Investor · Atlanta, GA · Member since 2020 · 9 posts · 10 votes
Hi,
I've been in Chattanooga for about a year now so I have a pretty good feel for the city. I group up in a vacation town that sees phenomenal returns through short-term rentals. The city of Chattanooga has quite a few hoops to jump through in order to legally operate a STR so I was wondering if any BP users are legally operating AirBnbs and would like to talk.
Some people are finding great success in Chattanooga with STRs and others choose to stay away. Let me know your thoughts.
@Tim Stone I have owned and operated AirBnBs in the Chattanooga area. The city of Chattanooga has been extremely wishy-washy about STRs, mostly looking to Nashville on how to regulate. At first they tried to make property owners rezone to R3 or R4 in order to operate, which caused a big stink with neighbors because they worried about multi-family being built next door to single family. The city then changed everything in which you need to go through an approval process (much easier if owner-occupied than non-owner occupied). The good news is that it is easier to get approval than it was prior (previously if one neighbor complained when they sent out the notices, you couldn't get approval - it is now 4). The best advice I can give is if there are currently active STRs on the street you are looking at, your chances of getting approved are better because they already had to go through the approval process (assuming they did it the legal way). However, I did speak with the land development office about STRs recently (I am working on getting mine approved back as a STR), and the City Council apparently is in the drafting stages of "doing away with" non-owner occupied STRs. Current owners would be grandfathered in, but new applications would not be approved. Take note this is still in the drafting stages, and with this being an election year I doubt they will make any movement on it until after the first of the year if they pass it.
Also, anyone interested in learning more about the approval process for STRs in Chattanooga can go to the city site here. There is also an interactive map on the site that you can use to verify whether or not an address that is within the city limits is in the designated STR district.
@Tim Stone I’m in STRs I’m also in chattanooga. Heavy in both. But not together. I have no interest in short term in chatt. So.... I could ALMOST be your guy but I’m not quite the one lol
I was in Chattanooga about 1.5 years ago and was looking to invest in long term rental. It seemed I was a day late and a dollar short. It seemed investors had bought them up (I think it was more the 37404 area and surrounding) and fixing and renting or turning into AirBnB. Im from CA and had only a few days to make a decision and decided to hold off, but it looked promising. And here I am now. I couldn't seem to find the right price/rent ratio (1:1.5). Any thoughts? Or any other cities I should be looking at in GA, TX, ND, etc.
I think your biggest risk with STR in Chattanooga is them changing the zoning/allowance to do so after you've purchased. There is currently a movement to do this in the 37404 zip led by the Dist 4 (I think) Councilwoman citing a lack of affordable housing that STR's contribute to by taking them out of the LTR housing inventory. I personally don't agree with this logic, but that's what's happening now, and no idea if it will pass. But if it does pass and you purchased based on STR returns instead of LTR returns then you may be up the creek. My only suggestion would be to look at the same property from a LTR perspective and see if that's a ROI you can stomach if that's what it came to pass.
@Tim Stone have you or anyone considered investing in STR in Marion county or outside the city limits of Chattanooga where there are not any or very few requirements to have a STR?
@Brian Levredge I think we should start looking at areas that are close to Chattanooga for example Marion county to invest in for airbnb that are on the river or close to it. Because it is a rural area I don't think they have any regulations on Airbnbs.
@Tim Stone I have owned and operated AirBnBs in the Chattanooga area. The city of Chattanooga has been extremely wishy-washy about STRs, mostly looking to Nashville on how to regulate. At first they tried to make property owners rezone to R3 or R4 in order to operate, which caused a big stink with neighbors because they worried about multi-family being built next door to single family. The city then changed everything in which you need to go through an approval process (much easier if owner-occupied than non-owner occupied). The good news is that it is easier to get approval than it was prior (previously if one neighbor complained when they sent out the notices, you couldn't get approval - it is now 4). The best advice I can give is if there are currently active STRs on the street you are looking at, your chances of getting approved are better because they already had to go through the approval process (assuming they did it the legal way). However, I did speak with the land development office about STRs recently (I am working on getting mine approved back as a STR), and the City Council apparently is in the drafting stages of "doing away with" non-owner occupied STRs. Current owners would be grandfathered in, but new applications would not be approved. Take note this is still in the drafting stages, and with this being an election year I doubt they will make any movement on it until after the first of the year if they pass it.
Also, anyone interested in learning more about the approval process for STRs in Chattanooga can go to the city site here. There is also an interactive map on the site that you can use to verify whether or not an address that is within the city limits is in the designated STR district.
