There’s something happening in my neighborhood that prompted this week’s article. Let’s talk about short-term rentals (aka STRs).
At this point in our shared human history, you would be hard-pressed to convince me you have never stayed in a short-term rental. Call it an AirBNB, VRBO or any other number of sites, short-term rentals have exploded over the last ten years.
STRs show up in a variety of forms, from couch surfing to renting a room to what we commonly think of, renting an entire house or unit.
Setting the Scene
My neighborhood is undergoing a season of tremendous change at the moment. The original character of the neighborhood was post-WWII tract homes, 2-3 bedrooms with one bath, built on a crawl space or slab. Based on the proximity to downtown Plymouth (in all its bougie glory), my neighborhood became a prime candidate for new construction homes built on the bones of these homes.
To be clear, I throw no stones here. Our primary residence is one of these new construction homes, and our rental is a 1951-built 2-bedroom also in the neighborhood so we have a foot in both worlds. I digress, as what I really want to dig into is a relatively new phenomenon in our neighborhood – short-term rentals.
They’re WHAT?!
Fair ladies and gentlemen, it’s recently come to my attention that at least one, but up to three, yes three, of these new construction homes are being offered as STRs, little maids all in a row. How do I know this information? The Mathematician is a super sleuth when he really gets a bone between his teeth.
We thought it was strange that these units appeared to sit there deserted for months after they were complete (and you know I have an MLS alert on my neighborhood so I would KNOW if those houses had sold and for how much!!). He took it upon himself to do some investigation and eventually discovered the units available for $425/night on AirBNB.
And so, the chickens have come home to roost, and I’m not sure I’m down with the smell. On one hand, I’ve been a huge fan of STRs ever since my law school friends and I had the absolute TREAT of staying at the “Las Vegas Party House” one spring break. (Yes, it was everything you are picturing – leopard print bath robes, stripper pole, and purple high heel chair – present and accounted for.)
Pros & Cons
STRs provide room to spread out, to have a fully functional kitchen and various other amenities of your choosing. Heated pool, hot tub, game room, it’s probably out there and available for you to rent. When these units first hit the mainstream, they were often more cost effective than a hotel room.
However, these units have increasingly come under scrutiny over the last few years. While the battle first began to rage in big cities with a high cost of living, it has spread. In Michigan, this battle is picking up noticeable steam in the state’s tourist destinations.
While rentals have existed in these areas for decades, the rise of the internet, AirBNB and its competitors and investor communities such as Bigger Pockets have significantly changed the landscape. Back in the 1980s, you might have known Bill. Bill lived in the house next door and owned 2-4 short-term rentals in your community. He was a part of the community. Bill knew what was going on with his properties. He didn’t put up with crap from his renters because he didn’t want his local reputation to get trashed.
Today, may of these properties are run by absentee landlords who are focused on cash flow, not community. Bill might have had a handful of repeat guests, who came back year after year to his properties, accepting new guests referred from his current pool of rockstars. A STR now accepts anyone with a credit card.
To Limit or Not
Some communities, like Saugatuck, have taken steps to implement a percentage cap on the number of STR licenses issued. The nature of these tourist towns, which rely on visitors to power their economies, makes this a sticky situation. But should you be forced to live next to a home which hosts random large groups who trash the yard, party until 2 am and park half on your lawn?
I have mixed feelings, myself. As someone who enjoys traveling in the space and comfort offered by a home, I see the benefits of this style of rental. As someone now living in a neighborhood affected, I hurt a little for that beautiful house, walkable to great schools, restaurants and amenities, sitting vacant or hosting transient guests. I feel sad for the families who would happily move into that house and become my neighbors.
I know my articles are usually a little more data-driven, but today we’re feeling all the feels. What do you think about STRs moving into the neighborhood?
As always, I’m here to help with all your homeowner goals and dreams!
