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The rise in short term rentals (STRs) in the U.S. has been met with an equal rise in ordinances and rules passed by states and local governments to regulate the short term rentals.
When short term rental investors – or their lenders – underwrite a property, they may feel more confident in their decision if an STR is already in operation. Intuitively, this makes sense: the STR’s operation implies their compliance with local laws. If a restaurant can’t operate without a city permit, then how could an STR operate without permitting?
Is operating a short term rental property a business? Intuitively, yes, particularly if the property is exclusively serving as a host of short term rentals.
