To rent out your property, understanding short-term rental (STR) restrictions is essential, as they significantly impact your Right of Control and Right of Disposition. Local governments, zoning codes, HOAs, and even mortgage agreements can limit your ability to rent for under 30 days. These restrictions aim to balance economic benefits with neighborhood stability. Always check local laws and bylaws, secure proper licensing, and obtain specific insurance to ensure compliance and avoid severe penalties.
What Is a Short-Term Rental?
A short-term rental (STR) typically refers to renting out a home, room, or apartment for 30 days or fewer—usually to vacationers, business travelers, or temporary tenants.
These are often facilitated through platforms like:
- Airbnb
- VRBO
- Booking.com
- Furnished Finder
Short-term rentals can be:
- Whole-home rentals (you rent the entire property)
- Room rentals (you live there but rent a room)
- Accessory Dwelling Units (ADUs) like garages or guesthouses
Why Restrictions Exist in the First Place
While STRs can be great for owners and travelers, cities and HOAs often impose restrictions due to:
- Noise complaints and neighborhood disruption
- Housing affordability concerns
- Increased wear on infrastructure
- Pressure from hotel industries
- Public safety and tax collection
Local governments aim to balance the economic benefits of STRs with the long-term stability of residential neighborhoods.
Who Regulates Short-Term Rentals?
You may need to navigate restrictions at multiple levels, including:
- Local Government
Cities or counties set primary rules around STR licensing, taxes, occupancy limits, and where STRs are allowed. - Zoning Codes
Zoning determines if you can operate a rental in your area and what type (e.g., owner-occupied only, no rentals in R-1 zones). - HOAs or Condo Boards
Private associations often ban or restrict STRs in covenants, conditions, and restrictions (CC&Rs). - Lenders & Mortgage Agreements
Some mortgages—especially government-backed loans—prohibit STRs within a certain timeframe of purchase.
Common Short-Term Rental Rules (With Examples)
Licensing Requirements
Most cities require STR hosts to register and get a license or permit.
Example: Denver, CO requires STR hosts to be primary residents and hold a valid license, or they face steep fines.
Zoning Limitations
Some residential zones outright ban STRs or only allow them with conditional use permits.
Example: In Los Angeles, STRs are only allowed in primary residences for up to 120 days/year, unless extended stay approval is obtained.
Nightly Caps or Maximum Days Per Year
To curb STR overuse, cities limit the number of rental nights per year.
Example: San Francisco allows up to 90 nights per year for unhosted stays.
Host Presence Requirements
In some locations, you must be present during the guest’s stay, especially for short-term room rentals.
Example: Chicago requires hosted rentals to occur in the owner’s permanent residence.
Financial Considerations: STRs Aren’t Always a Windfall
Before calculating your Airbnb income, be sure to factor in:
- Licensing fees: $50 to $500 annually
- Hotel occupancy taxes: Up to 15% in some cities
- Insurance upgrades: STR-specific homeowner’s policies
- Cleaning/management costs: Especially if you’re remote
- Fines for non-compliance: Some cities charge $1,000+/day for illegal STRs
Real-World Math Example:
Say you rent your home 10 nights/month at $150/night. That’s $1,500/month or $18,000/year.
Now subtract:
- 15% local STR tax = $2,700
- Management and cleaning = $4,000
- Insurance, licensing, and maintenance = $2,000
Net income: ~$9,300/year — if legally permitted and fully booked.
What Happens If You Violate STR Rules?
Operating an unlicensed or prohibited STR can lead to:
- Daily fines (e.g., $1,000 per day in Santa Monica)
- Cease-and-desist orders
- Lawsuits from HOAs or neighbors
- Loss of rental platform privileges
- Criminal penalties in rare cases
Actionable Tips for Property Owners
1. Check Zoning Laws and City Ordinances
Call your local planning department or visit their website. Ask:
- Is my address eligible for STRs?
- Are there limits on number of days or guests?
- What licensing is required?
2. Review Your HOA or Condo Bylaws
Some associations ban STRs entirely, while others restrict rental length or require registration.
3. Consult Your Mortgage Agreement
Some loan programs (like FHA or VA) require the home to be your primary residence for 12 months after purchase.
4. Get STR-Specific Insurance
Homeowner’s policies often exclude liability from short-term rental use. Look into:
- STR endorsements
- Umbrella coverage
- Specialty policies from companies like Proper Insurance
5. Set Up Tax Collection and Remittance
Some platforms collect hotel taxes for you—but others don’t. Contact your city or county’s revenue department.
STR Laws: A Tale of Two Cities
| City | STR Policy |
| New York, NY | Bans most entire-home STRs under 30 days |
| Phoenix, AZ | Allows STRs statewide, but requires emergency contact |
| Austin, TX | Requires licenses and zoning compliance |
| Miami Beach, FL | Fines up to $20,000 for unlicensed STRs |
Takeaway: Local laws vary dramatically. What’s allowed in one city could be banned next door.
Can You Convert a Short-Term Rental into a Long-Term One?
Absolutely. If STRs are restricted, consider longer-term rentals (30+ days), which are often exempt from STR rules. This can:
- Generate more stable income
- Reduce management needs
- Ensure compliance with local laws
Final Thoughts
Short-term rentals can be an incredible income stream—if done legally. Ignoring local rules could cost you thousands, or worse, your home. But with a little planning and due diligence, you can unlock the power of STRs while preserving your property rights.
Key Takeaways:
- STRs are regulated by zoning laws, city ordinances, HOAs, and lender rules
- Licensing, taxes, and insurance are essential components of a legal STR business
- Always verify before listing—noncompliance is expensive
- Consider long-term or mid-term rentals as alternatives when STRs are restricted