The Latest on STR Regulations in Arizona: Change is Close

[Melanie Johnston]

Posted by the City of Scottsdale on NextDoor on 2/18/20: Two hearings this week on short-term rental bills

The State Legislature will be hearing two bills this week in both the House of Representatives and the Senate to address the growing problems with short-term-rentals and the impact they are having on our neighborhoods. The goal of the bills is to provide more oversight and give local government a greater ability to manage short-term rentals. You are encouraged to share your thoughts, feedback and concerns with legislators.

On Thursday, February 20, 8:30 a.m., the Senate Commerce Committee will be hearing SB 1554 (https://bit.ly/3bQfhxl) introduced by Senator Kate Brophy-McGee. 

On Thursday, February 20, 9 a.m., the House Government Committee will be hearing HB 2875 (https://bit.ly/2SVVxju) introduced by Representative John Kavanagh.

My thoughts: Until a few years ago when Gov. Doug Ducey decreed that Arizona cities could not limit a property owner's ability to rent their property, 30-day minimum rentals were the law in Scottsdale. HOAs have always had the ability to create their own rules, with the vote of a majority of their owners, and all (but one) I've come in contact with have rental restrictions. I'm helping a BP couple search for a property to STR and, having spoken to at least 10 HOA reps in the last week, those restrictions range from a 30-day minimum to a 6-month minimum.

But with these regulations on the horizon, the thought that buying in a hon-HOA neighborhood (mostly SFHs) gives you the freedom to STR on a nightly basis is under threat.

There are many active Airbnbs right now in condo complexes across Arizona that have restrictions the owners are simply ignoring. This will no doubt continue, despite new regulations, but cities will likely toughen up their enforcement when given new powers.

I owned vacation rentals back in the day when Scottsdale required a 30-day minimum stay and they cash flowed well. Yes, your rates go down in the summer, but there are people who need a furnished rental for jobs/family/medical visits, so your property doesn't have to sit vacant when it's warm (okay, hot) outside. I currently operate a Scottsdale STR in a non-HOA neighborhood and use a hybrid model of high-income monthly rentals in the winter, 3-night min rentals in the "shoulder" seasons and monthly in the summer when I break even and spend zero time managing the rental.

Just be aware of what's happening so you can make decisions that are best for you. I will provide updates in future posts.

Melanie

[Justin Ellis]

@Melanie Johnston great info as always!

@Matt Morgan

Just based on reading the proposed changes, I would say these regulations would hurt investors bottom line quite a bit....

- 30 day min rentals (the deal breaker)

- In person check-ins (additional expense or at minimum a time investment)

- Noise monitoring devices required (a small expense, but this one I agree with)

- Max heads in beds (although reasonable at 2 adults per room)

- Posting a contact number in bold for the public to see (100% need to pay for cameras and an alarm if this one passes, that sign might as well read "rob this house").

I'm all for regulation, I just hope they don't "government the crap outta this" and in an attempt to control isolated incidents, make a system overly complicated and expensive, therefore no longer profitable to the small guy.