Vacation Rental Regulations Coming for Bozeman?
The vacation rental market in Bozeman has grown quickly over the past couple of years. The presence of online short term rental sites like AirBnB, have made it easier for any property owner to advertise their home to the world. Vacation home sales increased drastically across the US in 2014, partly due to their wonderful return on investment. But as the market has grown, more and more concerns have been raised about the lack of regulations of vacation rentals in Bozeman.
Bozeman has been honored as a top 16 world wide destination and a top ten ski town in the United States. Coupled with Big Sky’s summer growth (and very consistent winters of course!) as well as Yellowstone’s increasing popularity, it can be easier to find short term renters than in other Montana markets.
While short term rentals have provided Bozemanites with additional revenue potential in their properties, others have grown concerned about the commercialization of neighborhoods and rising rental rates. As more investors opt into the short term rental market, that leaves less home inventory for the long term rental market. Bozeman has had a vacancy rate at or near zero for several years. It has been an owner’s market, with most owners being able to filter rental candidates based on lease terms and rent rates. In general, having even less inventory on the rental market will lead to higher rent rates.
To have a vacation rental in Bozeman, home owners need to have a permit. However, vacation rentals have not been regulated. According to the Bozeman Daily Chronicle, 280 vacation rentals were listed as active on AirBnB. City planning only has 6 registered vacation rentals in the City of Bozeman.
Although vacation rentals only earn about 10 to 15% of their full potential in Bozeman, having a successful one can lead to a wonderful return on investment. A vacation home priced at $250 a night would net earnings at $40,000 plus if it was filled only half the year.
Bozeman Commissioners will explore the vacation rental market and determine if regulations will be necessary. They will discuss the issue on June 27th. Commissioners have had affordable housing on their list of priorities for a couple of years. The vacation rental battle will probably fall into this discussion as commissioners try to find ways to lower the average price of homes for sale as well as homes for rent.