Highlights
- STR operators must register annually and pay a $914 fee to the county.
- Occupancy Limits: Rentals are limited to 12 guests and must comply with hosted and unhosted stay rules.
- STR hosts need a Transient Occupancy Tax Registration Certificate and are responsible for tax collection.
- Certain properties, like ADUs and rent-restricted homes, cannot be used for short-term rentals.
- To avoid fines, platforms like Airbnb include valid county registration numbers in listings.
According to recent data, the average home price in Los Angeles is $1.2M in August 2024, trending down -2.1% year-over-year. Moreover, the average home price per square foot is $714, and it is sold for $1M.
If you’re considering investment properties, Los Angeles is an attractive market. Another big trend is the rise of short-term rentals. While you wait for your property value to grow, you can take advantage of the demand for short-term rentals in the city.
In October 2024, Los Angeles, CA’s average rent is $2,157. Los Angeles is the most expensive city in America, with rents 39% higher than the national average of $1,557/month.
This makes Los Angeles one of the top cities for short-term rentals. It’s a great time to join this market. Plus, owning a property in LA lets you enjoy the beaches and vibrant lifestyle whenever you visit.
In this article, you’ll find a complete guide to buying short term rentals Los Angeles good investment area.
Short Term Rental Laws Los Angeles
Los Angeles Board of Supervisors has approved new rules for short-term rentals (STRs) in unincorporated areas of the county. Starting in mid-September, STR operators register with the county and follow specific rules.
The law defines STRs as rentals for 30 days or less and says they must be the host’s main home. Operators register yearly with the L.A. County Treasurer and Tax Collector (TTC) and pay a $914 fee. Hosts, or someone they choose, must be available by phone at all times to handle concerns or complaints.
How to Get a Home-Sharing Permit in Los Angeles?
Applying for a home-sharing permit in Los Angeles is pretty simple. You’ll need to show a photo ID, like a driver’s license, passport, or state ID. You also need to provide at least two documents that prove the property is your main residence. These can include:
- A valid California vehicle registration certificate
- A valid California voter’s registration card or voter registration status
- A recent vehicle insurance bill
- A recent health insurance bill
- A pay stub or paycheck from the last six months
- A current lease or rental agreement with the landlord’s or property manager’s contact information and signature
- A current property tax bill showing the homeowner’s exemption
City Of Los Angeles Short Term Rental Laws For Properties And Activities
Some properties, like accessory dwelling units (ADUs) or rent-restricted homes, cannot be used as STRs. STRs also cannot be used for big events or parties. The number of guests is limited to 12, with no more than two people per bedroom plus two additional guests.
Guest stays fall into two types: “hosted” (when the host is present) and “unhosted” (when the host is not present). Hosted stays are limited to 90 days a year and must be booked for at least two nights. Unhosted stays can be for as little as one night. Breaking these rules could lead to fines of up to $2,000 daily or double the average nightly rate, whichever is higher.
The California Coastal Commission must review this new ordinance before it applies to county coastal areas.
While these regulations are new for the county, the city of Los Angeles has had STR rules since 2018, requiring registration and limiting rentals to primary residences. Recently, the city added a new rule that STR operators need a police permit to help stop large parties and illegal activity.
STR Marketplaces Like Airbnb Have Responsibilities
Companies like Airbnb and Vrbo must now include valid county registration numbers in all listings. If they don’t follow this rule, they can be fined up to $1,000 per day per violation.
New Law Requires Lodging Tax Compliance
The new law also requires STR hosts to follow lodging tax rules. They must get a Transient Occupancy Tax Registration Certificate, collect Transient Occupancy Tax (TOT) from guests, and pay this tax to the county.
Unlike in Los Angeles, platforms like Airbnb and Vrbo don’t collect TOT for their county listings, so hosts are responsible for managing the taxes themselves. Avalara MyLodgeTax can help STR hosts with tax compliance and make the process easier.
Short Term Rental Los Angeles Good Investment Cities
The following are potentially the best cities for good short term rental investments in the Los Angeles area:
- Malibu
- Santa Monica
- West Hollywood
- Pasadena
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Tips for Investing in Short-Term Rentals
Short-term rentals have become popular with real estate investors for a good reason. When done right, they can provide a steady income that outshines regular rentals. But to succeed, you need to make smart investment decisions.
Here are some helpful tips:
- Organize your finances so you can afford a vacation rental.
- Choose the right location to attract a regular flow of guests.
- Learn the local rules about home-sharing.
- Start looking for the perfect vacation rental.
- Renovate and furnish it to make it more attractive.
- Get a city permit for short-term rentals.
- List the property for rent.
- Keep your rental in top shape with regular maintenance.
- Have a solid plan for managing guests.
Summary
Understanding the new short-term rental laws in Los Angeles is essential for anyone looking to invest in this market. By following the registration and tax requirements and being aware of occupancy limits and property restrictions, you can set yourself up for success. With the right approach and location, this could be a short term rental Los Angeles good investment area that provides excellent returns.
Disclaimer
The content provided on this blog is for informational and educational purposes only and does not constitute financial or investment advice. While we strive to provide accurate and up-to-date information, you should not rely on this content as a substitute for professional financial advice. Any financial decisions you make are done so at your own risk, and we encourage you to consult with a licensed financial advisor before making any investment decisions.
The views and opinions expressed in this blog are solely those of the authors and do not necessarily reflect the views of any affiliated entities. The information presented here is not intended as a solicitation or recommendation to buy, sell, or hold any financial product.
