Frequently Asked Questions from Short-term Rental (STR) owners
Regulation infringes on my property rights - telling me what I can or can’t do with my property
Property rights are not absolute, i.e., your property rights don’t have priority over mine. When you buy in an area zoned residential, you accept that the city already has established rules that tell you what you can and can’t do with your property. For example, you cannot open up bars, restaurants, gas stations and hotels in residential neighborhoods.
STRs infringe on neighbor property rights in multiple ways: (1) Noise: constant noise prevents peaceful enjoyment of home, and city noise ordinances are effective at prevention or for the long-term, (2) Security: large groups of unknown strangers and therefore inability to safely use front and back yards with kids feeling safe, (3) Property Value: devaluing properties next to a STR, i.e., would you buy a house next to a full-time vacation rental and party house for your family? (4) Parking issues: most residential neighborhoods have limited parking, particularly for large groups and gatherings at STRs. Do you ever wonder why STR owners of whole house rentals don’t live next to their own property vacation rentals?
I’m a responsible STR owner - I only allow 2 guests per bedroom, have strict house rules (e.g., no parties) and show a 5-star rating.
Limiting to 2 guests per bedroom means that in 3-5 bedroom single family homes, you still are accommodating 6-10 short term vacationers. This is significantly larger than most single family homes and allows for large/noisy gatherings, bachelor parties, etc. Additionally, many STR owners internally re-configure their homes to increase bedrooms from 3 to 4 and in cases up to 6 bedrooms - all so they can skirt the rules and charge more $’s per night.
It is impossible for absentee owners who rent out their entire homes to monitor and control their guests. For example, would a group of 6-8 young vacationing adults who are in the STR’s backyard swimming, yelling, drinking, playing music and grilling constitute a party? Would this be a disruption to the neighbors when it’s occurring 5-7 days/week? Most would say yes to both of these. In essence, every STR with an absentee owner becomes a party house since short-term vacationers are interested in fun and excitement and are not vested in the long-term viability of the neighborhood
It is well known that negative reviews on Airbnb are discouraged by the nature of the Airbnb marketplace, i.e., if a guest provides a negative review, then they might get a negative review back from the owner, which influences this guest’s ability to rent in the future. Additionally, negative reviews can be deleted or the owners can give their STR a ‘fresh start.’ As one commentator noted: “In a world where bad reviews can influence future earnings or the ability to rent for short-term vacations, both hosts and guests will err on keeping the peace.” Guests and owners get a chance to rate each other with stars; residents and neighbors don’t get a chance to rate.
Most Strs aren’t a problem - you’re punishing the majority because of a few problem STRs and party houses
The vast majority of citizens are also law-abiding. However, cities make laws every day to prevent the outliers from negatively impacting other citizens. STRs around TX, the US and the World are being regulated/ prohibited because of the same ongoing issues. While not all STRs are party houses, a substantial number are since absentee owners cannot control what happens at their rental. For example, in Grapevine, TX, 75% of the STRs were not owner occupied and it’s impossible for absentee owners to control their guest activities and noise. You see every day that cities around the globe are looking at how unregulated STRs eat up available housing and change the character of neighborhoods and the city.
For a preview of what regulation challenges look like, consider the history of the city of South Lake Tahoe which first started regulating these in 2005. STRs now number 1400 out of 8900 total houses in the city. Most are confined to the city’s core neighborhoods where STRs outnumber residents on some blocks. The City’s overall permanent resident population has declined about 10% since 2000.
STRS ARE NOT A COMMERCIAL BUSINESS; THERE IS NO DIFFERENCE BETWEEN STRS AND LONG-TERM RENTALS
Just a cursory analysis reveals that STRs are fundamentally different. Residents and long-term renters have skin in the game. They usually include 2-4 people in a single family house and not 10-25+ vacationers who change out every 2-3 days. Owners and long-term renters are here for many months or years, their children attend local schools and they have a vested interest in the neighborhood. STRs are a commercial business. They advertise rates, rooms, amenities and shorter-term stays for large groups of disparate people and collect fees. This is completely different from single family residents or ‘home occupation’ as defined in residential zoning codes. STRs are best suited for hotel and business districts. To note, the state of Texas identifies short-term rentals as hotels.
Just in case anyone's still unclear about whether STR home rental are or are not a commercial business/hotel: Marriott is starting a new "Tribute Portfolio Homes" where individuals and business people can rent homes through Marriott (and get points or use Marriott points), and Marriott will also list on Airbnb, HomeAway, etc.. Individual homeowners can submit to rent their own home out through this Marriott site. It’s assumed this is one of Marriott's counters to the growth of Airbnb, etc. It's just in beta now, but all hotels could start doing similarly and this would mean more nightmares for neighborhoods.
