Does the threat of regulation make STRs too risky?

[D.J. Parten]

Hey everyone. I've found an off market property that I think would work great as an STR. It's a mid 1800s plantation home that has been very well maintained. It's not currently on any historic registries. It can likely be rented out immediately with no repairs, but obviously it will be a lot to maintain. It's 5 bedrooms, 2 bathrooms and ~5,800 sq ft. The purchase price is $400,000, and based on my research the ADR per room is $100 and the occupancy rate is 66%. There is no HOA.

The major thing giving me pause is that there are not many STRs in my town, but the few that are here have caused a stir among some residents who are calling for new regulations to be adopted. In response, the city has temporarily stopped issuing business licenses to folks who want ti operate a STR pending future regulations. I have not been able to figure out what regulations they are considering or a timeline for any potential action.

Should I sit around and wait on the city to decide? Should I get involved with the regulation process and fight it? Any advice is appreciated. 

[Nathan Gesner]

I agree with the others. You can't use it as a STR because they aren't issuing permits, and there's an increasing likelihood of new regulations in the future. Unless it works as a long-term rental, I wouldn't bother.

By the way, neighbors are more likely to complain when you have a 5bedroom home that can fit a ton of people. That's more likely to be a large gathering place for family groups (lots of kids running around) or a party house.