In recent years, many methods for real estate investing have emerged to assist all types of investors. Short-term rentals, in particular, became a major source of growth. Airbnb, for example, which is an online marketplace that connects renters and tenants together, among other methods burgeoned the most. Airbnb short-term rentals took a lead in the real estate investing business as well as in the tourism sector. Renters and tourists tend to prefer Airbnb short-term rentals to hotel experience for the abundant benefits that the service provides. Additionally, Airbnb has proven beneficial to both Airbnb guests (or renters) and Airbnb hosts (or tenants). Unfortunately, however, Airbnb legal issues continue to interfere and permeate across the United States.
The legality of Airbnb rentals remains to be under debate by many local governments. Many state officials have grown fears towards the service and some of the consequences it has had on the hotel business, per se, and have therefore enacted regulations against it. Investing in Airbnb in some states hence has become difficult.
Below we provide a glimpse of what Airbnb is and the various Airbnb legal issues that follow. Then, we explore two cities that continue to enact regulations against Airbnb through 2018. If you were to invest in an Airbnb rental, then we recommend that you study state and city Airbnb regulations thoroughly prior to making an investment decision. If you would like to learn more about regulations governing the Airbnb business, visit Mashvisor today and unleash a plethora of knowledge.
What Is Airbnb?
In order to understand Airbnb legal issues and regulations, let’s first explain what is Airbnb and how it could benefit real estate investors. Airbnb is a trusted online marketplace which connects renters looking for lodging with tenants, or hosts. Tenants or hosts decide on how much to charge per night, week, or month and list their properties online through an account that they create free of charge. Renters, or guests, on the other hand, get to browse through a collection of options and select a rental property that suits their needs. Both renters and tenants get to write Airbnb reviews and further assist each other in evaluating the viability of a rental property or a host.
Related: The Airbnb Profitability Calculator: The Best Friend of the Short-Term Rentals Investor
Why Airbnb?
Airbnb has proven beneficial for both hosts and guests. Hosts get to learn about other cultures without having to travel. Hosts who prefer to keep their home occupied while they are away find Airbnb very beneficial. Not only will they be comforted to know that the home is left occupied, but tenants also get to make money quickly. Meanwhile guests, on the other hand, choose Airbnb for the service is an excellent way to get immersed into a welcoming country’s culture. Moreover, renters and the more budget-alert tourists find Airbnb cheaper and more affordable than hotels.
Although Airbnb has flourished and become one of the most preferable short-term rental method, concerns about its misuse and the problems that arise with it continue to be of concern to many. Some of these problems include lack of oversight and enforcement of Airbnb-related tax collection, lack of adherence to zoning bylaws, and the potential of damaging properties and/or turning them into a revolving hotel. As a response to the arising Airbnb legal issues, some city officials have enacted laws to regulate the industry. In some cities, regulations continue to be rigid, while in others, they are more lenient.
Cities with the Most Airbnb Legal Issues
It is important to assess laws pertaining to an Airbnb rental in your city. Contact your local city council and inquire about these laws in order to fully comply and be able to practice safe renting. Below are two cities with the most Airbnb legal issues. If you were to invest in Airbnb rentals this year, stay away from these cities. Here we explore more.
Related: Airbnb Rental Properties – The Best and the Worst Places to Invest
Cities with the Most Legal Issues: Kirkland, WA
Kirkland, a city in King County in Washington, continues to face the most Airbnb legal issues and regulations against it. 2018 particularly looks alarming for the Airbnb business in Kirkland. This is because Kirkland City Council has recently passed new laws further restricting the use of Airbnb. Below are the new rules:
- Property owner must reside in the property for at least 245 days per year;
- In the case where a property owner is absent, a property manager is hired and ought to remain within 15 miles of the property;
- Property owner must attain a business license from the State of Washington; and
- A declaration must also be filled and signed by the property owner.
This is of course in addition to the business licensing fees and short-term rental lodging taxes that tenants pay. If you want to rent out your property on Airbnb, we recommend that you firstly understand state laws clearly.
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Cities with the Most Legal Issues: Austin, TX
Austin City Council has invested quite considerably in regulating Airbnb and other short-term rental methods. Ever since the City Council enacted major changes to short-term rentals regulations, Austin has become a less preferable city for Airbnb rentals and one with many Airbnb legal issues. Some of the changes include new requirements for advertising, setting occupancy limits, and new requirements for Airbnb business license, while creating a new process for denying, suspending, or revoking a license, along with an appeal option.
The new licensing requirements include:
- Inspection of septic systems, if applicable;
- Contact information for property owner or manager is compulsory;
- A proof of a Certificate of Occupancy issued in 2006 or later. A third-party life-safety inspection can be an alternative; and lastly,
- New restrictions and limitations on the percentage of short-term rentals in residential and commercial areas.
Although Austin shows great prospects for Airbnb growth, as it is one of the top destinations for tourists, regulations continue to relegate it. Ensure to study those regulations and understand how they could impact your investment opportunity.
Related: The 20 Best Places to Buy a Vacation Home in the US at the Beginning of 2018: Part 1
Airbnb legal issues have been rising, and as a result many regulations continue to be stipulated across cities and states restricting it. Kirkland and Austin are just two of the cities that have the most legal issues when it comes to Airbnb rentals. Yet, if you study city and state regulations and comply with requirements, expect to make big gains renting out on Airbnb.
For more information about Airbnb legal issues, visit Mashvisor.