Should Property Investors be Concerned About Anti-Airbnb Laws and Regulations?

Airbnb Laws

Housing costs are astronomical these days, especially for renters who aren’t able to save up for a down payment on a home, or people who relocate too frequently for work to justify buying a home.

In order to keep housing costs under control and mitigate homelessness issues, many public policy officials have started implementing stricter regulations on short-term rentals through Airbnb.

There have been claims that landlords have evicted long-term tenants in order to cash in on the short-term rental market, which has caused greater concern among members of communities across the U.S.

While neighbors continue to fear the lack of communal bonds among short-term visitors and the possibility of rent prices skyrocketing as more and more landlords turn to Airbnb to support their investments, should property investors really be worried about public backlash against Airbnb? Or politicians’ subsequent attempts to regulate the short-term rental markets?

Here are some things you should keep in mind before diving into Airbnb rentals or passing on this potentially lucrative opportunity.

Should You Be Worried About Airbnb Laws and Regulations?

Why is Airbnb Advantageous for Property Investors?

Simply put, renting out your properties or rooms in your own home on Airbnb can be much more profitable than renting to long-term tenants on a 6-12 month leasing contract.

Hypothetically speaking, you might earn $1,200 to $2,500 per month for a two-bedroom condo, meanwhile, you could charge as much as $100-200 per night for the same property on Airbnb. Not to mention you can charge a cleaning fee, too.

Of course, it’s worth pointing out that you can’t assume that you’ll have paying occupants every night of the month if you go the Airbnb route. But, it’s generally more financially advantageous to host properties on Airbnb. Although, it likely requires more work including cleaning, putting together welcome packages for each new guest, and communicating with potential guests.

Where is Airbnb Most Restricted?

Large, metropolitan areas heavily regulate short-term rentals like Airbnb, likely due to the high costs of housing for year-round residents.

Here are just a few examples of what you can expect in some areas around the U.S.

New York

One of the most anti-Airbnb states is New York, which bans short-term rentals of fewer than 30 days in buildings with 3+ units, unless the owner is present.

The first violation would cost you $1,000 followed by $5,000 for the second violation. New York City alone has allocated over $3 million just for enforcing its short-term rental laws, so unless you’re merely renting out a room in your home to supplement your income, avoid becoming an Airbnb host in the state of New York.

San Francisco, CA

Thanks to the highest costs-of-living compared to the rest of the U.S., San Francisco has been cracking down on Airbnb rentals over the past couple years.

As of 2019, only permanent residents may rent out their primary residences on Airbnb. And, rentals that occur when the host isn’t present are limited to a maximum of 90 days per year.

Otherwise, you’ll face a minimum $480 daily fine for your first offense, up to $960+ daily fines for multiple offenses. Hosts must also register their short-term rentals and acquire a business registration certificate.

Austin, TX

The city of Austin requires that Airbnb hosts acquire a Type 2 Short-term Rental license, which are increasingly rare as many Austin residents and out-of-state investors alike have been trying to get into the booming real estate rental market.

If you choose to operate without a license in Austin, your Airbnb operation could cost you as much as $2,000 per day.

How Do I Learn More About Airbnb Hosting Regulations?

Airbnb’s website has an entire section dedicated to Responsible Hosting in the U.S.

This webpage includes links to several prominent cities’ Airbnb laws and regulations, as well as information about paying taxes, acquiring any required permits/licenses, getting permissions, and navigating any issues with your neighbors.

There are many things to keep in mind before putting your property up for rent on Airbnb.

  • Do you need to apply for a license beforehand?
  • What’s your local tax rate for short-term leases?
  • What, if any, are the restrictions on number of days you can rent out your residence to short-term tenants each year?
  • Can you provide clear instructions for guests to minimize any possibility of disrupting your neighbors if/when you’re not physically present?
  • If you are not the property owner, then does your own rental agreement forbid you from renting out a room, or the whole unit to short-term guests? Some renters have been evicted for trying to make money on the side with Airbnb, despite clauses restricting this practice in their lease contracts.

Can You Make Money with Airbnb in the Future?

Although there remains a decent amount of backlash against Airbnb in several communities and in the media, this could still be a good opportunity for property owners to make money on the side.

After all, Airbnb isn’t exactly the housing crisis villain many people try to make it seem. For instance, countless seniors rely on Airbnb to supplement their retirement incomes and maintain active social lives. So, banning or heavily restricting Airbnb could be hurting a group of people who need this income the most.

To minimize any monetary penalties and issues with law enforcement, be sure to research your area or the area you’ve considered investing in, and know what regulations would apply to you as an Airbnb host.

Should Property Investors be Concerned About Anti-Airbnb Laws and Regulations?

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