By Al and Jean Batson
The Batson Team

Last month we discussed timeshares; this month we’re responding to inquiries about owning vacation rental properties.

What are the legal ramifications of owning a property to rent out for vacation rentals (i.e. through VRBO, HomeAway, Airbnb etc. – also referred to as “short-term rentals)?

There has been some concern/controversy because owners of rental properties want the right to make money on their properties – however there have been situations of parties or bad behavior by those vacationers that impacted the neighbors. Sadly, the renters we hear about are the few inconsiderate ones; most renters are very respectful of the properties.

The State Legislature has spoken with the recent passage of HB2672:
• Short-term rentals are lawful in Arizona; local municipalities do not have the authority to restrict them.
• All short-term rental owners must obtain a transaction privilege tax license and list that number on all advertising. Failure to comply will result in civil penalties.
• The owner must provide the local town/city government their contact information so they can be notified if the city gets complaints about the property/tenants.
• The new law provides that the town or city shall notify the owner and the Department of Revenue, within 30 days, if any complaints are received that result in verified violations and civil penalties.
• Short-term rentals are prohibited from having “special events” at the property that require any kind of permit. The purpose is to avoid impacting the neighborhoods with noise, traffic or general disruption of their ability to live quietly in their own homes.

While not specified in the House Bill, owners should certainly post rules and “Quiet Times.” Tenants expect information to be posted explaining the area, local events, restaurants and house rules and other helpful information.

Short-term rentals can be profitable. Vacationers often prefer a private home vs. a hotel and are willing to pay a premium price for such a space. In Arizona, we have an enormous need for such properties – for a few weeks to a few months. It can be challenge for them to find a furnished rental accepting leases for less than a year.

These types of rentals require knowledge and work on the owner’s part to tastefully and completely furnish the home, including cable TV and internet. What would you want to be there if you were ready to start your vacation?

The most important ingredient to owning a short-term rental is the business end; you need someone to clean it thoroughly and check to be sure everything is complete (nothing missing or broken). Many owners work with a company (like VRBO) to help obtain tenants, but you still need to be on top of everything going on with the property. There is more to deal with than having an annual-lease property that is unfurnished. Short-term rental properties can be a good investment in the right area with an appealing property. High-season rates can bring much higher rates per week/month. Before leaping into that pool of ownership, check with VRBO to see how they will work with you; and with your Realtor to find that property. We’re happy to help.

If you have any questions or an idea for an article, please contact us at: Jean@AlandJeanBatson.com.