7 Cities Where Vacation Rentals Are Restricted But You Still Can Make Money

Sometimes, a hotel just won’t work for travelers.

For example, when a group of buddies ventures to see an out-of-town concert, and the cost of four rooms is prohibitive. Or when a family takes a beach vacation and wants the convenience of a close place with a kitchen that allows for easy comings and goings for lunch, naptime for the kids and bathroom breaks. Or when a traveler heads to a popular destination during a prime season and finds hotels either booked or way out of their price range.

For these travelers, a short-term rental of a condo, house or room in someone’s home makes a lot of sense, and they turn to sites such as Airbnb and VRBO to find lodging alternatives. Some municipalities allow short-term rentals with little or no oversight. However, many other cities and towns have implemented rules and regulations that require permits and inspections and limit the exact areas where the rentals are allowed and the length of stay.

But if your property is located in a prized destination or where hotels can’t keep up with demand, you could earn some serious money in the short-term rental business. If you’re considering renting out a room or more, your first step is to check with city hall to learn the rules.

Even though you could be required to pay for a permit or undergo a home inspection, you might find that the financial benefits outweigh the costs and the oversight. Here are seven cities where vacation rentals are restricted but still can make money for you.

More than 25 million people visit the Anaheim Resort District annually, including the Disneyland Resort. Families who buy multi-day passes to visit Mickey and Minnie might prefer a home over a hotel room, both for cost and space purposes, giving property owners prime opportunities to rent their spaces.

Anyone with tenants for 30 days or less must have a business license and a short-term rental permit and can rent their properties only to visitors who stay at least three nights. This rule was designed to limit the disruption that the comings and goings of short-term stays can create in a neighborhood.

According to the people at Visit Austin, Austin, billed as the Live Music Capital of the World, has grown into a popular destination, with more than 30 million domestic visitors a year. With so many tourists looking for accommodations, Austin is an ideal place to rent a room in your home or another property.

You must have a license to operate a short-term rental in Austin, and the cost is high: $863.80 for the application and associated fees. You also will need a certificate of occupancy and are responsible for collecting and paying hotel taxes.

Boston allows short-term rentals of up to 28 days. The rentals are allowed only in owner-occupied condos, single-family homes, or two-or three-family properties. In the latter, the owner-occupant must own each of the units.

The opportunities for renters are strong, especially in the warmer weather months. The Meet Boston website reports that hotel occupancy rates were 83.9% in May and 85.7% in June 2023, with corresponding average daily hotel rates of more than $330 monthly.

If you list your property as a rental, you must notify any neighbors within 300 feet of the unit that you plan to have short-term tenants.

Hotel rooms in Miami are pricey, with Statista pegging the average nightly rate at $198, so short-term rentals are a popular alternative. The county allows vacation rentals for up to 30 days or one calendar month, whichever is less.

All vacation rentals must be licensed by the state and registered with the Florida Department of Revenue for tax purposes. Owners of short-term rental properties also must register for a tourist tax account and are responsible for collecting and paying convention and tourist development taxes every month. According to the county, each rental property must be inspected and registered at just less than $140.

The “responsible party” for the vacation rental must live in the unit for at least months of the year, during which it has short-term tenants.

Despite more than 150,000 hotel rooms in Las Vegas, there remains a market in Las Vegas to house the nearly 39 million visitors a year. However, Las Vegas has very tight controls on the short-term rental market.

Remember the saying, “What happens in Vegas stays in Vegas?” By law, there won’t be any bachelor/bachelorette parties, weddings, birthday parties or other special events happening in a short-term rental in the city. Rules also tightly control factors such as parking, noise and trash disposal.

Short-term residential rentals are permitted only in owner-occupied homes with no more than three bedrooms.

Orlando is the home of the Walt Disney World Resort – and other amusement parks – but its rules differ from those in Anaheim. The western city only allows short-term stays of three days or longer. In Orlando, short-term stays can be as little as one night.

But there is a catch. You may have rental guests only if you live on-site and rent out at most half of the bedrooms in the house. The whole house? You can’t make it a short-term rental unless you can turn over the keys for more than 29 consecutive days.

If you’re willing to share your home, you have a strong possibility of finding interested parties to rent. Visit Orlando reported that the region had 74 million annual visitors in 2022.

Hotels in the desert haven welcome about 1 million visitors annually, with another 600,000 staying in other accommodations. If you own a property in Palm Springs, money can be made on a short-term rental. However, the city does have some strict rules.

For example, if your neighborhood already has at least 20% vacation rentals, your application for a vacation rental registration certificate won’t be approved. Your property – and especially your swimming pool – must be inspected to make sure it passes a safety inspection. Most importantly, you might want to set a minimum stay requirement to maximize your rental income. You’re only allowed 26 rental contracts per year, and you surely don’t want to waste them on single-night rentals.