Short Term Rentals (Airbnb)

From time to time, we are asked about short term rentals (STRs) common platforms for which are Airbnb and VRBO. 

The reasons for the questions vary. Some people are thinking about getting in the business or have friends or family members who are interested. Others are concerned about active or potential short term rentals in their neighborhoods. Read on if any of these is you.

Here’s a great web map the city has put together with all current properly registered STRs.

https://lojic.maps.arcgis.com/apps/webappviewer/index.html?id=9c7c144d2f074977a015cc7dce112d4d

If there’s a neighbor of yours with rental guests, they should be on this map.

STRs are any rental less than 30 days. Rentals for 30 days or more are not nearly as regulated and won’t be covered here. What follows is based on Jefferson Co. rules, but other communities often have similar regulations and there is even variance within Jefferson County.* The rules change periodically, so please confirm with Metro Planning and Design Services at the number or link below before making any commitments.

(502) 574-6230
https://louisvilleky.gov/government/planning-design
5/24/23 news about a potential rule change

The easiest short term rental from a regulatory standpoint is your primary residence. Before you say “I would never do that!” you may want to consider what some neighbors of ours did at Derby one year for a three-night rental of their admittedly very nice 3,000 sq ft home - $19,000! Airbnb did get a cut of that, but it was still very much a money making opportunity. And it’s not just Derby…

Louisville’s Bourbon and Beyond and Louder than Life concerts are examples of events that draw a large number of out-of-town visitors who are happy to pay a premium for those events — not a Derby premium, but still above the typical market rates. Also, don’t forget the major holidays when out-of-town family members like to come home. Any period when the evening news talks about how many million travelers will be hitting the roads and skies is a good bet.

One key for your primary residence is having a low or no cost place to go when your place is rented. Options include: parents/in-laws, carriage or guest houses or friends who may want to trade hosting with you when they have a rental. Or, plan your vacations during the prime renting opportunities. 

When you get into the STR business, you are basically getting into the hotel business which means cleaning and linens laundered after each check out. There are companies that will clean, launder and even do your marketing for a price. You will also need to register your home with the city, pay a registration fee and comply with certain reporting requirements. But approval for a primary residence is pretty much automatic.

Non-primary residences (investment properties) require a Conditional Use Permit (CUP). The Jefferson County STR rules limit the distance between properties with CUPs to a radius of 600 feet. This keeps popular streets/neighborhoods from becoming hotel rows overwhelmed with traffic, extra parking and a large number of unfamiliar faces. 

Here’s link showing what properties currently have conditional use permits (green dots), pending (yellow dots) or denied applications (red dots):

https://lojic.maps.arcgis.com/apps/webappviewer/index.html?id=5354a2c2957743b38dc027cbab0b8ec5 

Where it gets tricky is you probably can’t get a CUP until you own a property. The application may be a 6-week to 6-month process. So, if you buy and get turned down or someone else gets approved nearby beforehand, you can be denied a permit and you’ll be limited to renting for 30 days or more and it’s no longer considered a STR. With more and more traveling nurses, who typically have 13-week hospital contracts, limited term monthly rentals are getting to be more practical, but not as valuable/profitable as STRs.

If a property is zoned Commercial, it likely does not need a CUP. There are commercially zoned districts along Bardstown Rd, Baxter Ave, Frankfort Ave. etc that come up for sale from time to time. DO NOT RELY ON THE PVA for zoning info. Look to Lojic.org for more accurate zoning info. You may want to make your purchase offer contingent on appropriate zoning confirmation (except that may make your offer less competitive). You can also buy homes that already have a CUP, but the rules may change on that. For now the CUP conveys to new owners, but there is some lobbying going on that would limit the CUP to the current owner, thereby expiring at the time of sale.

Competition is getting fiercer so there’s no guarantee you’ll make money and some chance you may even lose money. 

Here’s a link to Metro rules for short term rentals:
https://louisvilleky.gov/government/planning-design/short-term-rental-information

*The rules vary in some cities in Jefferson County that have zoning authority. Anchorage, Douglass Hills, Graymoor-Devondale, Hurstbourne, Indian Hills, Jeffersontown, Lyndon, Prospect, Shively, and St. Regis Park have not adopted any STR regulations in their Land Development Codes and STRs are thereby not permitted. Middletown and St. Matthews have adopted STR regulations in their Land Development Codes that are different from those for Louisville Metro. 

4/7/2023 10:06 AM