@Wes Blackwell thank you for a great post! This is a very comprehensive overview of the short-term rental market here in the Phoenix metro. I also see a ton of people being lured in by the high returns of the STR strategy here, and many of them are not taking all of these factors into consideration when they need to be. At least if they plan on using this investment strategy for the long term.
1. I have 3 short term rentals here in Phoenix.
2. I am obviously a little bias, but I feel some of the regulations that are being considered and already imposed in other cities is too much.
It is very easy for people to push horror stories and say that short term tenants are going to disrupt the neighborhood with noise, traffic, parties and god forbid smoking weed. Although, the same thing could very easily happen with a long-term tenant, or even a neighboring property owner. I have experienced this personally on multiple occasions. Growing up I lived in a very safe middle-class neighborhood in Billings, MT. My neighbors across the street (who owned their property) had an older son who sold drugs from their home. Heavy flow of traffic, cops regularly coming to the property, and all of the other complaints people have about short-term tenants applied. More recently, I lived in a condo here in Downtown Phoenix in a small tight nit community of residents where the HOA banned short term rentals. While living at the property, my neighbor (who owned the property) got a new boyfriend who loved to party. At least 3 times a week they would be blasting music until 4 in the morning or even later. We approached them multiple time asking them to keep quiet and it still kept happening.
The worst part about these situations is at the end of the week these people didn't leave to return to their home. This was their home, and we were stuck dealing with them as long as we lived there or either of us decided to move. In both of these situations I would have gladly replaced my neighbor with a short-term rental knowing that this stuff would happen occasionally, but most likely not nearly as frequently as we already had to deal with them. 95% of our guests are respectful and we never hear any complaints about them from neighbors. This may be different in areas that are more conducive to parties, such as Old Town Scottsdale. Although, from our experience we have very rarely had the nightmare guest that is described in all of these claims.
I also feel that it is easy for people to demonize "large investment groups" that are coming in and destroying their neighborhoods. From what I have seen locally most of our competition in the short-term rental space is individuals with a few properties being ran as short-term rentals like ourselves, or individual owners with only one property. In all reality, it seems like these people are trying to pool small investors, including many here on BP, with large "evil" corporations. There are a couple big players such as Wander Jaunt and Sonder. Although, Sonder seems to stick to partnering with larger apartment complexes in listing a few of their units. Wander Jaunt is a little more across the board with their rentals.
Also, many property owners I see doing short-term rentals are renovating their properties substantially before listing, us included. Many of our neighbors are very happy to see improvements being made to dilapidated properties next door, bringing up the value of their neighborhood.
I can understand and see many points being made against short term rentals. Although, I feel that some of the claims are sometimes a stretch and could easily be flipped to a bad long-term tenant or property owner.
This may be a little more than what you wanted to hear, although this is my two cents on the situation.
3. My advice to investors looking into this strategy is to look into all aspects that you outlined in your post. Pretty simple. Do not buy a property in an HOA as they can easily shut you down. Make sure any property you purchase makes sense as a long term-rental as well so if any future regulation comes down on AirBnBs you have a back-up strategy where you don't have to sell in a potentially down market. Also, try to find a property where you can add value so when you do end up selling (forced or by choice) you have additional margin.
