What happens in Vegas, stays in Vegas?
The city may have a reputation for forgiving indiscretions, but not-so-much if your misdeed involves Airbnb hosting without the proper permit. In fact, the regulations around short-term rentals are incredibly strict in Las Vegas, and only the serious Airbnb entrepreneur will invest the time and money required to clear all the necessary hurdles.
Dillon is very familiar with the complex process of licensing in Las Vegas. He and his wife found their dream home in the city, but it was a little large for just the two of them. They decided to pursue Airbnb as a way to maintain the home and generate extra income. Unfortunately, Dillon was ‘turned in’ by an anonymous tipster, and forced to cancel upcoming bookings until he received the appropriate permit.
Today Dillon walks us through the process, explaining the different types of available short-term rental permits, the fines associated with illegal hosting in Sin City, and the reason why regulations are so severe. Listen in as he shares the extra steps he took to secure the coveted Special Use Permit.
Why Dillon chose Airbnb over long-term rental
- Make three to five times more with short-term
- Make money rather than break even
How Dillon got caught doing Airbnb without a permit
- City putting together task force to go after hosts
- Until then, rely on neighbors to turn people in
- Anonymous tip may be from competitors with permits
The financial hit Dillon took pursuing the licensing process
- Seven months lost income (bookings)
- $2,000 in costs associated with obtaining permit
- Approximately $10,000 total
The fines associated with illegal Airbnb hosting in Las Vegas
- Dillon received warning first (cease and desist)
- Given ten days to come into compliance
- Had to cancel future bookings ($50 each)
- Can be fined for noise, lack of business license/permit ($2,000/day)
Why regulations are so severe in Las Vegas
- Scotch Eighties neighborhood (not gated)
- Mansions owned by older, wealthy citizens
- Homes purchased for Airbnb (parties)
- Disruption of quiet area led to legislation
The Conditional Use Verification permit
- Only available to small subset
- Owner-occupied, renting portion of home
- Pay $500 to obtain approval
- Must renew annually
The process of obtaining a special use permit
- Go to Department of Planning, set up process
- Attend pre-application meeting (architectural drawings, plan)
- Appear at Planning Commission hearing (automatic denial)
- Appeal to City Council ($500 fee)
- Once approved, valid permit stays with property forever
How Dillon took extra steps to receive approval
- Wrote letters to City Council members, mayor
- Met with individual members of City Council
- Asked for feedback on improving plan
- Got neighbors on board
The rules around short-term rentals outside the city proper
- Illegal in unincorporated townships and county
- Illegal in North Las Vegas as well
- Anything under 30 days is considered short-term rental
Connect with Jasper
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Complete Transcript for Get Paid for Your Pad Episode 183
Jasper: Welcome to Get Paid for Your Pad, a definitive show on Airbnb hosting, featuring the best advice on how to maximize profits from your Airbnb listing as well as real life experiences from Airbnb hosts all over the world. Welcome.
AD: This episode is brought to you by Hostfully. A company that helps you make beautiful guidebooks for your listing. Make your own at hostfully.com/pad. And as a special to all Get Paid for Your Pad listeners, get a free guidebook consultation after you make your first guidebook
Jasper: Hey everybody, welcome to another episode of Get Paid for Your Pad, I am here in Las Vegas and I’m recording this live with a new Airbnb host who is going through the process of getting all the legal permits in Las Vegas. I’m excited to hear what it entailed. Dillon, welcome to the show.
Dillon: Thanks so much.
Jasper: How did you get into the Airbnb hosting thing?
Dillon: I was a little reluctant because I wasn’t sure how long of a proliferation period there was going to be, and I wanted to start to see when that was going to happen and see if I was willing to jump into the game at that point. They’d just changed all the laws here. I was going to buy another multi-family house, I own apartment buildings, and my wife and I were aiming to buy all the multi-family houses, but we just found a house we fell in love with. It was bigger than we needed, so we were trying to think about how we’d make income from it, we could make roughly three-five times the amount with renters – and they wouldn’t have to be in my space all the time. So, it was perfect.
Jasper: Why didn’t you want renters?
Dillon: I have a lot, currently. Long term, there’s deferred maintenance issues. They slowly destroy the house. As that happens, I’m liable to pay for it. But by being able to charge higher nighyl costs and cleaning fees, I can make more money and not just break even.
