Things to Know About Short-Term Rentals

In the ever-evolving landscape of property rentals, short-term rentals (often referred to as STRs) have gained immense popularity. A short-term rental is typically defined as the renting of a property for a period of less than one month. While this business model can be lucrative, property owners often need to navigate a complex web of local regulations and market dynamics to ensure success. We’ve compiled a few key things that property owners should know about short-term rentals.

Oftentimes, there are local government regulations with specific rules that property owners must follow before they can rent out a short-term rental. These rules are implemented either through an administrative or a public review process. Typically, if short-term rentals are permitted, there is a permitting or licensing requirement. To obtain a permit or license, a property owner must apply with the designated agency. However, when there are no clear regulations in place, conflicts and uncertainties may arise. Sometimes, when short-term rentals are not clearly regulated, local governments take the position that they are not permitted in a residential zoning district because technically it’s a zoning violation to use a residentially zoned property for commercial uses. 

For example, the City of Chicago regulates short-term rentals and sets forth its regulatory requirements on its website Shared Housing Registration and Accommodations Licensing. Meanwhile, short-term rentals of residentially zoned properties are prohibited in Unincorporated Lake County residential zones under the Unified Development Ordinance of the Lake County Code (UDO). Doing so would be a violation of the County Code, which may lead to enforcement action being taken. In other jurisdictions, where there is no guidance on whether STRs are permitted or not, it’s best to proceed with caution.

Regardless of where the property is located, managing risk is crucial to success. In addition to understanding the regulatory requirements, it’s important to understand financing, operations, and other market dynamics. Further, having a backup plan in place for unforeseen changes in the regulatory scheme or the market is an important part of the planning process.

If you have questions about STRs, we’d love to hear from you. Feel free to reach us at 224-955-7095. 

Disclaimer: This content is for informational purposes only. It is not considered legal advice on any subject matter. The information provided here does not create, and receipt of it does not constitute an attorney-client relationship. You should not act upon this information without seeking advice from an attorney licensed in your own state or country.