Government Impact – Zoning & Licensing are Key

Zoning and Licensing are the two twin sisters of success to your vacation home ownership experience. Local governments have a duty to regulate both and have made inroads to address the needs of the communities, residents, second home owners and vacationers alike. (No easy task)

“Due to concerns that the county’s current policies regarding the regulation of vacation rentals, also popularly known as short-term rentals, are overly broad and lacking clarity, the Washington County Commission voted to put a six-month pause on the approval of any new vacation rental applications for the unincorporated parts of the county earlier this month”

Reads a recent article from St George News where they reported a 6 month ban at the ‘County’ level on short-term or nightly vacation rentals by the County Commissioners. They are working to balance the interests of all parties and need time to “get it right” as the trend for nightly rentals continues its climb in popularity with investors and tourists alike.

If you’re in the market to buy a second home in Washington County it may pay to work with an expert in operations, management and zoning. Know the details before you buy.

If you already own a second home, and you’re thinking of ways to cash-flow it but are not sure about zoning or have questions about rates, management or marketing – reach out to us for a free no-obligation consultation. About 20-30 minutes of your time will produce a great deal of insight as you navigate the market.

The locals ‘Guide’ to owning a Vacation Rental in the Greater St George area

If your client or yourself are getting ready to buy a second home in the Greater St George area, and part of the economic strategy is to rent it out when not using it, then you may need some insight on what PUD’s or zoning laws allow, their associated ordinances and licensing requirements and general strategies to make the experience successful.

Escape Properties, a member of VMRA (the Vacation Rental Manager Association) and only National Association of Realtors designated RSPS (Resort and Second Home Property Specialist) firm has been managing and operating vacation properties since 2008 in the area with thousands of successful guest stays.  We have spent a great deal of time and effort compiling this information for your benefit.  Where possible we have contacted municipal authorities to get the most accurate and relevant information as possible.  


Feel free to reach out to us for a specific analysis of your vacation
property – no obligation.  (435) 414-1525 or email  kendall@escape2stgeorge.com.


Vacation Rental homes have been around for hundreds of years in Europe.  In the United States most vacation homes have been concentrated to sea side communities or mountain cabins.  In the last 15 years with the advent of what is termed as the ‘sharing’ economy there has been a boom in the FOR RENT by OWNER options across the country and globally.  

Communities like St George that are located near destinations like Zion National Park or the Grand Canyon or have developed a sports tourism options have seen a boom to nightly rentals and second home ownership.  

There are 20 individual cities within Washington County and all with vastly different approaches to short term rentals.  Not all areas are geographically ideal for a nightly rental business models.  As such this article will focus on what we term as the Greater St George area (90% of our population) and will cover the cities of St George, Washington, Hurricane, Santa Clara, Ivins and La Verkin.  The cities of Toquerville, Rockville and Springdale are  near enough to Zion National Park that we will address them in a follow up article.

 

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St George

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Washington

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Hurricane

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Santa Clara

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Ivins

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La Verkin

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Springdale

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Toquerville

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Pine Valley

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New Harmony

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Rockville

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Hildale

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Veyo

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Dammeron Valley

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Leeds

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Virgin

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Enterprise

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Apple Valley

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Central

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Grafton

Our team gets asked often “Where is the best place to buy” a vacation home.  The simplest core answer is – “where ever it is allowed”.  Sounds simple right.  IF the property is not permitted for nightly rentals, and you want to off-set your costs with renting it out nightly – you are wasting your time and our time thinking about it.  There isn’t enough money or motivation to deal with code enforcement violations, angry neighbors, tax implications etc. to be successful with non-zoned units.  (Unless you are interested in operating the property as a ‘temporary housing’ property.  Ask us for details on this option)

 

To help in our discussion, we need to review a few terms and types of lodging options one may encounter in Southern Utah.

Hotel/Motel
Zoned commercially or high-way commercial.  Located in town on major traffic by-ways.  Single rooms with single bathroom, mini-fridge.  Large parking lots, no group gathering areas without a fee, elevators, limited views.  We have a few nice hotels – clean, good amenities, comfortable – but we don’t much in the way of a resort hotel that you want to take a vacation to per se.  They are building one in Ivins near Tuacahn.  I think it will have its own degree of success but may or may not have any opportunity for private unit ownership.

Glamping/Yurt/RV

These are options, but will not be discussed in this review.  Glamping is ‘glorified camping’ and is usually in a YURT or Tent.  There are a few that have popped up in the area around Zion National Park and are popular with the urban camper.

Shared house
(room for rent).  Also known as the Airbnb Model.  Owner lives on site.  Offers a space in the home for rent, usually a room with access to a private bath but all other areas of the home typically are shared.  Grandma’s house falls in this category.  Usually only accommodates 1-2 persons but may vary.  (In St George, even staying at Grandma’s house is illegal IF you compensate the old lady in cash or in kind)

Guest house private space.  Like the room for rent, but more private.  Owner still on site but the unit is separate with private kitchen/kitchenette.  Accommodations for 1-4 people is common.  

Whole Space (May be condo/townhouse or single-family home) May have a community pool with other shared amenities or may be all private amenities.  Most popular are homes with private pools and these are the hardest to find.  Units typically accommodate between 1-14+ persons (some up to 100) IF you’re looking to buy, this is the type of accommodation you will want.  Focus your time on WHOLE HOUSE options.

Management Options There are two types of management styles we will discuss here.  OPEN and CLOSED.  OPEN means that the home owner can choose who manages the unit (A management company of their choosing, themselves if they live in the county).  The selection of management companies may be limited to 3-4 different approved firms.  CLOSED means that the home owner is required to use a single designated property manager.  Other restrictions may apply.

How’s the Second Home Market in St George?

