From the desk:Mid-Term Rentals (30-90 Days)

The city says under 30 consecutive days. Does a 30 day minimum clear it?

I have a 2 bed 1 bath, 900 square feet, four blocks off a light rail line, under contract at 178k with 15% down. Furnishing budget 9,000. Unfurnished comps 1,400. Furnished 30 plus day listings in the same few blocks are asking 2,050 to 2,300.

The ordinance section I'm stuck on says a short term rental is any dwelling unit offered for occupancy for a period of fewer than thirty consecutive days, and that operating one requires a permit from a pool that has been capped for two years. So a 30 day minimum should sit outside the definition. Except the same code chapter has a separate registration requirement for "transient occupancy" that uses a different threshold, and the two sections don't cross reference each other.

My planning department email got a one line reply telling me to consult a professional, which I will, but I want to know what to ask.

The other half of this is the count itself. If a tenant checks in on the 3rd and out on the 2nd of the next month, is that 30 days or 29 nights, and does the ordinance count days or nights? A one day miscount is the difference between a lease and an unpermitted operation in a capped market.

The decision is whether I write my lease at a 31 day minimum and give up some flexibility, or 30 and rely on the code reading. Closing is in 19 days.

Answer

3ryanmck27SC2C

Write 32 and stop thinking about it. The flexibility you give up is theoretical and the exposure you take on is real, and in a capped permit market the penalty for guessing wrong is not a warning letter.

On what to ask, three separate people answer three separate questions, and don't let one answer cover all of them. Zoning or code enforcement tells you which definition governs occupancy at your address, since a code chapter can have a licensing threshold and a land use threshold that disagree, and only the enforcement side can tell you which one they cite. A local real estate attorney tells you whether your lease language actually creates a tenancy under your state's landlord tenant statute, because that status matters more than the day count in some states and the eviction path changes with it. Your CPA or the state revenue department tells you the tax threshold, because in a lot of states transient lodging tax applies below some number of days and ordinary rent applies at or above it, and the number is not always the same 30 the ordinance uses. Confirm each in writing, and get the code enforcement answer with a name and a date on it.

On days versus nights, the count language is usually in a definitions section at the front of the chapter. If it defines "day" at all it will usually mean a night of occupancy, but I have read ordinances that say neither. Your lease should state the term as calendar dates and the number of nights, so nobody has to interpret it later. With 19 days to closing, spend money on the attorney read this week rather than on furniture.

5 replies

1aliyah_bAU2APRO6

Cost angle nobody has put a number on yet. If the 32 day minimum costs you two extra vacant days per turn and you do six turns, that's 12 days at roughly 70 a day, so about 840 a year. Against the risk you're describing that's a cheap insurance policy. I'd also ask whether the capped permit pool has any value if you ever want to sell, because a buyer who wants nightly rentals can't get one and might pay for a unit that already has one. You won't have one either way, so that's just something to know.

-1raj_mehta14CapitalPRO6

I'm mostly lost in this thread but the part I understood is that two sections of the same chapter use different numbers. Is that common? It sounds like the kind of thing that gets fixed by an amendment eventually and until then everyone just guesses.

1chriswalton8CC1CPRO8

@vellum it's extremely common. Licensing, land use, and tax get written at different times by different people and nobody reconciles them. @ember, one more thing to ask code enforcement: has anyone been cited at a 30 day minimum in the last two years. Enforcement history tells you more about your actual risk than the text does, and it's often a public records request away.

0marcus_hale41CG4A

Before closing I'd also confirm the lender is fine with the plan. Some loan documents have occupancy language that gets awkward around furnished short duration tenancies, and if your file is a DSCR product the rent used to qualify may be the unfurnished 1,400, not your 2,100 projection. Ask which figure they used and get the answer in writing, because at 178k with 15% down that gap can decide whether the file even closes. Separately, at 19 days out, if the attorney read comes back ugly, what's your out? Check whether your contract still has any contingency alive.