Future of Short-Term Rentals - Charleston, SC

[Katarina Schuette]

In the city of Charleston, SC there were already strict rules regarding short-term rentals for non-primary residences as of recent years. This was in large part due to a push from the hotel industry since hospitality and tourism is such a large part of the economy here. The city only allows beach properties and a certain section of downtown to rent short-term if the owner doesn't live in the home. Now of course this sector of investing has been strongly hit due to the pandemic. I am curious to see if other markets are moving towards the same direction with more stringent rules on short-term rentals. I am also curious about whether the pandemic has changed your investing strategy. I would love to hear about your markets! 

[Joseph Cacciapaglia]

San Antonio created new rules for STRs about 18 months ago, and created a licensing process that limits the number of STRs in any given area. We started managing STRs as soon as those rules passed, and had around 35+- STRs under management when COVID hit. March was actually a strong month for us, with some extended stays, but April and May were tough. We've seen a big increase in bookings this month already, and all but 1 of our properties is booked for this weekend. Overall our policies and procedures haven't changed too much.

Many of our owners purchased their properties in cash or with low leverage, because this is a riskier business model to begin with. Everything shutting down was painful for a lot of them, but they were able to weather the storm. We've always encouraged investors to approach the vacation rental business in a well capitalized manner, and this incident will only strengthen that position. I think this was a good example of close to a worst case situation for the business model, and it seems like it's holding up rather well. I'm sure this will vary from one market to the next, so I'm interested to hear what others have to say.