20 Cities with No Airbnb Legal Issues in 2020

Want to invest in short-term rentals in 2020 without facing Airbnb legal issues? Then these are the cities you should be looking at!

Since Airbnb’s launch in 2008, renting out vacation homes to short-term guests on the site has become a desirable way to earn income for many property owners. Buying rental property and renting it out on Airbnb has also become a popular real estate investment strategy. For many investors, Airbnb rentals come with the potential of making a better return on investment than traditional, long-term rentals. This, of course, highly depends on the location of your rental property. For this reason, real estate investors are always searching for the best cities for Airbnb investments. Unfortunately, finding these locations is a bit harder than one might think.

You see, while some US cities seem like an obvious choice for investing in short-term rental properties, they may have Airbnb legal issues and even enforce strict regulations that make it almost impossible to run an Airbnb business. In recent years, restrictions on short-term rentals have been popping up in city after city across the US in an effort to keep Airbnb’s rapid growth in check. Airbnb rules and regulations are also very local in nature and vary from one place to another. Plus, Airbnb as a marketplace doesn’t offer legal advice targeted to specifically help real estate investors understand where Airbnb is legal for them and where it’s not. As a result, they don’t know the best places to buy a vacation home for Airbnb real estate investing in 2020.

If this is something you’re dealing with, you’ve come to the right place. Mashvisor helps investors find the best places to invest in real estate (both traditionally and for Airbnb). As the legal situation for short-term rentals is rapidly changing, we intend to keep investors up-to-date on Airbnb rules and regulations in our blogs. In this article, we discuss the most common Airbnb legal issues that you need to be aware of before purchasing an Airbnb investment property. And to make things easier for you, we also provide a list of the most Airbnb friendly cities in the US housing market! These cities have the least Airbnb legal issues in 2020, making them the best places to consider for an investor.

Airbnb Legal Issues to Be Aware of in 2020

The first tip we always give to Airbnb investors is to check the Airbnb regulations by city to find out whether or not starting a vacation rental business is allowed in your city of choice. So, what are the Airbnb legal challenges that you might face as a property investor?

Restrictions on Non-Owner Occupied Rentals: In many US cities, only primary residents can rent out properties/units to short-term guests. For example, Los Angeles only allows owner-occupied residences to be rented out on Airbnb. Meaning, if you’re hoping to make money from vacation rentals, don’t plan to invest here as, according to Los Angeles Airbnb laws, non-owner occupied rentals are not allowed.
Zoning Rules: While some cities allow short-term rental properties, they might have zoning laws. For example, some allow Airbnb rentals only in certain neighborhoods like in commercial zones but not in residential zones. Some may also limit the number of short-term rentals in certain areas or even the distance between similar rentals on the same block.
Extreme Permits: In most cities, Airbnb hosts have to apply for and obtain a business license or a special permit before they’re allowed to rent out. While this isn’t necessarily an issue, some cities have extreme permits and registration requirements, making the process very expensive or too complicated.
Building & Housing Standards: Most local governments have rules and regulations specifying minimum construction, design, and maintenance standards for buildings. These include rules on habitability, health, and safety which may be relevant to your Airbnb listing. Some cities may also require a property inspection to make sure it meets minimum habitability standards.
Taxes: Airbnb legal issues about taxes are a concern to any Airbnb host. Some cities require hosts to collect a tax (often at high rates) for each overnight stay and pay that tax to the city or county. Some also demand multiple taxes in addition to paying income tax on rental income and profit.

Cities with the Least Airbnb Legal Issues in 2020

So where is Airbnb legal for real estate investors in the US housing market 2020? Below is a list of the 20 most Airbnb friendly cities where you can avoid legal issues with Airbnb. Please keep in mind, however, that while they don’t prevent this rental strategy, each city does have some specific requirements and expectations for Airbnb real estate investors. So before searching for an Airbnb property for sale in any of these cities, study the specific Airbnb regulations in your city of choice to make sure you can comply with them. Here are Airbnb regulations by city and the Airbnb rental data – provided by Mashvisor’s Airbnb Profit Calculator.

1) Milwaukee, WI

Wisconsin prohibits cities, villages, and towns from enforcing ordinances that ban renting out properties to short-term guests. They can, however, enforce local room taxes on owners. To become an Airbnb host in the state, you need to obtain a tourist rooming house license from the Wisconsin DATCP and a license from the city, village, town, or county (if they require such a license). Why Airbnb Milwaukee? This city ranked #1 as the world’s top travel destination for 2020 according to Airbnb! It witnessed a whopping 729% YOY growth in bookings, meaning you can definitely expect a good Airbnb occupancy rate and ROI here.

