Short-term rentals in markets with restrictions

[Michael Porche]

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?

[William Anderson]

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.