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  • Writer's pictureJulie Fergus

Short-term Rentals Long-term Planning

Updated: Jun 13, 2023

It is no secret now, "they" are coming after your vacation rental! Do you have a plan B?

I have been shocked at the speed at which towns and cities are targeting short-term and vacation rentals including where my rentals are (or were) which have been vacation and tourist destinations for over one hundred years. Now these towns are under attack by people that don’t want “transients” in their neighborhoods. The common argument is the “neighborhoods are for neighbors” and that rentals take away from “affordable” or long-term rental housing.

First, I am confident that many people don’t know their neighbors. Many people live in their own little bubbles and don’t interact with their neighbors much. So, my thought is that this is not a strong argument against vacation rentals. Although, I will acknowledge that there are some bad rental owners that do not screen who they rent to; this leads to problems with parties or over-occupancy.

The myth of vacation rentals taking away rentals from people in need of long-term rentals can be a real argument depending on where the market is and what type of housing is in question. Most single-family homes that are used as vacation rentals are unlikely to be long-term rentals.

Many investors buy single-family homes in vacation areas to use as their second, or third homes. These homes are rented out to vacationers to offset the overhead and cost of that property. And in some cases, the property can be totally paid for with the rental income. This is a huge incentive to buy homes in vacation areas. Having others pay for your investment is very appealing.

Most single-family homes rented long-term do not provide enough income to cover the cost of the property. Property taxes, insurance, mortgage payments, maintenance, etc. make it challenging to cover costs at the going rate of rents. Believe me, I know, I’ve tried it and the math does not work for properties in high demand vacation area.

My point of writing this is to sound the alarm if you own property in an area where the public and town officials are talking about or considering regulating or banning short term rentals. Have a back-up plan just in case a ban comes down quickly. Here are a few things to consider while creating your plan B.

  • Pay attention to what the town council and planning & zoning boards in your town are talking about. Check Facebook groups for discussion regarding this topic. In my town where I live and have a vacation rental has several heated threads on this. Reading the comments in an insight to the hatred against vacation rentals.

  • Have your property sale ready. This will enable you to put your property on the market in an instant if there is a change to the zoning or regulations that will stop you from operating. When covid hit and the lockdowns came the vacation rental industry was in question. I personally took it as nudge to take advantage of a very good real estate market and sold properties quickly. The key was that my properties were sale ready.

  • Do the math. Perhaps you could rent your property long-term if the rules changes. Be knowledgeable about the market rents for long-term tenants.

  • Have a realtor. It is beneficial to have a relationship with a realtor in your market. The realtor should know your property and have advice on best time to sell if needed.

  • Know other vacation rental owners in your market. It is important to have a group of owners that can be involved in the discussion and planning with town officials. Don't wait until there is a potential change in the rules.

  • Brainstorm ideas on what you can do to stay ahead of "them".

  • Be a good neighbor. Your property should be well maintained and attractive to enhance the visual appeal of the neighborhood. Get to know your neighbors and let them know you care.

Vacation rental industry is not sure bet. There are things out of your control, and this witch-hunt is one of them. It is important to be aware and have a plan to exit if need be.

Link for the latest news in vacation rental regulations. Regulations Archives - VRM Intel

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