I manage several STR and Mid Term rentals, and long term, in Chattanooga. My mid term rentals(30+ days) typically have more consistent revenue streams with lower revenue than STR but allow for rate increases depending on demand. There are definitely several hoops to jump through to get STR licensing in the city but none of them are difficult except for the required neighbor postcards mailed to everyone within 300 feet of the subject property. With only 4 objections from neighbors the city will deny your license. You can appeal the denial, present your proposal but 98% of the time the council will deny your appeal if only one person in the objecting party just shows up. That's where the mid-term rentals come in. We start renting mid-terms while we apply for licensing, cuts down on vacancies, and although the rates aren't as high, it still can be much higher than a long term rental without the headaches. If we cannot get the STR licensing, we still have a model for mid-term rental. There are definitely certain hyper local areas to stay away from when considering an STR investment in the area that have had a consistent history of denied applications due to neighbor objections. We attempt to monitor the license denials on a quarterly basis to keep a finger on the pulse of what areas are not keen on STRs. It's not perfect but it is helpful for our investors.
@Kwambe Smith - absolutely! Simple short answer, here in Chattanooga, the city defines a short term rental as any rental where the length of stay is 30 days or less. The owner (if non-owner occupied) is required to have a business license, an STR license and is responsible for collecting and remitting occupancy and sales taxes among other requirements. However, we can still rent the property for any stay greater than 30 days without the required STR license and there is plenty of demand for these types of stays, call it corporate housing, housing for traveling nurses, mid term stays, doesn't matter the concept is the same. We are taking a potential or denied STR and converting to a fully furnished rental that we advertise on multiple distribution channels and still collect and remit the required taxes.
Another message for @Ian P.: Would it be possible to share the neighborhoods that have been resistant to STRs? Or, rather, perhaps how you monitor the denials? Thank you!
@Jonathan M Parkhurst - absolutely! Happy to have a call to discuss further but if you don't have a backup plan for STR, such as a mid-term, I recommend staying away from highland park and Fort Negley area near Mitchell st. Both areas have seen historically high neighbor objections. The best way currently to evaluate good vs bad areas for STR licensing is to periodically request the data from the city and examine it over time. Takes work but it will give you some insight into where neighbors are objecting to licensing.
Another message for @Ian P.: Would it be possible to share the neighborhoods that have been resistant to STRs? Or, rather, perhaps how you monitor the denials? Thank you!
@Ian P. can you share what areas are best for midterm rentals? Do you find any specific size or price point works best to attract mid-term renters? Thank you
@Kwambe Smith - absolutely! Simple short answer, here in Chattanooga, the city defines a short term rental as any rental where the length of stay is 30 days or less. The owner (if non-owner occupied) is required to have a business license, an STR license and is responsible for collecting and remitting occupancy and sales taxes among other requirements. However, we can still rent the property for any stay greater than 30 days without the required STR license and there is plenty of demand for these types of stays, call it corporate housing, housing for traveling nurses, mid term stays, doesn't matter the concept is the same. We are taking a potential or denied STR and converting to a fully furnished rental that we advertise on multiple distribution channels and still collect and remit the required taxes.
@Ian P. Great info. I've been trying to get solid answers on the STR rules in Chatt for a couple of weeks. I've been traveling full time for 6 years with one LTR self managed. I think I'd like a US base again so looking to do a house hack similar to what I stayed in, in East Brainard for a month in 2020; Upstairs 3/2 operating as STRs with a downstairs acting as a 1/1 for me when in town. It would be my primary residence so I thought I was good-to-go but I have been reading that it still is not a certainty on STR legality. I haven't been able to find details on the Chattanooga gov site either now. Do you know a good up to date resource? I'm also thinking of visiting Chatt again between Christmas and MLK day since I'll be in the US. I'd love to buy lunch for any property managers working in STR.
Hi Tim! Right now, considering the city ordinances are under review, we're working outside the city limits for STRs. Unincorporated Hamilton County and the city of Soddy Daisy also have temporary moratoriums right now, so we're similarly steering clear of those.
The great thing about Chattanooga is there are plenty of places to buy that are convenient to tourist destinations while being outside those areas with current restrictions!
One thing I like about Chattanooga for STRs is it isn't a huge tourist destination that relies on people taking big trips to get there. In a recession, if people are cutting their vacation travel, those bigger trips may get cut. Weekend trips from Atlanta or Nashville aren't likely to get cut, as they would be a relatively affordable vacation option.