The Short Term Rental Debate

THE SHORT TERM RENTAL DEBATE WHY Chicago IS NOT A GREAT CANDIDATE Despite the enormous popularity of short term Around I1% of vacationers rental services from take advantage of short term rentals. companies like Airbnb, RoomAway, and Roomorama; there are still some glaring obstacles for both renters and rentees. Some cities, including Chicago, have laws and regulations in place that can make it very difficult for short term rentals. Airbnb, the most popular short term rental service, has a presence in Chicago, but it is small, usually around 200 listings at a time, about the size of a hotel. LAW BENEFITS OF SHORT TERM RENTALS In 2013, short-term rentals in Short-term renters are Chicago generated $108 million in overall economic activity and created 920 jobs. attracted to the extra living space, lower rates than hotels, and better amenities. SOURCE OF INCOME FOR PROMOTES TOURISM GENERATES REVENUE FOR THE UNEMPLOYED OR • Over 52% of surveyed COMMUNITY RESIDUAL INCOME FOR individuals plan to stay in a vacation rental in 2014, up from 44% in 2013. • The Airbnb market OTHERS represents $14 million of annual accommodation • In 2012, 12% of American adults stayed in vacation rentals, spending $23 billion. spending in San Francisco. • For every $100 a traveler AIRBNB INSURANCE spent on short-term rentals, • provides protection for up to $1,000,000 in they spent an additional $69 on food • $24 on transportation • $59 on shopping • $48 on arts, entertainment • Owners generate an of $27,360 per damages to covered property in the rare event year in rental income. of guest damage, in and recreational activities eligible countries. THE ARGUMENT AGAINST SHORT TERM RENTALS Increased Reduced housing stock Damage to property caused by renters. noise and available to those who live and traffic. work in a community. Unfair competition with Legal ramifications licensed establishments for landlords and LAW like hotels and hostels. hosts. Listings aren't Laws for hotels and traditional services are in place to protect guests, no laws setup for short term rentals. Providing housing for short term visitors in exchange for money could result in fines or even jail time. accurate description of the property. THE SHORT TERM RENTAL MARKET IN CHICAGO Chicago has fairly tight laws governing a lot of issues that would cause problems for short term rental. 0000 100 TAX Chicago requires annual purchase of a $250 vacation inspections of rental properties, which typically costs upwards of $100 Rentals cannot be owner Chicago requires the occupied, which can cause problems for people offering rental license and charges a a couch or room in their 4.5% tax on rentals. house on Airbnb or another service like CouchSurfer. LICENSE Those intending to legally In 2012, the city of Chicago Companies such as Airbnb typically do not offer any type of protection from local people listing properties for laws to rentees, nor do they operate a business in which began to require that they rent out a part of their residence while living there short term rental publish may be subject to the Illinois Bed and Breakfast Act, guarantee the legality of a renting situation for the their license numbers with listings. which requires a $400 bed renter. and breakfast license. Violators are subject to penalties between $1500-$3000. • The arguably biggest supporters of short term rentals in Chicago are condo owners who are having trouble selling their properties in the depressed real estate market. • Most Chicago condo associations prohibit using units for short term rental. A study by TXP looked at short-term rental listings of Airbnb, HomeAway and FlipKey in Chicago. Those companies had a combined 171,000 nights booked in Chicago and surrounding Cook County in 2013 across 3,620 properties. CONCLUSION Many Chicago residents rent their homes and rooms via. AirBNB and other short term rental services. There are both upsides - extra income, meeting new people - and downsides such as property damage and legal repercussions. Is it right for you? You decide. Presented By APARTMENT GUYS Sources blog.launch.co/blog/do-chicago-airbnb-hosts-need-a-license-to-rent-answer-probab.html chicagobusiness.com/article/20131221/ISSUE01/312219984/airbnb-checks-quasi-legally-in-some-cases-into-local-market businessinsider.com/airbnb-illegal-law-case-2014-4 chicagobusiness.com/realestate/20120925/CRED0701/120929885/condo-owners-lose-ruling-on-vacation-rentals realtor.org/field-guides/field-guide-to-short-term-rental-restrictions stradvocacy.org/media/STRAC-Fact-Sheet2.pdf stradvocacy.org/chicagostjosephstudies/#.VBB3Y_IdWug investopedia.com/articles/personal-finance/032814/pros-and-cons-using-airbnb.asp?performancelayout=true .....