Median Property Price: $161,521
Monthly Airbnb Rental Income: $1,943
Airbnb Occupancy Rate: 54%
Airbnb Cash on Cash Return: 7%

Start searching for a profitable Milwaukee Airbnb rental property for sale now!

Find a Profitable Airbnb Investment Property

2) Gatlinburg, TN

Known as a gateway to the Great Smoky Mountains National Park, Gatlinburg attracts a lot of tourism traffic making it one of the best places for buying a vacation home. When it comes to Airbnb rules and regulations, you can rest assured that it’s an Airbnb friendly city. Airbnb hosts in the Gatlinburg real estate market are required to obtain a Sevier County business license and collect and remit lodging, sales, and gross receipts taxes. There are, however, zoning codes that you need to comply with, which you can read more about here.

Median Property Price: $421,768
Monthly Airbnb Rental Income: $3,761
Airbnb Occupancy Rate: 72%
Airbnb Cash on Cash Return: 7%

3) Columbus, OH

Ohio is one of the states with the least Airbnb legal issues in the US, and Columbus is the #1 Airbnb market in the state. While the city approved new Airbnb regulations in 2018, they are pretty lenient towards non-owner occupied rentals. Airbnb Columbus rules and regulations require hosts to get a permit, maintain insurance on their homes, and pay taxes. However, there’s no cap on the number of days in a year that investors can rent their properties out on Airbnb. Plus, our Airbnb data shows that Columbus rental properties are affordable AND profitable. Buying one to rent out on Airbnb is a smart investment in 2020.

Median Property Price: $222,212
Monthly Airbnb Rental Income: $2,308
Airbnb Occupancy Rate: 57%
Airbnb Cash on Cash Return: 6%

4) Indianapolis, IN

A 2018 Indiana state law prohibits localities from banning Airbnb rentals. As for the Indianapolis housing market, it has been very welcoming and supportive of Airbnb and has seen explosive growth. Between 2018 and 2019, the number of Indianapolis Airbnb listings has grown 39% and the Airbnb occupancy rate has gone up 6%. This tells us that even though there’s a good supply of short-term rentals here, there’s still a high Airbnb occupancy rate supported by the city’s booming tourism. Indianapolis does, however, require real estate investors to get an initial permit and collect taxes.

Median Property Price: $221,059
Monthly Airbnb Rental Income: $2,211
Airbnb Occupancy Rate: 52%
Airbnb Cash on Cash Return: 6%

5) Memphis, TN

The Tennessee General Assembly passed a bill mid-2018 restricting how far cities can go in banning non-owner occupied rentals. Memphis doesn’t have any bans, allowing real estate investors to operate in the city without facing any legal issues with Airbnb in 2020. However, the city does have a couple of laws to keep in mind. For example, short-term Memphis investment properties must have approved smoke alarms and carbon monoxide detectors installed, hosts and guests must comply with the noise control restrictions, and there is a 3.5% privilege tax.

Median Property Price: $233,435
Monthly Airbnb Rental Income: $2,057
Airbnb Occupancy Rate: 63%
Airbnb Cash on Cash Return: 6%

6) El Paso, TX

There are 4 Texas cities that have the least Airbnb legal issues in 2020. From these cities, buying an Airbnb investment property is most profitable in El Paso! The city is located in an international metropolitan area. The vacation rental market in El Paso has been stable for years, offering affordable homes for sale to buy and rent out on Airbnb without fear of penalties. That, along with nonexistent Airbnb regulations, makes El Paso an ideal city to invest in a short-term rental.

Median Property Price: $214,570
Monthly Airbnb Rental Income: $2,378
Airbnb Occupancy Rate: 64%
Airbnb Cash on Cash Return: 5%

7) San Antonio, TX

The second city in Texas to consider for Airbnb real estate investing in 2020 is San Antonio. Compared to other major cities, Airbnb regulations here are friendly when it comes to non-owner occupied rentals. There are some important rules for an Airbnb host in the San Antonio real estate market to remember. These include having to register with the city council and renew the license every three years, there’s a limit on the number of vacation rentals that can exist in residential zones, and hosts are responsible for collecting occupancy tax from guests.

Median Property Price: $276,158
Monthly Airbnb Rental Income: $2,607
Airbnb Occupancy Rate: 54%
Airbnb Cash on Cash Return: 4%

To start looking for and analyzing the best Airbnb investment properties in your city and neighborhood of choice, click here.