Well . . . that depends. Are you looking to Buy, Sell, Lease Out or Vacation Rental a property? Each segment is very different. Which area are you interested in? (Lease Out- in this text is reference to a traditional rental investment or non-nightly rental with a rental or lease period of 12+ months)

BUYING |

At the time of writing this post (2/28/21) there are only 252 ACTIVE residential listings available – the lowest priced is a 1 Br. 1 Ba park model mobil home in a 55+ community and at the high end we have a 5.58 million dollar estate with very little “Investment” properties in between.

Take out the 55+, the manufactured and the homes outside the traditional ‘Investment’ window ($400k or lower) and we’re left with only 38 units that an investor may want to look at! Only 15% of our available inventory is in the “investment range”! Are these good investments with healthy cash flows or are they too over priced with lots of difered maintenance issues?

Use of our ROI sheet and analysis will be more critcle than ever.

Is it possible to find a good investment property in the St George market today? YES. But we recommend the following:

1.) Be prepared. Your offer is most likely to be accepted if it is a CASH offer. Be prepared to compete and pay 3-8% above asking price. IF not a cash offer, then a good down payment.

2.) Be patient. Keep looking for good buys and not buying from the fear of scarcity. I beleive the market will have to make a correction. When the correction occurs rents may take a hit and you may find yourself upside down.

3.) When the opportunity presents itself – act quickly. Get the property under contract and then ANALYZE the hell out of it. IF you want to analyze the opportunity before making an offer and getting it under contract you’re going to find that your 48th in line. Get it under contract so its just you and the seller – no one else. Let the noise settle. It is FREE TO WALK AWAY if its not a good deal.

The agents at Escape Properties are exceptionaly qualified to analyze investment properties for rental analysis and looking at trends and risks as well as looking at ways to improve a property to find its best use.

Team Recommendation: Hold. Conserve CASH and watch for deals. WHEN the deal comes – we will need to ACT fast. Ask to be added to our WATCH list.

SELLING |

I have never seen a stronger sellers market before. YES – now is a great time to sell . . . . if you need the cash for another opportunity. Otherwise its a really bad time to sell. Don’t sell just for the sake of selling unless you have a plan for your capital. If you sell high and buy high it makes no sense. I recommend analyzing your cash flow first. IF you are making good cash flow then the smart thing to to is to HOLD on to the asset and look at ways to improve cash flow. (There’s an entire discussion on that topic in itself).

Example to SELL. I had a condo in Brian Head, a ski resort about an hour north of St George. I sold in less than 24 hours for top dollar. I was producing about $600/mo positive cash flow on the unit. (I only paid $32k for the unit and sold for $71k) I wanted the cash to invest in a non-real estate opportunity that produces about $1000/month instead. We invested in a food truck that someone else operates it and I hold an equity position in the asset too.

Example to HOLD. I have the opportunity to sell another property I own in Hurricane – a vacation rental. Its cash flows are much stronger then our Brian Head units and I could sell the unit easily for $450,000 today. (We paid $200ish) But we looked at the cash flow – and the properties utility – and have decided not only to hold on to it but we’re activily building 4 more cash-flow producing units. Because we already own the land and we know the vacatin rental market based on the properties location and amenities we know the cash flow on the additional investment will be strong regardless of what the BUY/SELL real estate market does.

LEASING |

If you have a second home in the St George area and you’re not currently leasing it you may want to really look at how strong the demand is at this time. If you’re not visting as often or the cost of holding is taking its toll on you (negative cash flow each month) this is a supper great time to lease – top dollar rents, tenants who want to stay long-term and willing to improve your property at their expense – all realities right now as the inventory for quality rentals is tight.

If your property values between $1 and $450-500k you’re in the range that using it as a rental investment may be your best use of the asset. Let’s take a look together and analyze your cost vs income.

All the associated risks of renting remain (damages/wear and tear etc.) but the revenue stream has increased substaintially and therefore is worth looking at. It is FREE to analyze a property and there is no cost to do so. Set up a time by clicking here to chat.

LETS MEET

Vacation Rental a Second Home |

Thank you Gov. Newsom of California and other business killing Govenors for shutting down everything in your state and Thank You UTAH for staying OPEN for tourism – despite the goofy mask thing and other adjustments. Few people are traveling to Disneyland and the beachs etc. due to COVIDrestrictions but have felt the need to get out and social distance in our community. What has this meant for having a second home where you’re able to rent out on a nightly basis? A BOOM in occupancy and a surge in nightly rates! Business is strong and healthy and will most likely remain so for the next 12 months and beyond before returning to a ‘new normal’.

All this despite a surge in hundreds of nightly rental units hitting our market. IF you have a property that is zoned for nightly rentals and you’re not doing so – you’re missing our on very good cash flows. We should have a serious talk.

If you’re not seeing 60% occupancy or stronger – we need to talk. IF you’re at 80% occupancy – you need to raise your rates. We should talk. Click here to set up a time

BUT WHAT WILL HAPPEN after COVID? We anticipate a slowing – sure. But we also see that St George is no longer a secret either and between our amazing outdoor lifestyle venues we’re going to see a second surge as sports tourism returns in full force. In other words – come along for a great ride!

You may ask “What can I do to set my unit appart from the unit next door?” If all you are doing is competing on price – then be sure to pay down your debt service. Price wars always hurt the one with the biggest debt service payment the most. IF this is you then you may want to SELL to free yourself from the debt OR if you have a reasonable debt load you may want to look at THEMING your unit to stand out such that your rate and occupancy stay strong. (There’s a whole nother post on this topic by itself!)

Right now is the BEST time to have a vacation home in my 14 years of operations. Let’s get together to discuss strengthening your property. IF Escape Properties doesn’t currently opperate your property for you let’s discuss our services, rates and long-term success strategies. Let’s Meet: LINK