Strs are FULFILLING a market need, which is why these are Growing so rapidly
Cities should be able to set zoning based on their own city’s market needs. For example, a market need in Corpus Christi might be drastically different than it is in San Antonio, Waco, or Midland or Dallas. For example, Grapevine has 5000+ full-service and part service hotel rooms and bed-and-breakfasts available for the market. STR owners could easily purchase or build properties in areas zoned for commercial business/hotels. Without proper zoning authority, cities and residents have minimal recourse in dealing with the dark side of STRs, which may leave some neighborhoods with many fewer families in favor of out of town owners operating mini-hotels in towns like Grapevine.
STRs fails the three characteristics of suitability, compatibility and adjacency when determining if they should be allowed in zoned residential neighborhoods. STRs are not suitable as they are of a completely different nature than single family residences or long-term rentals. STRs are groups of transients who stay for a few days and down’t care about the neighborhood. STRs are not compatible with single family residences since their interest’s conflict. Families want peace, stability and safety and are in it for the long term. Vacationers want short-term fun, excitement and do not care if the neighbors are bothered by noise and activities since they’ll be gone in a few days. STRs fail adjacency. Residential lots are typically close. Within zoning boundaries everything is a single family residence. STRs are outliers, basically commercial hotels that advertise rooms and rates and collect fees for multiple groups of people.
sTR Regulations are preventing me from earning an income on my property
Single family residential zones were developed to prevent commercial operations (e.g., gas stations, bars, stores, hotels) from operating in those specific areas. They were designed to promote neighborhoods where people could safely and peacefully raise a family, without the disruptions inherent in commercial enterprises. STR owners are free to run commercial operations in zoned areas for commercial businesses and hotels.
I depend on the STR rental revenue to support my mortgage and property taxes
Every residential homeowner has to to find legal ways to support their mortgage and property taxes. Most residential zoning ordinances specify that you cannot use a single family home as a source of income except for typical home occupation. For example, the Grapevine residential ordinance states that for single-family detached dwellings “none shall be a source of income to the owner or user of the principal single-family dwellings, except for customer home occupation.”
It appears that you bought a property that did not fit with your finances, and that you were hoping to cover costs by skirting zoning regulations. Your individual circumstances, i.e., your financial position, does not make something legal or ethical; you can only consider the circumstances of what you’re doing, i.e., running a business in a single family residential zoned areas. With the typical Texas housing market, it’s easy to either rent long term or sell the property for a profit. For example, one of the Grapevine party houses sold in 4 days, even though it was priced at a premium.
Strs bring additional revenue and tourist dollars to the city
Some studies have shown there is a positive impact and others have shown that STRs are actually a net negative to a city. Positive impacts of STRs are dramatically overstated since one of the main reasons that vacationers often choose to rent a home is to lower their expenses by cooking their own meals and staying at the home, particularly for large gatherings. What is not in dispute is that STRs do not pay their fair share of taxes (e.g., city hotel or occupancy taxes) or enforce regulations (e.g., fire codes, etc.) like other commercial businesses. Instead they push costs to other residents and city functions and are responsible for many other negative side effects, e.g., increased house/rent prices, fewer homes for residents, loss of population for schools, etc.
The idea that STRs are a great economic driver is based on a flawed analysis that overlooks the full costs and impacts STRs impose. STRs produce revenue but do so largely by imposing free-rider costs on the cities and neighborhoods that make them attractive in the first place. Attractiveness of STRs is based on shifting costs on others, like neighbors and competitors that play by the rules.
I bought the property based on strs being legal, plus I invested upgrade dollars in the stR property
STRs are dodging both the goal and intention of Single Family residential zoning. Many of the investments are often made to increase the number of guests who can reside at the property. For example, one single family 4BR house was ‘upgraded’ on the inside to now have 7 bedrooms for 20+ people. With the typical Texas housing market, it’s easy to profitably either rent long term or sell the property for a profit.
strs are not a big issue since there aren’t many in cities such as Grapevine
Each STR negatively impacts 5-7 surrounding homes directly (next door, backyard, out front). To put this in perspective, the ~200 STRs in Grapevine negatively impact 1000+ other homeowners. With the current 59% growth rate, this means the negative impacts would at least double every two years. Unfortunately many of the neighbors are forced to suffer in silence.