Jasper: So, you started with Airbnb and then got in trouble with the city
Dillon: Las Vegas is a different animal – the city is like the north side of the town. If you know Vegas, all the way to the mountains in the west, which is called Summerland. That’s still Vegas, but for most people, it’s just the strip. A lot of that is county, or unincorporated townships. Clark County is actually illegal – you can’t do Airbnb there. In the city of Las Vegas, it’s a permitted process. How I got in trouble: The city now is putting together a task force to go after people, they didn’t have the manpower before. What they were relying on before was neighbors to turn people in. When the code enforcement guy came over, he was a really cool guy, and we talked, I said, how did you find me? He said he got a stack of 15 today. What it looks like is someone in this neighborhood put together their own list and put them all in at the same time anonymously. This could be Airbnb profiles that don’t want to share markets
Jasper: to kill competition?
Dillon: It could be. With the seven months with process, with the loss rents I had, I’m into about $10,000. When you have other people in it for 10-grand, and they’re trying to do it without permits, they might turn people in. I can see why, I don’t want to, but why other people in my position might want to.
Jasper: So, you see other people doing it illegally and they should do it as well.
Dillon: They’re lowering the market rate and its’ costing – I can’t make my ten-grand back because all these people are swamping the market.
Jasper: Did you get fined?
Dillon: The first is a warning. They are finding all these ways to fine you. They can fine you for noise violations, lack of business license, lack of getting a permit, and when they stack all these up, it ends up being about 2-grand a day.
Jasper: So, first you get a warning and you had to stop hosting immediately. Did you have to cancel?
Dillon: By the way, it was before they changed the laws. I think they might be moving toward being able to charge you right away. It was a cease and desist and I had ten days to come into compliance. They did want me to cancel everyone in the future, and that was $50 for every booking. We snoozed our profile so I don’t think people can give us feedback if it’s snoozed.
Jasper: Don’t you get that review, though? That didn’t show up on your profile?
Dillon: Maybe there was a way around it. My wife manages it, so it’s not my expertise.
Jasper: let’s talk about the process of getting a permit. What we’ve seen over the last few years is that other cities tend to copy regulation and process from other places. What’s happening here could happen in the future. You already mentioned it took 7 months.
Dillon: The big law changes they just had, and by the way, I thought for sure this is the hotels. They’re the ones that are behind this. As far as I can tell, the hotels don’t care. We’re small fish. It’s the small communities that don’t want parties. There’s a neighborhood south of where we’re at and it’s all nice mansions, not gated. Because of that, they had people buy property in there and do this. It’s basically those who built Las Vegas. The older, super-rich who run stuff. They thought it was unacceptable in a nice, quiet neighborhood. That’s the genesis for how this happened. The big change they did, they made it so each person who wants to do a short-term rental has to go through a special-use permit process. So, that means the planning commission and the city council have to make a decision on this thing. There’s a small, sub-set group who are not supposed to, if they meet the conditions of it, they can pay the fee, $500, they can apply and get it approved, those conditions, important to note – if it’s an owner-occupied place, you have to own it and live there, and it’s a 3-bedroom place. If you have at least 2 bedrooms you’re able to rent. It’s a small-subset. If you have that situation, you’re allowed to do.
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Jasper: So, you have to live in the place, or own it, and you can only rent out a percentage of your house? That’s similar to Amsterdam. There, it’s 40 percent.
