Can STRs Work w/ Restrictions In North Nj / NY Self Managed Lake House or Cabins?

[Jonathan Vinas]

Hi BP community!

I’m looking for advice and firsthand insights on operating a self-managed short-term rental (STR) in North New Jersey, the Catskills, Hudson Valley, or Delaware Water Gap areas. My focus is on purchasing a single-family home to set up a lake house or cabin to own and self manage from my home in Bergen County, NJ. The goal is to create cash flow, do some value add work, and be able to take advantage of the STR loophole to help with my W2 income (hence the self managing).

I’ve been exploring towns like Beacon, Woodstock, Hudson, Newburgh, Lake Hopatcong, Highland Lakes, and others. However, I’ve encountered various restrictions that make it challenging to find a viable STR property, such as:

• - Requirements for owner occupancy or a property manager living within 30 minutes.
• - STR limits like no more than 100 rental days per year.
• - Rules prohibiting guests from using lakes for recreational activities.

I want to better understand if operating an STR in this region is feasible, particularly with these restrictions. Is it possible to navigate these regulations and make a lake house or cabin rental work?

I would appreciate tips from anyone who has experience making this model work in these areas or similar markets.

Looking forward to your advice and recommendations!

[JD Martin]

The best advice is don't buy in any area that prohibits STRs or makes operating them so onerous that you're unlikely to make any profit. So you're going to have to do some research on the existing towns you're looking at to see where it's allowed and where it's not allowed. One way to do this - just go on VRBO (and AirBnb, for full homes) and see where there are existing listings. That's not a guarantee - some of those people may be breaking the law too - but it gives you a good idea where to start. 

[Shannon Strickland]

This is where an STR-investor-friendly real estate agent is a rockstar for you as a buyer.

[Jonathan Greene]

The Castkills works well. @Thomas Polise has multiple STRs there, including one that is a four-plex in the middle of town. Northern NJ has options as well, but MTR works better in a lot of areas because there is demand. Delaware Water Gap is more of a weekender, but can work. Beacon you would want to be near the train and it's priced higher than the Catstkills - same with Hudson. Saugerties and Phoenicia are pretty STR friendly as well.

[Andrew Steffens]

I know this is not what you are asking for but have you considered the Jersey Shore? I am from that area originally and even manage one in Ventnor and one in Tuckerton/LBI. It is very seasonal but does very well in Summer and there are a lot of STR friendly towns.

[Michael Baum]

Hey @Jonathan Vinas, @JD Martin hit the nail on the head.

You are better off looking in areas with no restrictions if you can.

I will say that some of the restrictions might be able to manage. For example the PM living within 30 minutes. Does that mean the actual manager or a local contact. Most municipalities require a contact and not the manager in the wording.

If it's a contact, then you can work with your cleaner to be that local contact. That should satisfy that requirement.

Everything else is a no go IMHO. 100 days a year could be OK if you can succeed with that number but I would want the option to rent the full 365.

Prohibiting guests from using local lakes is crazy talk to me. If you have a lake house, why would they restrict the guests from using the lake? Insane.

Personally that kind of rule alone would make me avoid the area completely. If they are trying to do that, it is only a matter of time before they eliminate STRs all together.

[Jonathan Vinas]

Quote from @Jonathan Greene:

The Castkills works well. @Thomas Polise has multiple STRs there, including one that is a four-plex in the middle of town. Northern NJ has options as well, but MTR works better in a lot of areas because there is demand. Delaware Water Gap is more of a weekender, but can work. Beacon you would want to be near the train and it's priced higher than the Catstkills - same with Hudson. Saugerties and Phoenicia are pretty STR friendly as well.

Appreciate the insights. I’ll have to look into Saugerties and Phoenicia.

Beacon is no longer on the list of viable STR towns since they require a STR to be owner occupied.

Any recommendations on where to look in the Catskills?

I looked into the town of Catskill itself and what stumped me was the requirement for the host to be available within 30 min by automobile while occupied. The owner can designate a host who shall be responsible, and authorized, to act on the owner's behalf to promptly remedy any violation of these standards or the permit. However, I do not know who this could be beyond a property manager which would not work in my case since I am looking to self manage for both tax (material participation in STR loophole) and profitability reasons.

[Jonathan Vinas]

Quote from @Andrew Steffens:

I know this is not what you are asking for but have you considered the Jersey Shore? I am from that area originally and even manage one in Ventnor and one in Tuckerton/LBI. It is very seasonal but does very well in Summer and there are a lot of STR friendly towns.

I have considered it however my current goal focuses more on a multi season rental and I am also more familiar with the non beach towns. I am not opposed to the idea but definitely need to get more educated on the details such as where exactly, is it too crowded of a space, how to be competitive, maintenance requirements for a beach rental, etc. The idea of putting eggs in one basket (season) does tend to intimidate me. 

[Jonathan Vinas]

Quote from @Michael Baum:

Hey @Jonathan Vinas, @JD Martin hit the nail on the head.

You are better off looking in areas with no restrictions if you can.

I will say that some of the restrictions might be able to manage. For example the PM living within 30 minutes. Does that mean the actual manager or a local contact. Most municipalities require a contact and not the manager in the wording.

If it's a contact, then you can work with your cleaner to be that local contact. That should satisfy that requirement.

Everything else is a no go IMHO. 100 days a year could be OK if you can succeed with that number but I would want the option to rent the full 365.

Prohibiting guests from using local lakes is crazy talk to me. If you have a lake house, why would they restrict the guests from using the lake? Insane.

Personally that kind of rule alone would make me avoid the area completely. If they are trying to do that, it is only a matter of time before they eliminate STRs all together.

