County Banning Vacation Rentals

MD/DC · Member since 2024 · 1k+ posts · 1k+ votes

7mo

That sounds rough. Hopefully it is in the early phases and there will be negotiations. One of the reasons I stick with beach areas where the economy is supported by tourism is to hopefully have some degree of security for my STRs.

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Theresa HarrisPro Member

Member since 2019 · 15k+ posts · 11k+ votes

7mo

A few places are cracking down on vacation rentals-often areas that have low vacancy rates and a shortage of housing. They ban them outright, limit it (ie owner must live in the home and can rent a suite or room) or you have to register them.

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Mike GrudzienPro Member

Lender · Eugene, OR · Member since 2019 · 2k+ posts · 1k+ votes

7mo

Ouch!! I feel for you.

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John UnderwoodPro Member

Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes

7mo

I have heard of more and more places making it hard or impossible to have STR'S.

Sorry this is happening to you.

Hopefully you can make it work or have an exit stategy.

2 Reply

Bruce WoodruffPro Member

Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes

7mo

How does this property do as a LTR? It is probably your only option at this point.

Or sell and buy a STR in a 'friendly' city......maybe look over in Arizona....you could buy 2 or 3 nice properties there...you might even make more profit.

There are always options...!

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Andrew SteffensBusiness Member

Tampa, FL · Member since 2022 · 3k+ posts · 3k+ votes

7mo

That sucks - sorry to hear. Florida is blessed the state has frozen the counties and local jurisdictions from enacting any new laws post 2014.

[email protected]813-563-0877

Vacation Rentals of Florida53 Reviews

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Dan H.Pro Member

Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes

7mo

Quote from @Hsin-I H.:

My rental property in Carmel (Monterey county) is facing a new ordinance that's making STR difficult (and expensive). They are also fining (huge fine) hosts who haven't submitted the application, or submitted late (which is me) and asking us to cancel all existing bookings, which is so disruptive to our guests who had made plans way in advance in good faith.

This issue was also highlight on Travel off Path, naming Monterey #2 spot IN THE WORLD a not to visit destination. The hosts in the area has been fighting with the county on this but they are again, trying to ban STR entirely. Who's behind this? Always politics. Pressure from local voters and corporate hotels. County is getting a lot of money no matter what ($13000 for a permit and all the fine that they are gathering!)

https://www.traveloffpath.com/7-destinations-americans-shoul...

https://www.countyofmonterey.gov/government/departments-a-h/...

Does anyone have similar experience battling with their county?

A few years ago the city of San Diego placed a STR quota. There was one area heavily tourist where most homes were STRs. This area was added as an afterthought to the quota. They applied a high quota there (30%) . The rest of the city they applied a low 1% quota.

The premise of the quota was that the city has too many STRs.

The city advertised the quota as providing stability to the STR operators.

So what happened:
- mission beach that was a pure vacation market hit its quota. Many existing STRs had to transition to MTR, LTR, OO, or leave empty. Most converted to MTR and the huge supply increase resulted in LTR rents basically being less than LTR rents when including the additional costs associated with MTR (utilities, cleaning, higher pm, etc). Remember this area was basically added as an afterthought.
- the rest of the city did not come that close to hitting its quota and 3 years after the “lottery” still has not hit the quota. The implication being that there was never a high percentage of STRs outside the mission beach tourist zone.

We had 2 mission beach STRs that we have been operated annually as STRs (in GFC only during summer) since 1999 and have paid the TOT (Transit Occupancy Tax) as required the entire time. We had almost 25 years of operating legal STRs having paid who knows how much in TOT. only one of the 2 units was picked in the lottery even though it was a weighted lottery (max weight for 5 years of STR operations with proof you paid the TOT for those 5 years - implication is the city does not know who has been paying the required TOT). So 5 years operating STR got same lottery entries as 25 years operating STRs. Just over a year after the lottery, we got our 2nd STR license. We were slightly far down the list but they caught ~80 people for cheating on the lottery. Seeing they apparently had no means to verify the TOT, the people caught cheating were people who claimed 5 years of STR operation, but had not owned the property as long as 5 years.

What about the advertised stability? There is a socialist on the San Diego city council (Elo Rivera: I have not heard him refer to himself as a socialist but have heard many socialist statement including housing providers should not be able to profit for providing housing and corporations should not be able to make large profits when people are struggling to pay their bills) that initially proposed a $5k/br STR tax on top of the TOT. There was backlash so he lowered it to $8k/unit. When it was clear that would not make it through committee, he eliminated non corporate owners from the additional tax. It still did not make it through committee but he then proposed a fee for empty units (2nd homes that are not used as STRs) and that made it through the rules committee. So what happened to the stability that the quota was supposed to provide? I think the promised stability was BS to reduce the opposition to the quota. Once quota was in effect, promise of stability was gone.

Note our 2 mission beach STRs in our mind are 2nd homes first and STRs second. This implies MTRs did not meet our goal. I want to block the calendar for our use (including friends/family). Both units being STRs accomplishes this goal. We also have high enough occupancy that our personal use does not prevent these from being profitable.

So here are some of my thoughts
- any market, even a many decade vacation market, can have STR rule, quotas, etc implemented.
- most jurisdictions want the largest piece of pie that they can get. $5k/br seems crazy. If it had gone into effect, I am unsure if it would have helped or hurt our revenue. Our occupancy is far above market with the implication being our profit is far above market. Eliminating the lower occupancy STRs would reduce supply implying that we could likely charge more. Note there are many STRs in San Diego that are not making enough additional revenue over LTR to justify the effort and risk. I was glad it did not make it through committee as the impact to us was unknown and I am content with our current performance (our 2 mission beach STRs have 3 days total vacancy this month (one day on one and 2 days on the other) in bridge season (high season is June through Sept).
- if you have a top performing STR, quotas, fees, etc can eliminate competition. They will more impact marginal STRs than the more successful STRs.
- STR rules can change. Be prepared for changes. Have an exit plan. Realize if you are in a high density STR location (smokies, mission beach at 30% may still qualify, etc) the comps do reflect STR income. If STRs are eliminated, there is likely to be a significant price reduction and these will quickly be reflected in the comps. A quick exit may be the best option (before the comps fully reflect the STR income loss).

I want to add that I am a proud democrat capitalist. I find that socializing just about everything backfires. This includes rent control.

Good luck

1 Reply

Henry Lazerow

Real Estate Agent · Chicago, IL · Member since 2017 · 2k+ posts · 2k+ votes

7mo

Chicago did this, it is pushed by corrupt hotel unions, etc. I would never buy unless made sense LTR too.

In Chicago they made it illegal to do STR for a single family, condo or 2-4 unit unless claim it is owner occupied with the only required proof needed being ¨unit is the home address on your ID¨ so many people are able to to sneak around the rule.

2 Reply

Jules Aton

MD/DC · Member since 2024 · 1k+ posts · 1k+ votes

7mo

I’m surprised places that tightened regs didn’t grandfather in existing STRs.

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County Banning Vacation Rentals

County Banning Vacation Rentals

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