Success Stories in "Strict" STR Markets?

Question

I'm curious about markets that have a reputation for being tough on short-term rentals. The ones with heavy restrictions, permit caps, primary-residence-only rules, HOA bans, etc.

I'm not necessarily looking to invest in any of these markets right now. I'm just curious to hear from the BP community members who've found a way to make STRs work in places that are generally seen as unfriendly to them.

A few things I'm curious about:

-Which markets do you consider the strictest for STRs, and what makes them strict?

-Has anyone actually pulled off a successful STR in one of these markets? What did that look like?

-Was it a workaround (like meeting an owner-occupied requirement), a grandfathered license, a niche exemption, etc?

-Any markets where the rules are strict on paper but loosely enforced in practice?

Would love to hear what this community has pulled off!

Andrew Steffens · Answer

I will say I think you are sort of on to something.  One thing I like about my market, taking Pinellas County as an example, has a good mix or restrictive and non restrictive cities, which is acting a bit like a buffer against oversupply.

Matthew Tregoning · Answer

I would separate strict but stable from strict and politically unstable. A clear permit cap can protect existing operators. A market that changes enforcement, fees or eligibility every year is a different risk. I would never underwrite around loose enforcement or a workaround. The plan should still work if every written rule is enforced exactly as written.

Dan H. · Answer

Strict is relative.

Our primary STR market has a STR quota (with an enforcement fee),  a STR (TOT) tax of 13%,  and recently a council member proposed a $5k/BR annual tax that did not receive the necessary support for passage.

Quotas limit competition.

TOT is paid by guests.

Our STRs have produced crazy returns.  It helps that they were all value adds with most having cash out refinance that resulted in extraction of the full investment.

Our longest owned STRs (small beach duplex) will almost certainly exceed their highest previous income year (highest previous is ~$160k).    This duplex was purchased for $375k and is worth ~$2.5m today.   We also have a kick a$$ co-host at a great rate.   In addition, the property tax is based on the purchase price.  So my expenses are far lower than virtually all the other STRs in my market.

As for the loosely enforced….  The unincorporated areas of my market have a lower TOT than my primary market but there has been zero enforcement beyond sending a warning letter.   I would feel stupid if I had paid it hen there is no finer quench for not paying it.

Good luck

Success Stories in "Strict" STR Markets?

Most Popular Reply