Short-term rentals, sometimes referred to as transient lodging or vacation homes, are full or partial homes that are rented out by the homeowner for generally less than 30 days. With the uptick in usage of connectors apps such as Airbnb or Vrbo, advertising and profiting off of a short-term rental could be a viable option for some homeowners with an extra space.
Over time, short-term rentals provide a larger income than long-term rentals. This depends highly on the location of the rental and the amenities that are included. A major reason for the increase is that short-term rental landlords can charge more per stay than long-term rentals. In the United States for 2021, the average price to rent a full Airbnb house was $216 a night. The renter is also able to rent out rooms of the house instead for a reduced rate of around $50-$70 a night.
The trade-off to a short-term rental compared to a long-term rental is that income will not be constant or as predictable. The solution is to own a large number of short-term rentals to have a more reliable income. The more short-term rentals you own, the more reliable the income.
One thing to keep in mind before renting is local regulations. Due to a recent increase in short-term rentals available on the market, from 1,039,948 in 2020 to 1,370,903 in 2022, more and more cities are starting to enact rules to combat recent issues.
Recent Restrictions:
In the beginning, they were mostly unregulated, leading to upset neighbors who were tired of constant parties and nearby hotels that were losing business. Hotels, by comparison, have long been regulated by local governments therefore short-term rentals were expected to as well.
Some towns already had what they called a “transient occupancy tax” which included hotels, motels, cabins, and campgrounds that the town just extended to include short-term rentals. A large portion of towns across the nation required permits to be put in place and a few, who were tired of the constant noise, banned them altogether.
To restrict the constant noise complaints, some cities have set noise restrictions, a curfew, and a prohibition on outdoor music and sleeping. Other restrictions require the owner to be present for most rentals under 30 days. In response to the negative PR, Airbnb outright banned parties from taking place at their locations. They also set up methods of filing complaints against the owners of the property. Hopefully, these measures will be able to calm the fears neighbors and renters have.
Overall, a short-term rental is a good way to earn a passive income on your property as long as you are sure to follow local regulations and are careful who you are renting to.
This blog post is part of the CIMA Law Group blog. If you are located in Arizona and are seeking legal services, CIMA Law Group specializes in Immigration Law, Criminal Defense, Personal Injury, and Government Relations.
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