Airbnbing: Questions to Ask to Navigate Cities & HOAs

by | BiggerPockets.com

The people who we talk to usually have one of two profiles: The first use Airbnb casually as a means to help cover vacation costs or snag a few extra hundred dollars a month (which is how we started). The second profile consists of people who want to utilize Airbnb to accumulate properties and wealth quickly by leveraging short-term rentals. Depending on how comfortable you are with being yelled at by the government or your HOA, the casual Airbnber need not worry too much about city laws or HOA rules. (I say this because in our experience, you usually receive a warning before getting fined, so risk is limited.) If you are an investor wanting to buy properties though, it is critical that you educate yourself on your city laws and HOA rules first.

Outside of major metro areas, most cities lack specific laws for short-term rentals, but it’s reasonable to assume these laws are coming. Since you are reading this blog, you must have an idea of how popular short-term rentals are. Soon, the neighborhood associations and your local government will be just as familiar with the phenomenon. Because of this, it’s worth calling your city planner and asking if they have specific short-term  rental laws. This can be easier said than done, so below I’ve listed a few ways to go about it.

 

Related: With Government Crackdowns, Are Short-Term Vacation Rentals A Doomed Investment Niche?

Asking the Right Questions

When asking if there are rules or regulations, include the words “short-term rentals,” “Airbnb,” and “VRBO” in your language so that you cover all your bases. If there are rules in place, ask to be emailed the documentation. 

If they say there aren’t any rules, don’t stop asking questions. You’ll want to know the future regulatory environment as well as anything that may not sound sound like a short-term rental rule, but actually is. In this scenario, ask:

1. If the city council is discussing potential laws for short-term rentals, or if the planning department has started any kind of review.

2. What the present attitude is toward short-term rentals. Does it seem like it might shift one way or the other? Are there nearby cities in which existing laws are being reviewed?

3. If there are rules or laws pertaining to rentals that last 30 days or less (this is a short-term rule that many cities utilize, but doesn’t specifically mention Airbnb or VRBO, and thus often gets missed).

If you have an HOA, it can also prevent you from using short-term rental sites. A lot of HOAs have restrictions on rentals of less than 30 days. Many more are adopting laws that prohibit renting for 90 (or even 180) days or less. (This happened to us.) Depending on your point of view, there is also some effective software out there that will help the HOA detect if you are running an Airbnb in your place. (We experienced this.) These tools work, so the HOA can find you and shut you down in no time.

Related: Is Airbnb Really Ruining Rental Markets?

Get Involved

The good news is that if your city or your HOA doesn’t have these laws yet, you can help affect change. Go to council meetings. Get on your HOA board. Educate people on why short-term rentals are good for the city, good for business, and less problematic than they probably appear. (A short-term renter who’s a problem is gone in four days, whereas a long-term renter who’s a problem is a year-long headache).

Trust me when I tell you it’s worth your time to look into your city laws and HOA rules. You definitely do not want to buy a short-term-rental investment property and then get shut out of short-term rentals. Good luck.

Have you run into any issues with you HOA or local government? How did you handle it?

Let me know in the comments section below!

About Author

Erin Spradlin

Erin Spradlin is co-owner of James Carlson Real Estate. She currently owns three properties and is looking for her next investment. With a background in Airbnb rentals and marketing, she is always looking for the next trend. Find more on Erin at: http://www.jamescarlsonrealestate.com/.

9 Comments

  1. It’s good that someone has given this warning to do due diligence before getting into airbnb. The LA beach cities have an outright ban on all short term rentals and it’s now being enforced. Still there are a ton of short term rentals available in the beach cities in violation of the law.

    So basically my advice is don’t assume anything. Just because there are short term listings in a city, that doesn’t mean that it’s legal.

    • Erin Spradlin

      Yeah, I think there’s definitely a question of legality and comfort. In Denver, there’s a ton of cities where you can do it without much risk because they don’t have the resources to go after you yet, but you should be in the know about the law and then decide if you are comfortable being out of compliance. Likewise, if you are going to invest, I think it’s really important to understand what could happen to that investment long-term if laws change.
      Sounds like LA has a similar situation. It’ll be interesting to see how different cities tackle Airbnb.

    • Erin Spradlin

      As a matter of fact, I do…. We compile reports on cities up and down the front range, and I’ve talked to the Centennial planning dept. They are a little ambiguous in their stance… Currently, they don’t have any laws related to short-term rentals, 30 day limitations or use code… so nothing they can really go after you with. They have asked people for voluntary compliance and allow for “casual use.” They could provide no definition for that, nor what the violation would be if they did want to pursue you, so that’s a little bit confusing. They also are reviewing laws around it right now and will likely adopt something in the future (probably 1-2 years.) I would say if you are considering it for an investment, I’d be weary because laws could change, but if you are just planning on doing it on a place you already own or are renting, you are likely in the clear (barring any HOA issues).

  2. Victoria Hartcorn

    Thank you, Erin! It would be my parents second home they are under contract on. It’s a great deal price-wise and in a nice location. No HOAs, but they want to Airbnb when they are not in the state so it helps pay for itself. They may also end up assuming it as a primary residence in the future and could do a long-term rental in the basement (has a conforming bedroom) if laws change, so I think we’re okay on this one.

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