Dillon: You’re allowed with the permit. You still have to go through the process. It’s such a small window. They had some elderly people they didn’t want to make this too tough for. You have to go to the planning department. A lot of people think they live in Vegas, but they don’t. If you know Vegas, Desert Inn is one of the big streets. The street east isn’t Vegas. You go a couple miles north of the strip and you’re in north Vegas. Las Vegas is the main government body here. If you live in Vegas, which you can pull up a city map, it is where a lot of the population is located. You go to the planning department here. You go to set up the application process. In a few weeks, they’ll do a pre-app meeting. They want to review the process and tell you how difficult it is. You’ll need your architectural drawings. I got an architect to do the drawings, she’s reasonable, you have to have your plan together, and after that, it’s the planning commission. It’s a televised thing. You have six commissioners that preside over this huge hearing. You have to wait 2 months or so, and you have this meeting and they deny you. For a special use permit, you’re asking for something that’s outside the normal use. What happens is the department looks at it and says it doesn’t fit. So, they recommend denial. Then, planning commission, in general, is going to go with denial as well. It’s what I’ve seen. Then, you have the ability to appeal for $500 and have the city council look at it. If you’re serious about this, you should meet with your commissioner. You have to figure out what ward you’re in. Jasper’s laughing because it’s so involved. You have to figure out what section you’re in, and if you’re in ward 1, which is the city council woman Louis, for the previous 4 years she’s never accepted a special-use permit for this. That’s a tough one. But, if you meet with your commission ahead of time, you might be able to get them to not deny you. Then you’ll go on to city council. A lot of times, you get denied. I did. Then I appealed. And had to wait another two months to go in front of city council. I was committed and I wanted to learn. So, I wrote extensive letters and met with every council person I could. I wrote the mayor. I figured who were the toughest people on this. It was my ward 5, Ricky Barlow councilman, Louis, ward 1, and ward d3, Bob, all councilmen, those three were spearheading this thing. I focused my efforts on meeting them. If I could get a good portion of them, I could get it. Everybody said yeah. But I did my homework. I put together a plan, which wasn’t great at first. I kept on asking how I could make this plan better. They said, you should see how this person does it. I did it. I put so many hours in. I figured out a plan. Part of is it, you’ve got to get them on board. The other part, if you don’t get your neighbor on board, they have the ability to shoot you down. I saw as many as 120 neighbors too shoot someone down. They’re going through this process, and all the neighbors don’t want it. They already pissed off their neighbors and the city council are going to take that really seriously. They don’t want to get those complaints. That’s why they increased those fines. They’re unavoidable. You can’t lease your house and let the entity get the fine, they’re going to get that money.
Jasper: You were talking about the different parts of the city, Vegas vs North. You are located in the city, correct? For the other areas in Vegas there are different rules?
Dillon: For all the unincorporated townships, and the county, it’s illegal. In North Las Vegas, which is different, it’s illegal as well. So, everywhere except the city it’s illegal.
Jasper: It doesn’t’ matter what you’re renting, it’s just illegal. That’s it.
Dillon: Short term rental is less than 30 days, that’s how you define it
Jasper: I’m surprised. It’s a place where a lot of tourists come, that’s an understatement – it’s probably one of the biggest tourist destinations in the US. So, you’d think with these many visitors they’d make it a little easier. The process you explained sounds ridiculous.
Dillon: What’s interesting is that the history is, there’s nothing here, but then it became a gambling capital, but then they ended up becoming legitimate. The way they became legitimate was they started being involved with government. We have a a huge element that the crime families are involved. The people in council are nice and I didn’t get that vibe from them at all. I did hear something about having road work when we didn’t need to because the mob runs that. They continuously do road work so they can make money.
Jasper: So, if I was to summarize – it took you seven months, you get denied by default and then you appeal and make friends with the people that vote. Is that fair to say?
Dillon: I think getting their advice and having good relationships with your neighbors and be ready to spend a couple thousand dollars to go through. It was seven months for me because I had the two city council meetings. They’d just changed the laws that day, and they wanted me to come to the next meeting. IT should have been five but it’s about seven
Jasper: You have the permit and how long is it valid?
Dillon: It stays with the property forever.
Jasper: That would increase the value of the house?
Dillon: Yeah, it’s really cool. If people know how to do this here, I know people that are crushing it with Airbnb, there are some untapped areas where people want to stay. Now that I have this one, I want to buy places around here and keep doing it.
Jasper: You started hosting a few weeks ago, how is that going?
Dillon: It’s good, it’s figuring out the price point, we’re getting bookings left and right. It’s like, I have it on my wife’s phone and I hear it go throughout the day.
Jasper: Awesome, man. Good information. For the people listening, if you’re interested in doing this in Vegas, reach out to Dillon. He’s willing to help out. I’ll put your details in the show notes. I think it’s cool you didn’t take no for an answer, you stuck in there and made it happen.
Dillon: If someone wants me to help them go through the process and do some of these things, I’m willing to. Good luck everybody.
Jasper: Thanks a lot for your time, Dillon. And all the listeners, thanks for listening. Of course, Friday we’ll be back with another episode, a news episode. I just wanted to mention there’s a recently published book of Get Paid for Your Pad, I’ve been getting some good feedback. If you’re listening and want more, you can get the audiobook by signing up with Audible. With that, thanks for listening and see you next time.