8) Philadelphia, PA

The vibrant tourism sector supported by the many historical attractions makes Airbnb Philadelphia one of the hottest short-term rental businesses in the country. While operating an Airbnb rental here doesn’t require a rental license, it does require a Commercial License. Airbnb investors also have to pay the city’s Hotel Tax and install smoke alarms and carbon monoxide alarms in the property. There are a few different types of short-term rentals with varying requirements which you can read all about in our Philadelphia Housing Market Report.

Median Property Price: $304,192
Monthly Airbnb Rental Income: $2,115
Airbnb Occupancy Rate: 54%
Airbnb Cash on Cash Return: 4%

9) Kissimmee, FL

Kissimmee bills itself as “The Vacation Home Capital of the World,” so it’s no surprise why buying an Airbnb Kissimmee investment property is a smart decision. Important Airbnb laws to remember are that you have to obtain a business license and the rental property has to be in a short-term rental overlay district. Still, since vacation homes are popular in Kissimmee, there are plenty of exceptions! For example, you can get a conditional use permit if your property is not in an area zoned for short-term residential use.

Median Property Price: $270,301
Monthly Airbnb Rental Income: $2,557
Airbnb Occupancy Rate: 70%
Airbnb Cash on Cash Return: 4%

10) Cleveland, OH

Cleveland has regulated Airbnb rentals effectively, which has led to little Airbnb legal issues. An Airbnb host in Cleveland needs a business license to operate. Real estate investors must also pay a 3% transient occupancy tax when Airbnb guests stay for fewer than 30 consecutive days. These two rules, along with others regarding zoning and housing standards, have regulated short-term rentals in the Cleveland real estate market. Therefore, Airbnb investors who comply with these rules and regulations are making money in this city.

Median Property Price: $174,465
Monthly Airbnb Rental Income: $2,024
Airbnb Occupancy Rate: 51%
Airbnb Cash on Cash Return: 4%

11) Phoenix, AZ

Arizona removed all restrictions on short-term rental properties in 2016, making it one of the states with the least Airbnb legal issues. There are three Airbnb friendly cities in Arizona were short-term rentals for sale also have a good ROI potential. The first one is none other than the state’s capital: Phoenix. Renting out Phoenix vacation rentals is legal for non-owner occupied rentals in all neighborhoods! Airbnb hosts, however, have to hold a valid transaction privilege tax (TPT) license and pay a state transaction privilege tax, a county excise tax, and a local transient occupancy tax. Read more Phoenix Airbnb rules and regulations in our Phoenix Housing Market Report.

Median Property Price: $394,842
Monthly Airbnb Rental Income: $2,567
Airbnb Occupancy Rate: 57%
Airbnb Cash on Cash Return: 3%

12) Tempe, AZ

Airbnb Tempe is another lucrative real estate investment in the US due to the city’s rapid growth in tourism. There are a number of Airbnb regulations real estate investors need to be aware of, one of the most notable is its different taxes. Short-term rental properties in the Tempe real estate market are subject to a State Privilege Tax (5.5%), a City Privilege Tax (1.8%), and a City Transient Lodging Tax (5%). You can visit the city’s website to learn more about Airbnb rules and regulations for investors in 2020.

Median Property Price: $367,108
Monthly Airbnb Rental Income: $2,723
Airbnb Occupancy Rate: 55%
Airbnb Cash on Cash Return: 3%

13) Mesa, AZ

Just like other cities in the Arizona housing market, investing in Airbnb Mesa is fully legal. The city of Mesa, in particular, never banned short-term rentals and doesn’t impose strict Airbnb regulations. Based on state law, there is no limit on the number of days you can rent out on Airbnb. Furthermore, hosts are not required to collect and pay taxes – Airbnb is responsible for that on their behalf! There’s really no reason not to buy an Airbnb investment property here. Just take a look at our Mesa Airbnb data for 2020:

Median Property Price: $331,119
Monthly Airbnb Rental Income: $2,253
Airbnb Occupancy Rate: 54%
Airbnb Cash on Cash Return: 3%

14) Eugene, OR

Next up on our list is Eugene which ranked #7 among the top travel destinations for 2020 worldwide. According to Airbnb, the city saw a 213% YOY growth in short-term rental bookings – meaning high Airbnb occupancy rate and rental income! On top of that, Eugene has little Airbnb legal issues right now. Hosts only need to register with the city and pay the transient room tax.

