Airbnb continuously transforms the way real estate investors are making money from short-term rentals. The platform allows Airbnb guests to find hosts and rent out their properties in a smooth and simple transaction. Airbnb investing has been so successful that many consider it to be the optimal rental strategy. Just like any investing method, however, an Airbnb host needs to consider many factors before investing in Airbnb. As you would expect, the most important factor is Airbnb legal issues (to learn more about the other factors, read this: “Four Things to Consider Before Purchasing an Airbnb Investment Property“! This blog will examine the top Airbnb cities that lack such legal issues.
The Most Common Airbnb Legal Issues
Before we dive into the cities with the least Airbnb legal issues, let’s go over some of the most common legal issues which short-term rentals face in the US housing market. Of course, the Airbnb cities with the least legal issues will lack many of these problems.
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Extreme Permits and Registration
Virtually all Airbnb cities require some sort of registration for their short-term rentals. This is an obvious and important requirement. However, some cities go overboard with these requirements, leading to one of the most common Airbnb legal issues. Such cities require multiple licenses, often with short expiration dates and recurring fees.
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High Taxes
This issue is an obvious and concerning one to any Airbnb host. Some cities demand multiple taxes for short-term rentals, often at high rates. The rates can even be higher than typical hotel taxes.
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Stringent Zoning Rules and Housing/Building Standards
These Airbnb legal issues significantly impact the legality of Airbnb rentals in cities. At their most intense, zoning and housing standards can severely restrict the ability of Airbnb rentals to function.
Airbnb Cities with the Least Legal Issues
If you’re an Airbnb host looking to avoid Airbnb legal issues, investing in the following cities is your best bet. On a side note, if you want to know where to avoid investing in Airbnb, read this blog: “Which Are the US Cities with the Most Airbnb Legal Issues at the Beginning of 2018?“!
Columbus, Ohio has been an excellent city for investing in Airbnb. The city has many affordable Airbnb rentals (which you can start searching for by clicking here). Also, short-term rentals function without severe restrictions, from taxes to zoning laws. As it stands in the beginning of 2018, this trend of positive legality of Airbnb rentals in Columbus will continue. However, this might change in the future, as the city is considering placing a limit on the number of days Airbnb rentals can be rented out for. If you are an Airbnb host focused in Columbus, be sure to follow the ensuing sequence of events.
Sticking to Ohio, we arrive at another welcoming city to Airbnb investing: Cleveland. Cleveland has regulated the legality of Airbnb rentals effectively, which has led to little Airbnb legal issues. An Airbnb Cleveland investor requires a business license to operate. A real estate investor 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 properly regulated short-term rentals in Cleveland. As a result, Airbnb investors have been making money and avoiding Airbnb legal issues.
Much like Cleveland, Dallas, TX, has effective Airbnb rentals regulations set in place. The city implements taxes, zoning laws, and others, like most other Airbnb cities. Dallas, like many cities in Texas, is a very profitable city for Airbnb investing, oftentimes being the optimal rental strategy. To learn where you should invest in Dallas, read this blog: “Top 5 Areas for Dallas Investment Properties”.
Louisville, Kentucky, like many of the other Airbnb cities on this list, has implemented effective short-term rental regulations. Some of its Airbnb rules include land development codes and building and housing standards. Others include a transient room tax, a business license requirement, and an annual tax that comes along with it. Louisville’s openness and regulation of Airbnb is nothing new. In the R Street’s 2016 Roomscore Report, Louisville was acknowledged for its establishment of a tailored legal framework for Airbnb rentals. This beneficial trend is only expected to continue into 2018, pleasing both Airbnb guests and Airbnb hosts.
Phoenix is another city that effectively regulates Airbnb rentals. In the previously mentioned Roomscore Report, Phoenix received an “A” as its final grade. Investing in Airbnb in Phoenix became fully legal in 2016 when the strategy became legal in the State of Arizona. Its rules include a license requirement, a zoning ordinance, and taxes. An Airbnb host in Phoenix needs to pay a sales tax and, if applicable, a transient lodging tax. To read more on the legality of Airbnb rentals in Phoenix, visit the Airbnb Phoenix Help Article.
Last, but definitely not least, on our list of the cities with the least Airbnb legal issues, is San Antonio, Texas. Like Phoenix and Louisville, San Antonio has been praised in the Roomscore Report, being one of only 10 cities to receive a score of a 90. At the time, however, San Antonio did not have an established legal framework for short-term rentals. Airbnb was essentially, as the Roomscore Report put it, not explicitly allowed or prohibited in San Antonio. Much has changed since then, of course. The city then proposed an ordinance for Airbnb rentals and other short-term rentals (to learn more of the details on the ordinance draft, click here). Since then, an updated ordinance has been approved, establishing Airbnb regulation in San Antonio.
Conclusion
Airbnb is arguably the optimal rental strategy for short-term rentals. The platform has been well received by some cities, but not by others. Luckily though, there has been a trend of legalizing Airbnb rentals as the years go on. Still, if you’re planning on making money investing in Airbnb, be sure to avoid Airbnb legal issues.
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