Airbnb, short term rental regulations and the future

[Renee Z.]

After recent research, I have noticed that a lot of states, counties or cities have already or will be pushing out regulations stating that:

• You have to own and live in your property to be able to list only part of your property as short term rental on Airbnb or other sites, and that part you list can not be something that can be used as a long term rental such as an English or mother-in-law basement.
• Host must also notify the neighbours and apply for a special licence and renew it every year.
• Such regulations will take effect in Montgomery county Maryland July 2018, State of Virginia and District of Columbia are also thinking about putting similar regulations in place.
• In this case, an absent owner or a renter who wishes to sublet won't be able to go around that since they won't even be able to get a licence required to legally list their room on short term rental websites.

What does this mean for people who are planning to start an Airbnb business? Game over? Moving to an Airbnb friendly state, which might still be regulated in the future? Or what else???

[Julie McCoy]

I think regulations will vary wildly from place to place, so a custom strategy is probably necessary. There's one thing that is always good to do, though, which is HAVE AN EXIT STRATEGY. If sudden STR regs come on your city it might get bumpy anyway, but you don't have to lose your shirt.

Personally, I'm focusing on markets that have strong tourism and established STR history (pre-dating AirBNB etc), that have occupancy taxes in place already. Then, the issue has already been addressed by the state/county/city, I know what the deal is, and it's unlikely to change (or at least change dramatically) - the gov't is already getting their cut so they aren't likely to mess with a good thing.

It seems that urban areas are the riskier ones from a regulation standpoint, but from a cash-flow perspective they can be more reliable because of the variety of travelers they cater to, not just tourists.  

So, do your research for your market, know that everything is a calculated risk, and have an exit strategy.  That's my recommendation. :)