Short Term Rental Regulations - Any Workaround?

Question

Hello Eveyrone,My parents have a home in Seaside, CA which we are trying to convert to a Airbnb STR unit, however I see under Seasides STR regulations that any newly formed STR's are prohibited post April 2018.I did find this, and I was wondering if anyone else attempted this and if this actually works? Also, curious if there are any other workarounds or loopholes that can get you around this legally.Another question is, is it worth getting an STR property in areas that you know will do well but have these type of regulations in place?Thanks BP Team and Community!

Nathan Gesner · Answer

You know in your heart she's just breaking the rules, right?The rules do not allow short-term rentals because they do not want guests coming and going. She's renting the property to her business, then the business is subletting/subleasing to the AirBnB tenants. She's still in violation of the rules and the intent of the rules; her only "trick" is making it harder to discover.I don't believe in building wealth by cheating and I wouldn't recommend her technique. It's people like her that are operating illegal short-term rentals that are creating this backlash against them and making it harder for others to operate a legitimate business.

Jarrod Kohl · Answer

It would be worth you to dig into regulations yourself. Its usually not super comlicated when they have been created in the last few years. The most often "legal loophole" in a lot of markets is to either rent out rooms in your own house *aka share the space" Or in markets in my area you can rent out a few other units in a multi IF you live in one of the units. Aside from that it is a very limited x days/year or long term rentals.The best areas for STRs are usually "vacation" towns, though even some of those are now adding regulations (which IMO is a bad idea) So you just need to stay on top of these things.

Ryan Tiglao · Answer

@John TeachoutThanks for the comment! The goal is still to do this legally. Sometimes there are creative ways to work the system but still within the law. I'm new to the game so just was wondering on others thoughts, and also saw an abundance of STR's in seaside so that also prompted my curiosity. @Tim JohnsonI'll shift and just use this property as a lont term rental and search elsewhere for STR properties. Appreciate the tips and your 2 cents!

Tim Johnson · Answer

Hi @Caroline Tran, welcome to the BP forums!Investing and working with STRs is a huge and growing industry....and yes, there is profit to be made. Having said that, it's like any other REI - rules are local and specific and the intelligent investor will both know the rules (and freedoms) as well as when to strictly follow them and when to use them to one's advantage.Unfortunately, the very premise of the video you shared is "how to get around these restrictions...." She claims that what she is sharing is legal and will be a "win for everyone". The fact is..... an HOA of a CONDO or community won't give a damn whether you purchased the unit in a "company name / LLC" or in your personal name - the rules still apply. The fact that she states that it's all "above board".... but yet needs to coach you on "what not to say" should be a red flag right out of the gate.Yes, many municipalities are clamping down on STRs....and unfortunately it appears to be true for your specific location. There's enough risk involved in REI already without taking on further risk of being shut down by local authorities. There are still plenty of locations that not only allow, but welcome and encourage STRs - so my 2 cents would be to seek out those areas and jump in.....

John Teachout · Answer

If STR is prohibited, then do a long term rental. Also a medium term rental may work. You know what the laws are regarding STR, why would you violate those and risk your investment?

Chad McMahan · Answer

I just watched the video. It's essentially a video tutorial on how to more effectively deceive and lie and hope you can push your STR through and hide the activity from others- illegally and unethically. It even goes as far as to guide how to word things in a deceptive way, because if people know what you are really up to, they will raise the red flag and enforce the rules that are in place.FYI, often times CC&R's are carefully worded to eliminate "use" not "occupancy", which make this moot, anyway. That being said, watching this video, I feel like I need a shower. There is no need to do things unethically and/or illegally. There are so many opportunity areas that allow STR's where investors can make money hand over fist. Good lord...

Justin Beasley · Answer

Agree with everything @Nathan G. said. Rules exist for a reason. In my experience typically people who break the rules play victim once they have to deal with the consequences. Avoid stuff like this...there are a lot of markets you can make money in.