Understanding Short-Term Rentals #1



There has been a big push for landlords to look into short-term rentals (think, Air BnB) as opposed to longer-term (monthly or yearly) typical rentals. The reason for the push is that renting a property nightly can bring in much more per month—even including vacancies. It has become almost an entirely new real estate investing technique.

While a great way to make additional rents, there are things that you should understand before jumping in with short-term rentals. The first is legality. All rental properties are regulated by the city in which they are located. You will also see county or state-wide regulations. But typically, state laws govern the relationship between landlords and tenants and other larger matters. In most jurisdictions, the specifics of what types of rental properties are allowed are done at the city level.

This city-sponsored legislation arises because cities are charged with protecting neighborhoods and the “look and feel” of their respective cities. And they have a lot of authority on rentals. Most cities require landlords to register ALL their rentals properties, pay a licensing fee and make determinations as to how many unrelated tenants can live in a give property. If you are a landlord, you should take a serious look into your city’s regulations!

But, short-term rentals are a new and different kind of rental. Cities certainly accept renters in their jurisdiction. But short-term rentals fall under the same category as hotels. So, if you have a short-term rental property, you are a hotelier, not a landlord. And most cities do not want hotels and the transient nature of hotel guests in the middle of residential neighborhoods.

Due to that, many cities have already either banned or regulated the short-term rental industry. All other cities are looking into it and making decisions. The biggest mistake you can make is assume that you legally rent out a property on a nightly basis. You can find yourself the subject of an investigation and fines. If you’re city hasn’t yet made a determination, you can research what they are thinking by talking to the planning and zoning commission or city council members.

The last thing you want is to run numbers for your deal assuming nightly rents and then a year later be banned from using the house that way!

So the first key is to really understand what rules and regulations apply to nightly rentals. And this will vary city-by-city! You can have different rules with different cities in the same county. And those rules may change over time.

In the next blog, I will cover how nightly rentals are taxed and how to save on your tax bill!

For more information, please see my website link below!

Jeffrey S. Breglio, Esq.
Breglio Law Office and REI Mastery U
(801) 560-2180


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