In the beginning there was the garage apartment, a bedroom that was loaned to a friend who just wanted to visit for a few days or the soldier who stayed with a buddies friend. No matter the circumstance, back in the day, no one was charging for the stay and it was out of kindness that we were blessed to be a guest in someone’s home. But today that has changed and the home-sharing, vacation rental and executive rental business has quite simply boomed.
Over the past ten years or so we have seen a new platform take shape. Once the 2006-2007 financial crisis hit there was a new sense of urgency. Many of our seniors were close to losing their homes, or already had lost their home . As it happens, this is usually when we become creative creatures and begin to explore what we can do differently in order to ride and navigate the destructive wave that is before us. This is what happened in the Short-Term Rental industry (STR) and today we are experiencing the creation of a new, ever-changing and growing industry.
Enter, some early adopters that have since disappeared. Great effort, but when a new industry is forming there is to much chaos and division on what to do and how to operate that it gets muddy and hard to really make sense of it all. Even today it seems that each City has its own version of a short-term or home-sharing ordinance. But now we have National Short-Term Rental (NSTR) that is on the stage to represent and advocate for not only the original mom and pop operations but those companies who are managing the short-term rental (STRs) for owners – called Management Companies (MC). MCs are traditionally used by apartment owners but the landscape for apartments is also changing as owners of four-plexes, duplexes, tri-plexes and more are using the STR space for a variety of reasons.
Here are a few of the reasons that owners have turned units into STRs:
- Offset a lack of income from Social Security
- Use the income to repair or upgrade their home or apartment
- Keep rents stable for tenants – no increases.
- Provides income to help them supplement their retirement and stay in their homes.
- Constant battle with local and state legislators to brick by brick take away or greatly reduce private property rights.
One aspect of the rental industry is that landlords and owners have become jaded by tenants who are looking to sue. Because the smaller building owners do not raise rents on a regular basis they have a harder time repairing their building. And many of those building were built more than 20, 30 or 60 years ago and repairing them is very expensive.
The struggle that faces the STR industry is that Hotels initially pushed back against short-term rentals saying that it was taking away business from them. However, from my research with visitors, if they did not have the option to rent at a much lower rate, that family would not be on vacation at all. So, the argument that they are taking away business just does not pan out. In fact, with an increase in local visitors it has helped enhance local economies. This is why the developers are taking notice, but at the same time Cities are trying to place more restrictions on STRs so that rental units are not taken off the market. It is a cycle that will continue to play out for the future. But why?
One reason developers are looking at STRs is that they are taking advantage of the lease-up process. With the need to build more units to accommodate the rental market, it makes sense that developers are also looking for ways to offset the fees being imposed to create more affordable housing. But the same feeling I have about rent control I also have when it comes to the short-term rental market – there is enough room for everyone and the constant attacks on private property rights needs to stop. My research over the past 5 years has proven to me that landlords are not the enemy and in fact I ran into more landlords who almost never raised their rents and felt like their tenants were family. It is the large and more corporate management companies that are raising rents. Drive down almost any street and you will see a sign in the window or on the lawn. These owners are not advertising and the rents are much lower than tenant rights advocates report when in front of City Council meetings.
In conclusion, the STR industry is still growing and changing all the time. There is a need for an independent and unbiased organization that is on the side of the hosts and owners. National Short-Term Rentals (NSTR) is a great place to find support, vendors, best practices and more. NSTR is committed to helping hosts, management companies and vendors supplement and educate those who are entering the STR industry. There is much this industry can provide but as with any industry there are pitfalls too. Whether it is a practical question or legal NSTR has resources to share with its members on from the local market to the national stage we are here to help you navigate this ever-growing industry. The future is certainly bright.