Dallas City Council bans STR's

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Dallas City Council bans STR's

Silvia OchoaPro Member
Real Estate Agent 路 Dallas TX 路 Member since 2019 路 55 posts 路 13 votes

June 14, Dallas City Council votes to ban short term rentals like Airbnb and Vrbo in single-family zoned neighborhoods. Enforcement will take effect in December of this year. This effectively ends the " wild wild west" of short-term rentals in Dallas, which had no regulations until now. The councils new regulations allow STR's in neighborhoods marked as commercial, mixed-use and certain multi-family neighborhoods.

"The regulations require STRs to register annually and pay hotel occupancy taxes. There would be a two-strikes-and-out policy for violations, and the maximum number of people in an STR was set at 12 and there must be one parking spot per bedroom." per William Joy of WFAA

 Just wondering how this will affect current STR investors in Dallas. Will you transition to traditional long term rentals or will you consider selling? 

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Michael BaumPro Member
Olympia, WA 路 Member since 2016 路 8k+ posts 路 7k+ votes
3y

This is just another example of why investing in STRs in major cities can be an issue.

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  • John UnderwoodPro Member
    Investor 路 Greer, SC 路 Member since 2014 路 13k+ posts 路 17k+ votes
    3y

    I would be selling or converting to a LTR.

    Even if your perfectly legal, a disgruntled neighbor could easily get you to 3 strikes. 

    2Reply
  • Brad LarsenPro Member
    Property Manager 路 San Antonio and Austin, TX 路 Member since 2016 路 377 posts 路 380 votes
    3y

    @Silvia Ochoa I heard this was coming. Thanks for sharing. I am very curious how this will affect the STR investors and what options they would be considering....selling, moving to long term rentals, etc.

    Good info!

    1Reply
  • Michael BaumPro Member
    Olympia, WA 路 Member since 2016 路 8k+ posts 路 7k+ votes
    3y

    This is just another example of why investing in STRs in major cities can be an issue.

    6Reply
  • Lucia Rushton
    Realtor 路 Dallas - Fort Worth Metroplex, TX 路 Member since 2016 路 1k+ posts 路 925 votes
    3y


    This is exactly why I have always suggested investors have more than one income stream and/or exit strategy in place. 

    3Reply
  • Silvia OchoaPro Member
    OP
    Real Estate Agent 路 Dallas TX 路 Member since 2019 路 55 posts 路 13 votes
    3y

    I am at the end of a renovation in my current home and had been going back and forth between long term vs short term rental. Looks like my decision has been made for me. Luckily, I will still cash flow really well as a long term but I am bummed that I've lost an investment strategy for this particular property. I do feel like competition for properties in the multi-family/ mixed-use/ commercial zones will start to increase pretty soon, so I am starting to look in those areas ASAP. The new regulations will not deter me from using the STR strategy. How about you guys? Especially those of you with experience?

    2Reply
  • Bruce Lynn
    Real Estate Broker 路 Coppell, TX 路 Member since 2011 路 5k+ posts 路 4k+ votes
    3y

    @Silvia Ochoa Seems like a lot of STR seem to think MTR is the answer now. I'm not sure we have the demand for all the STR to turn into MTR. LTR for some is not an option, due to the costs they have and many are not thrilled about what they have to do with a housefull of amenities.

    I'm sure some will sell and some will try other options. One contributor here turned his STR in South Dallas into LTR and kept it furnished and utilities on, so it can be an option. STR he said was profitable during early Covid, but seems like it turned unprofitable in the last year or so. At the rates and occupancy I often see, I expect that is true of many. Maybe this is tough love for some. I'm sure there are some that are upset and angry. We've warned people for years this was coming in Dallas and many other cities too.

    Ft. Worth I believe basically has the same ordinance. Not sure there will be that many opportunities to have STR in commercial area. I guessing they also might be subject to more commercial issues like sprinkler systems, commercial fire alarms, handicapped access, etc which will discourage many or make it so expensive, it's not profitable.

    1Reply
  • Josh GreenBusiness Member
    Realtor 路 Tampa/St Pete/Clearwater/Bradenton 路 Member since 2020 路 396 posts 路 353 votes
    3y

    Bet we'll have a boost of investors looking to buy STRs here in Florida 馃槀

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  • Mark S.
    Real Estate Investor 路 Saint Paul, MN 路 Member since 2017 路 543 posts 路 474 votes
    3y

    @Silvia Ochoa The suburb I live in is in the process of clarifying its city ordinances to explicitly ban STRs. I am glad they are - too many people screwing up neighborhoods with them where they don鈥檛 belong. (BTW - I own a number of STRs but only in vacation markets or in locations where they won鈥檛 disturb neighbors, such as on acreage.)

    2Reply
  • Scott Mac
    Austin, TX 路 Member since 2019 路 5k+ posts 路 5k+ votes
    3y

    "Wholly" Mackerel...

