that were not enough, the buyer can not apply until after the deed is recorded.
This makes for a big risk on the part of a buyer acquiring the property for the purpose of using it as an STR.
People that come from far away don't have any issues with staying at properties in adjoining cities without any rules (couple of miles away). I have not see any real differences in occupancy rates. The premise is a good one, I believe it depends upon the location and situation.
This is a great point that is hardly mentioned. All too often many people get caught up in “what will this produce a month” without doing the due diligence needed to avert a financial disaster on their part. A realtor will advise someone to check with a lawyer for verifications on restrictions (good luck finding one on short notice for that). Granted, for the last several years, inventory was going so quickly that it was hard to do the proper due diligence because properties were selling so quickly, it’s nice to see it going back to a normal market though.
Im hearing from others that the permit going away upon resale is happening in multiple restricted markets. This is fine if you fully intend to hold for your lifetime though, but it should be known that if you go to sell, the real estate market will reflect that and you better be in a market that can support the price without the property having any income. I think home owner residents lose sight of how much more their home is worth without having restrictions on it and how it affects their resale value and equity. I’ve seen some examples where same house a block away (one zoned for rental and the other not) being priced 50 percent apart and the one double in price (zoned for rental) selling much faster than the other.
To your last point, I completely agree. I own a property that is a minute away, from an imaginary border town that has many restrictions, in a town with no restrictions and the returns are just as good (and way better from a yield perspective), it just doesn’t have the fancy zip code.