The Future of STR’s?

15 Replies

If you invest in Short Term Rentals, are you concerned about the future of this type of rental?

It’s like everybody hates us! I have my first in Big Bear Ca, and after only 4 months ( during the slow season) we been able to pay all of our expenses and have made profit! We also just became super host’s on Airbnb!

My concern though is the increasing ordinances cities or states are putting on STR owners. I'm in a resort community so That makes me feel like the city will continue to need us despite their obvious annoyance by STR's. I even heard hotel chains are now starting to try and do their own STR programs to compete!

Thoughts?

Thanks Bigger Pocket Family!

Not really, the only places that have problems are primarily cities where there is a need for long term housing as well. I focus my acquisition of vacation rentals to resort towns who generally welcome strs as they are built around the cities primary source of income. 

If my STR was in a city I would be worried about potential future ordinances.

I am out of city limits and on a lake. It is a more rural peaceful area that shouldn't be impacted by new ordinances any time soon.

@Mark Page The regulation and ordinances are starting to happen in the Catskills area, a couple hours from NYC and what has become a huge STR market. I share your concerns.

If you don't mind me asking, do you personally manage the STR? Meaning, are you close enough that you can clean and prepare the place for new guests, or do you pay someone to do it for you?

Thanks

I have concern for STR's in major metropolitan areas, but true vacation rental markets will be fine. Most of the local economies in those markets have been dependent upon short term rentals since well before the inception of Airbnb and VRBO, and before there were computers in every home for the most part.

@Mark Page In NJ our governor just created and passed a law last October called the Airbnb Tax. At the Jersey Shore we have a lot of STR for summer rentals. We rent by the week and there are also Airbnb rentals for weekend stays.

He passed the law arguing that it isn't fair that Hotels and Motels have to pay a tax and these STR don't. So now all short term rentals are subject to an Airbnb Tax of about 10%. The law goes on to say that if you list your rental with a real estate agent you don't have to pay the tax. The only way the tax is enforced is when a home owner registers with the state as a short term renter. I've also heard that the governor is looking into revising the tax.

Short term rental owners should be happy there is regulations. A circus or free for all environment where everyone can open anything is not healthy for a community. This is part of the argument that set bed and breakfast owners have made for years. 

someone in my town decided to open a bed and breakfast without checking with the zoning office. They figured since it was permitted they didn't have to check. Of course that was ignoring parking signage and set back laws so their sign came down a few weeks later

there's a lot of clueless people out there who think short-term rentals is a fast buck. I'm happy to see them never go into business

Like others have said, stick with traditional resort towns that have had vacation rentals for decades and I think you will be fine. And follow the ordinances by becoming permitted and pay the taxes. Areas where these rentals haven't existed before or there isn't zoning for these type of rentals is where you're seeing most of the problems. Smart municipalities recognize that there are revenues to be made with allowing STR's but when crappy owners and managers don't play by the rules or disrespect the neighborhood, they start cracking down.

Originally posted by @Mark Page :

If you invest in Short Term Rentals, are you concerned about the future of this type of rental?

It’s like everybody hates us! I have my first in Big Bear Ca, and after only 4 months ( during the slow season) we been able to pay all of our expenses and have made profit! We also just became super host’s on Airbnb!

My concern though is the increasing ordinances cities or states are putting on STR owners. I'm in a resort community so That makes me feel like the city will continue to need us despite their obvious annoyance by STR's. I even heard hotel chains are now starting to try and do their own STR programs to compete!

Thoughts?

Thanks Bigger Pocket Family!

My Dad and I are considering getting a STR. After deciding to not pursue Lake Havasu, primarily due to the 24/7 local contact requirement not being great for remote investing, we are considering other markets and Big Bear is one I was thinking about. It sounds like things are going very well for you. Do you mind sharing any insights into the STR market and regulations there? I haven't started investigating the area yet so any info would help me kickstart that process. Thanks!

Think the biggest opportunity is actually in the Tier 2 and 3 metropolitan cities. I operate over 50 in Charlotte and Atlanta and we have no issues here with regulations. Raleigh tried to pass regulations but then the NC General Assembly  passed a law that prevents cities from regulating Airbnb: https://indyweek.com/news/wake...

Have strong conviction that this is the way of the future for travel and real estate investment.

Originally posted by @Richard Phillip Lewis :

@Mark Page In NJ our governor just created and passed a law last October called the Airbnb Tax. At the Jersey Shore we have a lot of STR for summer rentals. We rent by the week and there are also Airbnb rentals for weekend stays.

He passed the law arguing that it isn't fair that Hotels and Motels have to pay a tax and these STR don't. So now all short term rentals are subject to an Airbnb Tax of about 10%. The law goes on to say that if you list your rental with a real estate agent you don't have to pay the tax. The only way the tax is enforced is when a home owner registers with the state as a short term renter. I've also heard that the governor is looking into revising the tax.

Originally posted by @Emir Dukic :

Think the biggest opportunity is actually in the Tier 2 and 3 metropolitan cities. I operate over 50 in Charlotte and Atlanta and we have no issues here with regulations. Raleigh tried to pass regulations but then the NC General Assembly  passed a law that prevents cities from regulating Airbnb: https://indyweek.com/news/wake...

Have strong conviction that this is the way of the future for travel and real estate investment.

I am worried, but I'm not... What I mean by that is; WE know towns like Big Bear and Lake Havasu City (both of which I have, and currently own vacation rentals in) DO rely mainly on tourist dollars. But sometimes the locals forget that.  Big Bear KNOWS they need tourists. Lake Havasu City KNOWS they would be Ludlow if it weren't for that lake everyone wants to be on. But when you become a full time resident who needs a full time rental and suddenly realize it's really hard to find one because everyone wants to do short term, you get worried, frustrated and angry. You start to think about moving on to the next town. There goes your workers that make the tourist machine pay! I know because I've been a full time resident in both towns, as well as a few other tourist towns.

Our vacay rental in BB was a money maker WAY before AirBnB came along. We decided to move up there full time and ran a vacay rental biz back in the early 90's that did very well. I also worked for the Chamber of Commerce. Our Havasu Park Model on the Island, in a lake front resort, makes money like it's being printed in the basement.

So now we want to invest in a long term rental to house the town's workers. But the prices keep going up which means we'd need to charge more for rent. But the town's workers can't afford it. So then the city management starts trying to please it's constituents who are complaining and asking for change. You see how I think and why I get kind of worried? I mean, not enough to sell off my STRs, but enough that I listen to the locals (on social media and by hanging out with them at local watering holes) and keep my finger on the pulse of said town.

We are seriously trying to decide what our next move is here as we sit on cash we made from selling our long time home and rental in South OC... buy in South OC again, or LTR in Havasu or another STR?? Hmmm....