    Dallas is an enormous MMA, so many counties, twice the size of Massachusetts.

    The 19-county Dallas Metroplex region is about 15,600 square miles (for comparison all of Massachusetts is only  7,800 square miles). 

    I wonder if this will migrate across the USA (like rent control)?

    1Reply
  • Sarah KensingerPro Member
    Real Estate Consultant 路 OH 路 Member since 2023 路 2k+ posts 路 1k+ votes
    3y

    At least it's not an all-out ban!

    [email protected]330-557-3021
    0Reply
  • Henry T.
    Member since 2022 路 1k+ posts 路 1k+ votes
    3y

    I'm aware of neighborhoods' kneejerk reaction that str's are bad. I've done all I can(thanks to advice here) to make sure I get good people and its not a party scene. I also try to make clear to my neighbors (delicately) that str is better for them because, even if I had one bad guest, he's gone in a few days. In Seattle and WA state,(with hidden criminal records) for example, or just bad luck,  if I should get a LTR gang-banger, or whatever,  he's there forever and you can't get rid of him. Which would you prefer mr. neighbor? My neighbors seem to understand that str is ok.......I'm just one guy advocating the benifits of str, but yeah, I'm quite concerned about city councils clamouring for cheap votes, it's frighteneing. I'm surprised this happened in Texas, a red state(never been there), where I imagine there's less regulation. With a stroke of a pen all these livelihoods wiped out. Dallas city council, you suck.

    3Reply
  • Silvia OchoaPro Member
    OP
    Real Estate Agent 路 Dallas TX 路 Member since 2019 路 55 posts 路 13 votes
    3y
    Quote from @Mark S.:

    @Silvia Ochoa The suburb I live in is in the process of clarifying its city ordinances to explicitly ban STRs. I am glad they are - too many people screwing up neighborhoods with them where they don鈥檛 belong. (BTW - I own a number of STRs but only in vacation markets or in locations where they won鈥檛 disturb neighbors, such as on acreage.)


    Crime, trash and noise complaints were the main reasons given to ban STR's. Is your city citing the same concerns? I have not personally experienced any of those issues with the STR's on my street so I know that there are responsible owners that will be unfairly impacted. It's definitely an issue that should have been addressed years ago and the lack of initial regulations have caused deep resentment from local homeowners. I am sure there will be some tweaking along the way as Dallas stands to lose millions of tax revenue from the 1800 or so registered STR's. The reality is that there are closer to 6000 rentals and the potential tax revenue will not be overlooked, especially since the city will need more money for code enforcement and investigations. In general, cities across the country have chosen to regulate short term rentals instead of outright banning them.

    0Reply
  • Mark S.
    Real Estate Investor 路 Saint Paul, MN 路 Member since 2017 路 543 posts 路 474 votes
    3y

    @Silvia Ochoa I'm guessing here, but I think it's primarily the transient nature of STR's along with issues with weekend parties. They really do not belong in neighborhoods that are made up primarily of owner occupied, single-family residences, in my opinion.

    3Reply
  • Henry T.
    Member since 2022 路 1k+ posts 路 1k+ votes
    3y

    It may only be temporary. Last month WA state eliminated the "Single family residence" zoning.  It no longer exists. Who's gonna be next? Texas?

    0Reply
  • Bonnie LowPro Member
    Lender 路 Asheville, NC 路 Member since 2016 路 1k+ posts 路 1k+ votes
    3y

    Wow, this is really a blow to investors. I wonder how many people running STRs are also local to the area? Seems they just don't care. So much for Texas being the land of the free. No wonder there's so much activity from folks in the Dallas area looking to transition to mid term rentals. From what I've heard from very astute investors like Kathy Fettke, Dallas metro is very affordable and still good for cash flow so maybe some of these properties will work out as LTRs. For the sake of those who own these properties, I really hope they have some options.

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  • Chris SeveneyBusiness Member
    Moderator
    Investor 路 VA 路 Member since 2015 路 21k+ posts 路 19k+ votes
    3y

    @Silvia Ochoa

    As someone who is a real estate investor but also served on a planning board this is not surprising at all.

    When it comes to people and their homes, we have always had nimbyism (Not in my back yard).

    It鈥檚 all good to do it somewhere else but the moment you bring it to my neighborhood heck no.

    You are seeing this in major areas across the us (I believe New York just passed some laws as well). Washington DC has some pretty strict laws.

    This is why it's also very important to make sure your asset has options - buying it if it only works as a STR is a very bad idea.

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  • Colleen F.Pro Member
    Investor 路 Narragansett, RI 路 Member since 2013 路 8k+ posts 路 4k+ votes
    3y

    @Silvia Ochoa the one parking spot per bedroom seems a little high for a city but you have alot of space there I suppose. Wonder if it will lead to any repurposing of commercial space to STR?

