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Legal cities for non-owner occupied STRs

regulations

#1

​Hi all,

I’m trying to start a non-owner occupied STR business through AirBNB (rental arbitrage, no mortgages) but it seems like regulations and ordinances are popping up all over the US day-by-day.

What’s your best advice in terms of choosing a city to start a business like this?

I’d love an online repository with current regulations across the country, but I can’t find anything. I have no problem scouting out the individual cities I’m eyeballing and seeing what their stance is on their websites, but (1) some are very unclear and (2) I’m afraid to invest in a city that may put laws in place shortly after, stopping my strategy in its tracks (e.g.: anyone who invested in Nashville 1-2 years ago).

Thoughts?


#2

Too much risk…much better buying your own and not putting any landlord at risk.


#3

Couldn’t agree more. Unfortunately I don’t have the money for a down payment.


#4

I’d pick a city where regulations are already in place and it’s clear what the regulations around Airbnb/STRs are. Unfortunately, that still doesn’t guarantee that the rules won’t change, even after they’ve been established.


#5

And have you co spidered your set up costs? I spent $30 k on one property.


#6

Do you know any cities that meet that requirement? Seems like every city is undergoing change around STR reg.


#7

I’d find another line of work. You are facing way too many obstacles as a non owner in a market that’s starting to encounter regulation everywhere.


#8

I’d like to know from the OP why they think that they have the experience and the qualifications for this venture. STR, done properly, is about hospitality, about genuinely wanting to please guests and offer the best possible service that truly represents value for money. The OP seems to be not even thinking about that - a landlord rather than a host in fact. Does the world really need more landlords who don’t even own the properties they are renting?


#9

Why?

Couldn’t agree more.

What makes you think that?

I wouldn’t consider myself a landlord in this instance. I’d be more of a property manager - setting up/furnishing, arrange bookings and check-ins, working with cleaners and any maintenance personnel, etc.


#10

Because knowing this would enable us to help you more and give you a lot more valuable information that would help your decision making.

Excellent.

Because you are giving the impression that you’re willing to rent a property anywhere that has a demand for STR. This is, opposed to where you live and can be a hands-on host.

Neither would I.


#11

I’m from NYC but I’ve managed international hostels in South America and SE Asia, so I’m familiar with hospitality. At this point in my life I want a somewhat aggressive income strategy for certain plans I have coming up in the next 5-10 years of my life. When I say aggressive, that’s in terms of cash flow, not risk or at the cost of hospitality. That being said, I still would like to set up shop somewhere lucrative.

I’d like to be hands off after 6 months, and put processes and management in place as I scale, but I’m aware that it’s important to be hands on in the beginning and/or as long as possible for a strategy like this.


#12

Hostels are better bets than hotel experience for Airbnb hosts. This is particularly the case if people have experience of chain hotels - the corporate way is rarely the way to go with STR. Hostels are similar in several respects.

There are several hosts here who host remotely and they will be able to advise you on the situation and - in particular - choosing the right people to work for you. Personally I’d always choose an existing Airbnb host to take your place because the Airbnb system is quite a learning curve. I take my hat off to you though - I don’t think I could ever host remotely.


#13

Thanks Jackie. Any chance you’d be able to point those remote hosts out? Would love to pick their brains.


#14

I’m sure that they’ll be along to comment soon enough. :slight_smile:
As a rough estimate, I’d say that 75% of the hosts here are on site. Even so, they will recommend things to you that are just as useful to on site hosts as remote hosts - things such as surveillance cameras outside the property. Even on site hosts have to sleep sometimes! But these are items that you’ll need to take into consideration when preparing your budget.

I am an onsite host (of 2 separate apartments but I’m right there on site) and personally, I find hosting to be relatively easy and stress-free. But read some of the topics here and you’ll see some of the pitfalls that all hosts are prone to. There’s a wealth of information to read right here at the forum.


#15

Texas is a low regulatory environment state. The state legislature has passed a law protecting STR homeowners and the TX courts are also friendly to homeowners. That said, I’m a homeowner and so I’m familiar with the law protecting me. I don’t know if the law would protect you, someone leveraging another person’s property. So you could research TX.

From what I understand Californians are heading to TX in droves so maybe you can find some opportunity here.


#16

Thanks again, great insights. Not opposed to being an on-site host at all, I just want to scale this and make it a sellable business in 5-7 years. I have no problem interacting or being on call, but it’s just not as easy with my plan :slight_smile:


#17

Thanks Dusty, appreciate the info. Super helpful.


#18

I think that the problem here is that none of us have any idea what will happen to the STR business during that time. It’s all pretty nebulous and even the smartest of us have a hard time predicting what will happen.

With this in mind, my only suggestion is to concentrate on an area that has a long history of STR and a constant supply of tourists.

I ran a bed and breakfast business for many years before the internet was even invented. I rented out a vacation apartment for many years before Airbnb started. So therefore I’d say that the important issue is to be nimble, versatile and a bit of a chameleon. Be prepared to change when circumstances do.


#19

Very true, well said. I reached out to a few agents in Houston but 2 didn’t know what STR meant and the 3rd said buildings don’t allow it. I’m sure some don’t but they didn’t seem to keen on helping. Not surprised I guess.


#20

I’m with @jaquo and @konacoconutz. The OP looks to me like another slum landlord in the making rather than someone truly interested in hospitality:

From Wikipedia: Hospitality refers to the relationship between a guest and a host, wherein the host receives the guest with goodwill, including the reception and entertainment of guests, visitors, or strangers. Louis, chevalier de Jaucourt describes hospitality in the Encyclopédie as the virtue of a great soul that cares for the whole universe through the ties of humanity.


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