Median Property Price: $429,994
Monthly Airbnb Rental Income: $2,662
Airbnb Occupancy Rate: 53%
Airbnb Cash on Cash Return: 3%

15) Tampa, FL

Florida is known as a hot location for Airbnb real estate investing. Florida Legislature prohibits cities from regulating short-term vacation rentals. One of the most Airbnb friendly cities here is Tampa. Hillsborough County, the county Tampa is located in, does not have any official short-term rental laws set in stone as of yet. According to state law, however, Airbnb Tampa real estate investors must pay the Florida Transient Rental Tax, the County Sales Surtax, and the County Tourist Development Tax.

Median Property Price: $405,433
Monthly Airbnb Rental Income: $2,656
Airbnb Occupancy Rate: 51%
Airbnb Cash on Cash Return: 3%

16) Dallas, TX

To this date, Dallas has not passed laws that limit Airbnb non-owner occupied rentals in any significant way. Hence, renting out your property to short-term guests (whether it’s a primary home or an investment property) is fully legal. No strict Airbnb regulations, along with the increasing demand for Airbnb Dallas, has made the city one of the best places to invest in vacation homes in 2020. Keep in mind that running an Airbnb business requires paying a 7% city hotel occupancy tax and a 6% state hotel tax.

Median Property Price: $406,284
Monthly Airbnb Rental Income: $2,891
Airbnb Occupancy Rate: 59%
Airbnb Cash on Cash Return: 3%

17) Cape Canaveral, FL

Yet another city that lacks Airbnb legal issues in the Florida housing market to consider for investing in short-term rental properties. Located on the Atlantic coast, Cape Canaveral is a hot travel destination for 2020, ranking #12 on Airbnb’s list. Its many attractions, as well as its proximity to other tourist destinations like Cocoa Beach and Orlando, gave it a 136% YOY growth in bookings. There aren’t any Airbnb regulations here besides the County’s Tourist Development Tax which will automatically be collected.

Median Property Price: $258,423
Monthly Airbnb Rental Income: $1,980
Airbnb Occupancy Rate: 55%
Airbnb Cash on Cash Return: 2%

18) Fort Lauderdale, FL

Next up on the best US cities for investing in vacation rentals is Fort Lauderdale. As with other Florida cities, Airbnb here is fully legal for non-owner occupied rentals in 2020. A few Airbnb rules and regulations to keep in mind include: Airbnb hosts need to register with the city on an annual basis, obtain a business license, pay the required taxes, and the rental property has to undergo an inspection. Comply with these regulations and you’ll enjoy a profitable Airbnb Fort Lauderdale real estate investment.

Median Property Price: $706,301
Monthly Airbnb Rental Income: $3,121
Airbnb Occupancy Rate: 58%
Airbnb Cash on Cash Return: 2%

19) Atlanta, GA

Until now, Airbnb Atlanta has not been affected by the national trend of legal issues with Airbnb. As a real estate investor, you can buy and rent out an entire property for a short-term basis. Nonetheless, there are some requirements that you have to meet. These include obtaining a hotel license and business license and paying city and state hotel/motel taxes. Compared with Airbnb laws in other major US cities, these will not prevent you from making money with Airbnb rentals in the Atlanta real estate market 2020.

Median Property Price: $426,363
Monthly Airbnb Rental Income: $2,245
Airbnb Occupancy Rate: 45%
Airbnb Cash on Cash Return: 2%

20) Houston, TX

The final city where Airbnb is expected to remain unregulated and fully legal in the coming year is Houston. At this time, the city of Houston, TX has not made any official regulations for vacation rentals. This tells us that renting out both owner-occupied and non-owner occupied rentals are possible real estate investment strategies. But according to our real estate data, short-term rental properties will be the more profitable strategy in 2020. Here’s more data for investing in Airbnb Houston investment properties:

Median Property Price: $403,558
Monthly Airbnb Rental Income: $2,282
Airbnb Occupancy Rate: 52%
Airbnb Cash on Cash Return: 2%

No matter which of these cities you choose for your Airbnb rental property purchase, you will need to know how to become an Airbnb host. Read our comprehensive guide here.

The Bottom Line

Now that you know which cities have the least Airbnb legal issues, it’s time to start looking for a profitable Airbnb investment property in your city of choice. Our Airbnb Profit Calculator will provide you with all the data you need to analyze properties for sale and make smart investment decisions in a matter of minutes. So sign up with Mashvisor to start looking for and analyzing properties in Airbnb friendly cities!

To learn more about our tool and how we will help you make faster and smarter real estate investment decisions, click here.

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