    We had some proposals here for loss of ability to rent to be linked to complaints and a lot of people brought up that some people just complain more regardless because they don't like renters. You would really have to determine if complaints were baseless of not. 

    0Reply
  • John MorganPro Member
    Rental Property Investor 路 Grand Prairie, TX 路 Member since 2018 路 2k+ posts 路 2k+ votes
    3y

    First Arlington and Grapevine bans them. Then Fort Worth a few months ago. Now Dallas. It will be very difficult to be positive cash flow on these nicer homes as long term rentals. The numbers just don't work for homes valued over 300k. I invest in homes around 200-220k and the numbers barely work with $2000/month rent with these C+ class properties. But I'm guessing most of these STR folks will need to go MTR or sell. But the MTR competition will be fierce now with all this extra inventory that's about to hit. I think I read Fort Worth has over 800 STRs that need to go away now and Dallas has around 1,300. Ouch! But they've been talking about banning them here for several years so these investors hopefully had plan B ready for this day.

    2Reply
  • Alicia MarksPro Member
    Fort Worth, TX 路 Member since 2020 路 1k+ posts 路 2k+ votes
    3y
    Quote from @Sarah Kensinger:

    At least it's not an all-out ban!


     There are very few multifamily zoned areas in Dallas, nor housing in commercial zoning, so it's effectively a ban.

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    2Reply
  • Alicia MarksPro Member
    Fort Worth, TX 路 Member since 2020 路 1k+ posts 路 2k+ votes
    3y
    Quote from @Bonnie Low:

    Wow, this is really a blow to investors. I wonder how many people running STRs are also local to the area? Seems they just don't care. So much for Texas being the land of the free. No wonder there's so much activity from folks in the Dallas area looking to transition to mid term rentals. From what I've heard from very astute investors like Kathy Fettke, Dallas metro is very affordable and still good for cash flow so maybe some of these properties will work out as LTRs. For the sake of those who own these properties, I really hope they have some options.


     Texas is the land of the free, Dallas, Austin, and Houston have been overrun by out of state residents escaping rising costs. Now they've moved here and are impacting city governments that end up recreating the same problems they left. Like locusts.

    [email protected]Podcast Guest on Show #204
    4Reply
  • Kyle J. CooperPro Member
    Investor 路 Corpus Christi, TX 路 Member since 2019 路 71 posts 路 43 votes
    3y

    I read the notes from the recent meeting and it appears to be a restriction for all of Dallas county. We shall see if it spreads outside of that, bc the DFW market is massive, still plenty of opportunities in the surrounding counties.

    I did see some notes regarding no restriction on str if the property is your primary residence (Texas homestead exemption). I may need to do some additional research, though I'm sure this situation will evolve over the coming months/years. So my understanding is this would include renting out a room in your primary residence, side of duplex, renting out Adu/back house, etc.

    Goes to show that house hacking seems to work in just about any environment. I currently rent out part of my primary residence as an str and I think we will be in the clear to continue. God bless you all!

    2Reply
  • Aaron Gordy
    Real Estate Broker 路 Austin, TX 路 Member since 2012 路 1k+ posts 路 1k+ votes
    3y

    Just another reason to be careful when thinking about str investments. Its great for the hotels as the supply decreases and you can bet that those players have big money lobbying for these changes. At the property level, its best to have alternative ways to make a property work.

    1Reply
  • Collin HaysBusiness Member
    Property Manager 路 Gatlinburg, TN 路 Member since 2020 路 3k+ posts 路 4k+ votes
    3y

    STRs are hotels, and hotels are businesses.  Businesses are generally prohibited from operating in areas zoned for residential.  I don't want a hotel next to me, any more than I want a tanning salon or nail parlor next to me.  Neighborhoods are retreats from business; for quiet enjoyment of the homeowners.  

    If you want to operate a business, locate the business where business is permitted by zoning.  Don't take your chances on a situation where the code enforcement simply hasn't caught up with your business.  That's a time bomb.  

    This isn't that hard.

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  • Patricia Drew
    Member since 2020 路 19 posts 路 20 votes
    3y

    I don't know anyone, conservative or liberal, that likes having STRs in their single-family neighborhood.

    3Reply
  • Aaron Gordy
    Real Estate Broker 路 Austin, TX 路 Member since 2012 路 1k+ posts 路 1k+ votes
    3y

    I don't mind. I have a neighbor that runs one (its illegal according to the city) in my neighborhood. Its not harming me or the neighbors. No harm no foul. Govt needs to stop meddling in free enterprise. I have personally stayed in great neighborhoods that had str's. I once stayed in The Treme' neighborhood in New Orleans in a house that would now be considered an illegal operation. It was a very good experience as I was able to listen to jazz musicians practicing from the balcony.  If I had stayed in a hotel in the french quarter, I would not have been able to really understand the great history and current dynamics of The Treme'  neighborhood. 

    3Reply
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