What You and Your HOA Need to Know About Short-Term Rentals
Websites like Airbnb®, Vacation Rentals by Owner (VRBO®), HomeAway®, and craigslist® now make it easy for Nevada homeowners offering lodging and visitors needing a place to stay to find each other. So it’s no wonder that so many Nevada homeowners find the prospect of renting their home or unit on a short-term basis so tempting. In fact, according to Airdna, a company that tracks Airbnb data, there are currently 5,044 active Nevada listings on Airbnb alone.
This may seem like a great way for homeowners to make some extra cash while giving travelers a way to avoid the cost of more expensive hotels. However, there are a number of things to consider before deciding to rent out your home—especially if you belong to an HOA. Likewise, if you are on your HOA’s board of directors, you’ll want to be well-educated on how to manage this trend in your community.
Whether you’re a homeowner or a board member, we recommend that you start off by getting answers to these basic questions.
1. What’s the law?
Most cities and municipalities have some sort of regulation when it comes to short-term rentals. For example, in Las Vegas you must register with the city and obtain a permit. You also need to have both a Las Vegas and a state business license, and you must comply with noise and parking regulations.
2. How is the rental defined?
You’ve probably noticed a rather hefty tax added to your bill when you have stayed at a hotel or a bed and breakfast. Virtually all cities and municipalities collect a lodging tax from accommodations they define as “hotels.” This tax, which is higher than regular sales tax, may apply to your rental if your city considers it a hotel. In Nevada City, for example, rental of any accommodation for overnight dwelling, lodging, or sleeping is subject to a 10-percent tax. Both the cities of Las Vegas and Henderson collect a 13-percent lodging tax, although there are slightly different rates for “resort” versus “non-resort” accommodations.
3. Does your HOA allow short-term rentals?
Even if your city allows short-term rentals and you comply with all of its regulations, your HOA may have different rules. Or it may not allow short-term rentals at all. Check your association’s governing documents before listing your home on one of the home-sharing websites. Otherwise, you could be facing fines.
HOA boards should periodically check sites like Airbnb, VRBO, and HomeAway to see if any homeowners in your community are listing their homes in violation of HOA regulations. Your community association manager can then notify the owners of the violations and inform them of potential fines. In addition, homeowners can be told to remove their listings.
4. What is the potential impact on your community?
HOAs that were created before the existence of sites like Airbnb may not have explicit rules. If this is the case in your community, your board should make time to discuss this in an upcoming meeting. Short-term rentals can impact a community’s security, liability and property values. For example, homeowners are unlikely to screen guests, creating a potential safety risk for other residents. Also, in the event of an emergency, guests may be at greater risk of injury or death because they will not be familiar with emergency procedures. Additionally, short-term renters may be less concerned about following rules, respecting residents and maintaining the property.
On the other hand, your community may find it advantageous to allow short-term rentals, especially if you live near a resort area like Las Vegas or Lake Tahoe. For one thing, the opportunity to earn income with a short-term rental could boost buyer demand. It could also produce income for strapped homeowners who might otherwise fall behind on fees or even abandon their home entirely.
Deciding how to handle this growing trend can be a difficult undertaking. However, a good community association management company can provide the guidance you need.
For more information on how to deal with short-term rentals, contact FirstService Residential, Nevada’s leading community association management company.