AirBnBelmont

Short-term rental websites have revolutionized the way we travel and book accommodations. Now, they’re the reason residents are at the edge of their seats in a nerve-wracking race to institutionalize rental regulations.

Since October 2022, a series of standing-room only public forums – moderated by the city’s Commissioner of Accounts, Dillon Moran – have been held to discuss the economic impact of short-term rentals in Saratoga.  Short-term rentals fill a gap in the hospitality industry, argue some, and the positive economic impact they generate can potentially extend to the renter, the host, co-host, city, and state. “All the hotels are booked up already. Where else are these people going to stay?” asks Mike Scuola, founder of Peerless Companies, a real estate investment firm whose motto is “Build. Manage. Invest.” (Check out their website here: https://peerlessco.us/)

STRs FIND THEIR STRIDE

The short-term rental (STR) market we know today has replaced the boarding house/lodger model that facilitated affordable housing in the 19th century. Its online platforms, including: AirBnB, VRBO, Expedia, HomeAway, and others, however, are used almost exclusively for booking vacations. Which puts traditional proprietors at a disadvantage, say hotel, motel, and bed-and-breakfast operators subject to regulations, city taxes, and county occupancy taxes for establishments with at least four units. 

In Saratoga, an aggressive growth cycle has resulted in the number of STRs nearly doubling from where it was less than two years ago, with more than 950 listings within city limits, found software company Granicus in a cross-platform review. Without strictly-enforced STR health, cleanliness, parking, and safety standards, property owners, renters, and first responders are left unprotected. One of the primary benefits of a traditional hotel (that many STRs lack) is a dedicated staff to check customers in, handle rowdy guests, clean their rooms, or provide them with room service.

Peerless Companies manages a variety of real estate investments, including short-term and long-term rentals, working with an experienced group of third-party vendors and their in-house team, to serve as a local point of contact, said Scuola. “We’re set-up for any issues that may occur. We perform credit and background checks, verifying a renter’s identity for long-term rentals, and for short-term, we screen a guest as much as we can. The platform performs a pre-screening. We rely on reviews, make our own house rules, set, and enforce them (or else we’d become a party house). We keep up with home and property maintenance, so all as it should be.”

“When a guest is in one of our homes, it’s all about the experience. We provide guidebooks that focus on everything the area has to offer, guest baskets, a hotel-style turn-down, wrapped toilet seats, fresh shampoo. All that incurs costs.”

A SHARE OF THE PURSE

Saratoga Springs has a longstanding tradition of being a host community. The summer horse-racing tourist season boom triples the city’s population – and its room rates. For the historic arrival of the 2024 Belmont Stakes Racing Festival in June (to allow for the uninterrupted construction of the new Belmont Park in Elmont, just outside New York City limits) those rates, in some cases, are jumping to more than four times their off-season price.

AirBnB, the biggest of the home sharing apps, allows hosts and co-hosts to earn an income while renters may still end up saving money, freeing up cash for them to spend at more local businesses. Many prefer the home rental experience (over the traditional hotel stay) leading them to return to the area when they otherwise might not. And other affordable options – including Coldbrook RV Park, just minutes from Saratoga – are filled with amenities for the whole family.

In New York State, revenue from vacation rental properties (rented out for less than 90 consecutive days) is critical because it is subject to state, city, and local taxes… But wagering on short-term rentals is not as lucrative an investment strategy as many believe, cautions Scuola. There are website, processing, and other fees, resulting in high operating costs reducing the profit margin. “Profits are not what people think. It’s very costly on the operation side…Everybody thinks you’re going to get rich off short-term rentals, but you’re really not. You have to clean every two days and cut the lawn frequently, so whenever anyone’s there, it looks pristine. You want that first impression to be what they expect it to be.”

In April, Peerless Companies will be launching a new booking software on their website to provide a reduction in those fees to clients. As a STR co-host, they offer another layer of transparency to hosts, allowing them a look behind-the-scenes at communications, marketing, and property management.

TAKING THOSE ODDS

Preserving the majestic character of the city comes at a price. The economic opportunities the business community will soon experience from hosting the historic Belmont Stakes race, must be approached with an eye on how STRs affect housing accessibility and affordability in the long-term housing, and home ownership markets. “There is a ton of affordable housing going up and the city as a whole is trying, but it’s hard to do it in the footprint we have,” said Scuola. “Everybody is worried about keeping up with the Jones’, but when construction costs are higher, it becomes too expensive to be able to afford to lower the rent without an infusion of money from federal tax credits, like the Low-Income Housing Tax Credit (LIHTC).”

Peerless Companies manages Coldbrook RV Park, affordable apartments, and single-family homes in Saratoga County.  They are mission-focused, he said, and Saratoga is a great little city with a great community, but when the government gets involved and puts regulations in place, costs become excessive.

To limit the negative impacts of a glut of rental properties remaining vacant most of the year in Saratoga’s neighborhoods, regulations limiting STRs to only owner-occupied properties have been proposed. Under the proposed legislation, owners must reside in the property for at least 185 days/year and, as of July 1st, will have 60 days to register as a STR. They must pay a $1,000 registration fee (across two years), and for the associated costs of fire inspections, insurance, etc. There would be a $200 penalty per day for both booking services and hosts for not registering a unit.

“It’s important for my clients that I get them prepared for what’s to come, but in my opinion, it’s going too fast,” said Scuola. “There has to be taxation at some point on short-term rentals, but it’s a matter of how you do it and what is required. The proposed legislation is too much and is being pushed too fast. They need to think about the effect and the ramifications to follow. They need to take time and look at other successful models in the state.”