LA Cities Tighten STR Regulations: Homeowners Eye the Month+ Model as Remote Work Remains Here to Stay
By: Brad Greiner, CEO of Open Air Homes and OpenAiRE Brokerage
This is a Two Part Series on Month+ Rentals in Los Angeles. The first is for Homeowners choosing this route, and the second for Guests looking to stay for extended periods of time.
Los Angeles, a hub of culture, entertainment, and sandy beaches, has witnessed the tightening grip of regulations around short-term rentals in many cities. From Santa Monica to West Hollywood and many of the beach cities like Hermosa Beach, Manhattan Beach, and Redondo Beach, the stance on short-term rentals has been restrictive. And while rumors circulate that Santa Monica might soon reconsider its stance on short-term rentals, the specifics of such regulations remain under wraps as of this writing. Nevertheless, amidst this uncertainty and legal gray areas, a new trend is making waves: Month+ rentals.
Cities with STR Restrictions and the Month+ Solution
In the labyrinth of LA’s rental regulations, certain cities have distinctly outlined their stance against short-term rentals. Cities such as Santa Monica and West Hollywood have imposed clear bans. Meanwhile, Hermosa Beach, Manhattan Beach, Redondo Beach, and Beverly Hills are currently treading a legal gray zone with ongoing lawsuits that challenge their rental regulations. As these lawsuits progress, the final rulings remain to be seen.
Yet, the consistent thread across these cities is that 30-day rentals are part of the legal framework under California law, and we believe will remain a viable option for homeowners in cities where there is an absence of short-term rental regulations. Homeowners looking to remain on the right side of the law have recognized Month+ rentals as the only viable, legal alternative to short-term stays in these areas.
While it is reported that up to 1 out of every 5 rentals in Los Angeles may be breaking the law, there is a path forward for hosts who wish to follow the law and still monetize their homes. At Open Air Homes, all of our homes are in compliance, and we only work with homeowners who wish to follow the law when renting out their homes. The good news is that while the laws may be strict in many cities, Month+ rentals are an answer that keeps you in compliance, and still offsets the cost of second home ownership when you are not in residence.
Why Choose Month+ Rentals?
Locking into a year-long lease might not be feasible for many homeowners, especially those who wish to utilize their homes during parts of the year. However, Month+ rentals, stays extending beyond 30 days, offer a sweet spot. Classified as long-term in California, they conveniently bypass the maze of short-term rental guidelines.
These rentals require a legal Real Estate brokerage, like Open Air Homes, to complete the rental and have guests sign a CAR form, which protects all parties involved. The same form is signed for guests staying a year in your home.
Transient Taxes vs. Potential Revenue
While transient occupancy taxes target stays under 30 days, essentially classifying them similar to hotel accommodations, Month+ rentals manage to side-step this, because, after all, these guests are not transient under the law.
Although the potential revenue you will likely earn from Month+ rentals might be 20-30% less than traditional short-term stays, it comfortably beats standard year-long lease earnings by 20-40%. And gives you as the homeowner the potential to stay in your home for a portion of the year, which is the primary reason homeowners come to us, hoping to offset the cost of their second home when they are not in residence.
Riding the Remote Work Wave
The remote work trend isn’t just a fleeting phase; it’s the new normal. This shift has bolstered the demand for Month+ accommodations. Platforms like Airbnb showcase this trend with a surge in 1-3 month bookings.
For homeowners constrained by city regulations, this trend presents a timely opportunity, and one that we forecast will only continue to grow as many businesses choose to loosen their office policies to retain top talent. Top talent often make more money and pay top dollar for rentals, giving them the ability to travel more often and work from wherever they are at that moment.
Hillside Hideaway Guest House by Open Air Homes
Navigating RSO Properties with Month+ Rentals
Rent-stabilized (RSO) properties in LA come with their unique challenges regarding short-term rentals. But many homeowners of RSO properties that wish to use their property for a portion of the year are turning to Month+ rentals.
The city of Los Angeles strictly does not allow short-term rentals in RSO properties, and yet there are thousands of these homes that are part-time residences for homeowners, and these homes would sit vacant and incur costs that are often out of reach for many homeowners who own these homes, and Month+ rentals are allowing them to continue to pay their mortgage, use the home when in town, and rent out to happy guests when out of town.
Month+, or Medium Term Rentals, Are The Future and Will Remain A Viable Path
Month+ rentals are not merely an interim solution for stringent regulations; they represent a holistic response to the evolving dynamics of work and travel. As the legal backdrop remains in flux, especially with potential changes in cities like Santa Monica, Month+ rentals stand as a beacon of stability.
At Open Air Homes, we’re at the forefront, guiding homeowners through this transformative rental horizon, always ensuring compliance, profitability, and peace of mind.