 I hear you. The lake restriction and 100 day cap are a hard no-go for me. 

My post above regarding Catskill, NY and designating a host sort of ties to your idea however in this case I don’t think it would work. The local law says that the non owner occupied property being rented will need a designated host that may or may not be the owner however that other line item in the code that stipulates that the host must be available within 30 min driving while the unit is occupied becomes the dealbreaker. I cannot be the designated Host since I am more than 30 min away and would have to hire a PM in this case which I currently am not looking to do. 

I may have more strict requirements for my operations today but just means I need to look around more for a market that fits my current position. 

Big piece for me for this property is to meet the STR loophole hours to make it non passive to help offset my w2. Year 2 will be more flexible since I will not have to self manage but need to find a market that supports this year 1. Appreciate the input.

[Michael Baum]

Hey @Jonathan Vinas good thinking there.

Just an FYI, it isn't a loophole. It is just the IRS rules. It is working as intended.

[Samantha Cash]

Unless its changed since Ive looked last year Town of Catskill doesn't have restrictions. The village does.

[Jonathan Greene]

Quote from @Jonathan Vinas:

Quote from @Jonathan Greene:

The Castkills works well. @Thomas Polise has multiple STRs there, including one that is a four-plex in the middle of town. Northern NJ has options as well, but MTR works better in a lot of areas because there is demand. Delaware Water Gap is more of a weekender, but can work. Beacon you would want to be near the train and it's priced higher than the Catstkills - same with Hudson. Saugerties and Phoenicia are pretty STR friendly as well.

Appreciate the insights. I’ll have to look into Saugerties and Phoenicia.

Beacon is no longer on the list of viable STR towns since they require a STR to be owner occupied.

Any recommendations on where to look in the Catskills?

I looked into the town of Catskill itself and what stumped me was the requirement for the host to be available within 30 min by automobile while occupied. The owner can designate a host who shall be responsible, and authorized, to act on the owner's behalf to promptly remedy any violation of these standards or the permit. However, I do not know who this could be beyond a property manager which would not work in my case since I am looking to self manage for both tax (material participation in STR loophole) and profitability reasons.

I can connect you with Tommy about that because he manages his own properties there with his wife and I believe they have someone in town as that stop gap.

[Andrew Steffens]

Quote from @Jonathan Vinas:

Quote from @Andrew Steffens:

I know this is not what you are asking for but have you considered the Jersey Shore? I am from that area originally and even manage one in Ventnor and one in Tuckerton/LBI. It is very seasonal but does very well in Summer and there are a lot of STR friendly towns.

I have considered it however my current goal focuses more on a multi season rental and I am also more familiar with the non beach towns. I am not opposed to the idea but definitely need to get more educated on the details such as where exactly, is it too crowded of a space, how to be competitive, maintenance requirements for a beach rental, etc. The idea of putting eggs in one basket (season) does tend to intimidate me. 

 Understandable.  It does bring in some income outside of season as it is close to AC but it certainly makes over 80% in 3 main months.

[Jonathan Vinas]

Quote from @Michael Baum:

Hey @Jonathan Vinas good thinking there.

Just an FYI, it isn't a loophole. It is just the IRS rules. It is working as intended.

Guilty of the buzzword brainwash :) 

[Jonathan Vinas]

Quote from @Jonathan Greene:

Quote from @Jonathan Vinas:

Quote from @Jonathan Greene:

The Castkills works well. @Thomas Polise has multiple STRs there, including one that is a four-plex in the middle of town. Northern NJ has options as well, but MTR works better in a lot of areas because there is demand. Delaware Water Gap is more of a weekender, but can work. Beacon you would want to be near the train and it's priced higher than the Catstkills - same with Hudson. Saugerties and Phoenicia are pretty STR friendly as well.

Appreciate the insights. I’ll have to look into Saugerties and Phoenicia.

Beacon is no longer on the list of viable STR towns since they require a STR to be owner occupied.

Any recommendations on where to look in the Catskills?

I looked into the town of Catskill itself and what stumped me was the requirement for the host to be available within 30 min by automobile while occupied. The owner can designate a host who shall be responsible, and authorized, to act on the owner's behalf to promptly remedy any violation of these standards or the permit. However, I do not know who this could be beyond a property manager which would not work in my case since I am looking to self manage for both tax (material participation in STR loophole) and profitability reasons.

I can connect you with Tommy about that because he manages his own properties there with his wife and I believe they have someone in town as that stop gap.

That would be much appreciated!

[Ashish Acharya]

@Jonathan Vinas Operating a self-managed STR in North NJ or the Catskills is feasible with careful planning. Research local regulations thoroughly, as towns often require permits, owner occupancy, or restrict rental days. Focus on STR-friendly areas like Newburgh or Highland Lakes, and use platforms like AirDNA to assess revenue potential. Build a local team for cleaning and repairs to streamline operations. To leverage the STR loophole, ensure active participation in managing the property. Success depends on finding properties in less restrictive areas with strong year-round demand and aligning your strategy with local rules.

This post does not create a CPA-Client relationship. The information contained in this post is not to be relied upon. Readers should seek professional advice.

[Mark Berge]

I can just speak about Hopatcong. If you are going to operate a short term rental you will need to fill out an application with the boro of hopatcong. If they approve it, you can do it. Otherwise most towns like Roxbury, Landing everytime someone moves in you will need to have the fire department inspect the property so you can get a c of o. If you don't do that and the neighbors complain like it happened to me, the city will knock on the door to see what's going on and give you like a $100 per day fine which I paid. I then decided to rent out the house on a one year lease. Best thing I ever did.