Conversion of Three Rental Homes to Short-Term Rentals
Question: We went to a short-term rental seminar last fall at Scottsdale Community College. There were excellent speakers such as Paradise Valley broker Greg Hague, Scottsdale Realtors CEO Rebecca Grossman, Scottsdale Councilwoman Kathy Littlefield, and the Paradise Valley police chief. The reason that we went to this seminar is that we have owned three rental homes in Anthem for more than 20 years, and we were wanting to convert these three rental homes to short-term rentals. Although this seminar was excellent, this seminar primarily discussed the effect of short-term rentals on a community. We are still confused, however, as to whether we should convert our three rental homes to short-term rentals. How long ago did short-term rentals get started? Should we now convert our three rental homes to short-term rentals?
Answer: First, short-term rentals started in San Francisco in 2008 with two tenants needing more money to pay the rent for their San Francisco apartment. They decided to rent out three air mattresses on their living room floor, and to include breakfast. Air Bed and Breakfast then became Airbnb. Just like Uber, a simple concept quickly became a billion dollar industry. Cities and towns throughout the United States, however, have varying short-term rental regulations. For example, San Francisco now has several requirements, e.g., the owner of a short-term rental must live in the home nine months out of the year. On the other hand, Chicago basically has only one requirement— short-term rentals must be at least 30 days. However, cities and towns in Arizona, by state law cannot regulate short-term rentals, except for short-term rentals used as “party houses.”
Second, in addition to Airbnb, the other major company in the short-term rental market is VRBO which is the acronym for “vacation rentals by owner.” In other words, “vacation” rental homes were a major factor in the start of the short-term rental industry, and “vacation” is still a major factor in determining whether a rental home should be a short-term rental. Anthem is a beautiful community and there are undoubtedly short-term rentals now in the Anthem community. If you are interested in your three Anthem homes becoming short-term rentals, you might go online to contact a local Anthem realtor for more information, especially if that local Anthem realtor manages short-term rentals.
Note: Short-term rental homes are much more labor-intensive with higher management fees and higher maintenance/repair costs. Finally, an HOA can still restrict short-term rentals, so you should review the CC&Rs to see if any of your three Anthem rental homes are in an HOA.
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