7 Cities to Never Rent a Home on Airbnb

What are the top worst cities for Airbnb rentals? You should know if you’re considering listing your home as an Airbnb as a viable side gig. Certain cities make it very difficult to turn a profit, let alone even list your home on the site in the first place.

From exorbitant operating costs to incredibly strict city regulations, some cities make it nearly impossible to turn your home into an Airbnb rental.

Here are where experts say you’re better off not listing your home as an Airbnb.

The city by the Bay seems like a great vacation spot where you can make a lot of money by putting your home on Airbnb. However, Eric Preston, the CEO of Agent Launch, said that might not be a great idea.

“California is generally viewed by many investors as a weak market to own an Airbnb. San Francisco, in particular, has high initial and operating costs.” Preston said.

Additionally, Preston said there are a lot of restrictions on homeowners when it comes to renting out their San Francisco home.

“For starters, you must live in the home for more than 90 days per year before listing it for rent. If you don’t, you could be fined up to $484 per day for first offenders and up to $968 for repeat offenders. Furthermore, only permanent residents are allowed to engage in short-term rentals. Ultimately, San Francisco has made it prohibitive for resident and non-resident homeowners to rent out a property on sites like Airbnb,” Preston said.

One of the things that makes listing your home on Airbnb so complicated is your city’s regulations. That’s certainly the case in Des Moines.

“Des Moines makes the list because its short-term rental industry is wrapped in red tape. The city has gone out of its way to impose restrictions on homeowners with short-term rental properties to curb the potentially negative impact on certain neighborhoods. For short-term rentals in Des Moines, you need to get a rental certificate and approval from the city’s board of adjustment.” Preston said. “You must then operate your short-term rental for five years before legally securing a license. There are also a ton of requirements you must meet to get this license, including providing off-street parking, adhering to occupancy limits based on the number of bedrooms and passing inspections. These requirements are stiff for a less-than-attractive housing market like Des Moines where tourism, which drives the short-term rental market, is as limited as the profit potential.”

Portland has become quite a tourism hub for those who love the outdoors and its quirky culture. Unfortunately, if you’re trying to profit off the influx of visitors, you’re in for a rude awakening. 

“There are two reasons that Portland lands in the bad category: it’s flush with short-term rental inventory and is steeped in regulations,” Preston said. “Portland has historically been a competitive market for Airbnb and is considered one of the stricter cities. It was the first that mandated that homeowners have licenses to operate a short-term rental and a wealth of applications were delayed due to an enormous backlog.”

Preston added that you can’t make money off your rental all year long.

“Homeowners can only operate a short-term rental if they live in it for at least nine months of the year and guests can only rent for 30 days max. Non-compliance is costly. From February 2017 to August 2018, Portland handed out close to 200 citations to property owners for failing to operate with a permit,” Preston said.

Like fellow Bay Area city San Francisco, San Jose has a lot of complications when it comes to Airbnb.

Preston said there are a lot of restrictions on how long you can rent out your property. 

“San Jose has inflexible zoning requirements for short-term rentals. Also, a ‘host’ must occupy a property for at least 60 consecutive days and show an intention to make it their primary residency. If you’re present as the ‘host’ you can still only rent to up to three guests in a single-family home or up to two guests in a multi-family dwelling. If a host is not present, then you are limited to renting your property for only up to 180 days per year.”

Preston added that you’ll also need a business license and to pay taxes. Two of the taxes you’ll have to pay are the Transient Occupancy Taxes at a combined total of about 10%.

In the same vein as Portland, Austin has become a popular tourist destination for young adults looking for a thriving culture. Scott Friedson, the CEO of ICRS LLC, said a new ordinance is creating headaches for homeowners trying to take advantage of the swell of tourists.

“Austin recently passed an ordinance banning short-term rentals in residential neighborhoods. For those still operating, the threat of hefty fines and potential legal issues make the city unfavorable.” Friedson said. To be clear, this is a temporary prohibition of short-term rentals, which would apply to properties developed under this ordinance. Nevertheless, it could complicate some homeowners’ plans going forward.

It might be known as the Big Easy, but that’s not the feeling homeowners get when renting out their homes on Airbnb. Friedson said the city’s rules for short-term rentals can cost homeowners more than it’s worth.

“New Orleans is a popular vacation destination, but laws require special permits, inspections and limit non-owner occupied short-term rentals to 90 nights a year. The confusing regulations and limits significantly cut potential profits,” Friedson said.

Friedson pointed out that, in some neighborhoods, you’ll never be able to rent out your home on Airbnb.

“Miami Beach banned short-term rentals of less than 6-12 months in residential neighborhoods, and those operating require a permit with an application process that can take up to a year.” 

There is good news, though: Friedson said that the ban aims to free up housing for long-term residents struggling with affordability.