Your Real Estate Investment Guide to Airbnb Rental Properties: Where Is Airbnb Legal?

Airbnb emerged as a short-term rental service that helps homeowners or tenants rent out their properties while they are away. Airbnb has proven to be beneficial for both tenants and renters since it has catered to the needs of budget-conscious travelers while also helping homeowners and real estate investors make quick money. Unfortunately, however, regulations continue to restrict the use of Airbnb in many cities in the US and around the world. Cities such as New York and Los Angeles continue to see rigid regulations restricting Airbnb. Where is Airbnb legal in the US housing market? Where is Airbnb legal in other countries around the world? How is Airbnb legal in places and illegal in others?

Related: The Ultimate Guide to the Airbnb Investment Property

Before we explore the regulations restricting the Airbnb market and learn of where is Airbnb legal and where it is not, we will first explain what Airbnb is and provide useful information in regard to this investment method and rental strategy. Then we explore where is Airbnb legal in the US and where it is not.

What Is Airbnb and How to Become an Airbnb Host?

Airbnb is an online marketplace that connects landlords (Airbnb hosts) and renters (Airbnb guests) together. Landlords make quick money as they rent out their real estate properties for a short time, while travelers, on the other hand, get to immerse themselves in the welcoming country’s culture for a cheaper price. Guests, moreover, enjoy more competitive rates as compared to hotels making traveling more affordable.

Costs Associated with Renting Out on Airbnb

As you plan to become an Airbnb host, ensure that you get familiar with all costs and fees to avoid generating a negative cash flow. Having a keen eye for costs will help you generate a positive cash flow. You should account for the following fees in your budget:

  • Monthly payment (if paying for the apartment through a loan);
  • HOA dues that fluctuate around $500/month, depending on the location;
  • Cleaning fees of about $50 per booking;
  • Supplies estimated at $150 to include complementary treats and snacks;
  • Utilities (internet, power, and cable TV) of about $200.

Other important numbers that you should consider include: the purchase price of the investment property, the down payment, the mortgage APR, taxes, and commission service fee of 3% to Airbnb. If you clearly outline your costs and account for all fees, you should expect to make big gains.

Related: 8 Steps to Finding an Airbnb Investment Property

Regulations to Consider

As you prepare to become an Airbnb landlord, study thoroughly laws pertaining to Airbnb rentals in your city. Although Airbnb has proved to be overall successful, some problems have arisen that have shaken the fears of many government officials and urged them to react accordingly. The potential to upend tenant-landlord relations, possibility of some tenants turning a quiet residential property area into a revolving hotel district, lack of oversight and enforcement of Airbnb-related tax collection, and lack of adherence to zoning bylaws are all problems that have planted fears in government officials and urged them to regulate the short-term rentals market.

Today, some cities restrict landlords’ ability to host paying guests for a short time. In others, registering your real estate property, getting a permit, and/or obtaining a license before listing and accepting Airbnb guests is mandatory. Certain types of short-term rentals are prohibited altogether. Where is Airbnb legal and where is it not? Let’s explore below.

Related: 6 Reasons For The Growth Of The Airbnb Investment Property

Cities Where Airbnb Is Legal

In the following passages, we explore some US cities that have recently enacted regulations on Airbnb markets. Please note that this list might not be inclusive of all states and restrictions. It is important that you contact your local city council for the full list of requirements pertaining to your area before you decide to start renting out  your investment property through short-term rentals and become an Airbnb host.

Where Is Airbnb Legal? Where Is Airbnb Not Legal?: New York

The fact that New York is the biggest tourist destination in the United States does not mean Airbnb regulations will be lean. In fact, Airbnb is battling with city regulators over legal matters. Because millions of dollars in annual hotel taxes were evaded over the past four years by illegal short-term rentals, regulations and legislation to increase fines for violators of New York’s temporary rental policies have been put in place. Moreover, NYC law only allows a permanent resident to sublet his/her real estate property for a short time of less than 30 days, and only in the presence of the landlord on site.

Where Is Airbnb Legal? Where Is Airbnb Not Legal?: San Francisco

San Francisco regulations are similar to those of New York’s, where Airbnb rentals are only allowed if hosts remain present throughout the accommodation, with rentals booked for a maximum of 90 days. All Airbnb hosts must also register with the city prior to listing property and accepting Airbnb guests. Although laws are rigid, The San Francisco Chronicle reported that only few people registered their Airbnb property with the city.

Where Is Airbnb Legal? Where Is Airbnb Not Legal?: Santa Monica

Where is Airbnb legal? Well, Santa Monica might be on the list of where Airbnb is not legal. Santa Monica is certainly one of the few cities where regulations have almost wiped out the presence of Airbnb rentals. Government officials explain the rigid regulations to be due to overall increases in housing prices and shrinking housing supply. To qualify to be of the 20% who can still exercise and rent out via Airbnb, you must live in the property during the guest’s stay, register for a business license, and collect a 14% occupancy tax from renters payable to the city.

Leaving regulations until the very last step of preparing for Airbnb renting can be detrimental to your real estate investment since many regulations have been newly introduced restricting Airbnb and its hosts. It is necessary that you first contact your local city council to request the latest and most updated regulations governing Airbnb rentals in your area. When you comply with all requirements, you may proceed with your experience as an Airbnb host. We hope your experience with Mashvisor intelligence center today is borne fruitful. For more information about Airbnb laws, where is Airbnb legal, and how does Airbnb make money, visit Mashvisor.

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