The Risks of Regulation for a Short-Term Rental Business

This site is a work in progress and looks to give some indicators as to the rules and regulations affecting Short-Term Rentals in the Poconos.  It is a moving target, now and into the foreseeable future as municipalities try to balance the rights of owners/business operators against the rights of the neighboring homeowners.  If you are reading this with from an investor’s perspective, think about rules and regulations as business risk.  As with any investment, there is risk and having restrictions and added costs applied to your business will have impact.  A negative impact comes from added costs, a positive impact can come from low-quality competitors leaving the market, decreased competition and an overall raising the quality of the remaining operators. 

There are two primary forces of regulation in the STR business: municipal zoning and short-term rental ordinances and Pocono Homeowner/Property Owner Associations.  Municipalities govern the types of properties in which STR is allowed to operate and give particular requirements designed to assure the health and safety of the guests and control the impact the operation has on the neighborhood.   Planned communities with POA/HOA governance can put an additional layer of control on a STR operation.

There is an old saying that people get involved in local elected office for one of two reasons: revenge or self-interest. This is particularly true when it comes to township commissioners and HOA board members.  While the trend in the Poconos is to be more restrictive on STR’s, that comes from officials (township commissioners or HOA board members) who push their agenda.  In some communities, governance is being led by those who have a personal stake in STR and there you may see rules and regulations turning more favorable to vacation home rentals.  

Municipalities and community associations think of rental properties as a business, so should you the owner. Businesses often band together in organizations like Chambers of Commerce, Professional Associations and trade groups and as a STR owner, you should invest some time, effort and perhaps even money into alliances that promote and protect your business. The STRs that operate in your neighborhood are business competitors, but they are also key allies. Finding neighborhood owners sometimes is as simple as finding their listing on Airbnb or VRBO and sending them a message. Some owners have formed private Facebook groups for just their communities where they can communicate about their business and strategize about how to dealing with your community association as well as owners watching out for each other. There are also broader serving private Facebook Groups, like the Pocono Region Short-Term Renting Owners’ Group which can be helpful.

There are indeed risks associated with regulations that will impact a STR Business.  Operators who are willing to invest time and effort to influence the political forces that impact their business can help minimize that risk.  Complying to rules and regulations is absolutely a cost of doing business and investing in the governance can be a factor in minimizing risk.  Do your homework: call and talk to Township Secretaries, Code Enforcement Officers, attend the public meetings in the township and get to know the HOA boards and the management companies they employ.  If you want to invest in a community-based business (like a STR portfolio) it will pay to be connected or part of the bodies that oversee licensing of your business to protect your self-interest as well as being a responsible neighbor.

I encourage you to watch the following video:

Published by markshayrealtor

I believe helping you find a home is all about the fit, finding a home that fits your needs today, and sets you up for the future. I walk my customers through the many steps needed to find the right fit for a property that they can use as an investment, a vacation home or as their primary residence. I found my way to the Poconos looking for the perfect vacation home. I purchased a nice sized tract of land near Blue Mountain Ski Resort, where I built a home and continue to develop the land. I think of the area as both a great place to live and a great place to vacation. My vacation home has been successfully running as a short-term rental for a number of years and I have turned that experience into my real estate specialty, helping people buy vacation homes they can run as a short-term rental.

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