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Short Term VS Long Term – Which Rental Is Right For You?

Short-Term Vacation Rental vs. Long-Term Vacation Rental

Given the sheer number of short-term vacation rentals on Oahu, it’s surprising to learn that only 816 of these short-term rentals are currently legal. New short-term rentals outside of specific areas have been banned since 1989. Legislation may soon change that, but don’t expect the Honolulu City Council to approve or the mayor to sign any new law until at least this summer. If you’re considering renting out your property, doing so via the long-term vacation rental route comes with fewer obstacles from a zoning perspective, but it may also hinder your ability to enjoy the property when you want to.

Short-term Rentals

In Honolulu, there are two types of short-term rentals, both of which are rented for less than 30 days by the guests. A “transient vacation unit” consists of properties where the owner is not present, and the entire house, apartment or condo is rented to the guest. The other type of short-term rental is the traditional bed and breakfast, also known as a hosted rental, with owners living on the property and renting out extra bedrooms or cottages.  However, those are not the regulations for most of Oahu, which does not permit rentals for less than 30 days, the classic “short-term rental.” Much also depends on homeowner and condo association rules, which may not allow any type of short-term rental, even if the rental exceeds 30 days.

Long-term Vacation Rental

Long-term vacation rentals are identified as those in which visitors stay for six months or more. They don’t have the same sort of restrictions found with short-term rentals. Some homeowners buy property in Hawaii with the intention of renting it out, but before doing so, perform your due diligence. While short-term rentals are only permitted in Oahu in a Vacation Destination Area (VDA), long-term rentals are allowed outside of VDA areas.

While long-term vacation rentals do not generate the type of controversy given short-term rentals, it’s important for the homeowner to do their research. They must check with their homeowner’s association to see if such rentals are permitted, since many HOAs allow only owner-occupied units. The same holds true for their homeowner’s insurance company and mortgage lender. The homeowner must pay the fee for a General Excise Tax (GET) business license registration, collect the tax on long-term rentals and pay these funds to the state.

One argument against long-term vacation rentals is that they deplete the amount of housing stock available for rent for those living in the area. There’s a severe housing shortage on Oahu, and the practice of long-term vacation rentals is exacerbating the problem. One reason the VDA law was enacted was for preventing outside investors from  dominating the local housing market. That may have helped when it comes to short-term rentals, but does nothing for the long-term vacation rental that could otherwise provide year-round resident housing.

Contact Us

If you’re looking to buy or sell a home or find a rental property, you need a knowledgeable, experienced realtor. We’ll help you find the right home at the right price for you, or the right short-term or long-term vacation rental. Contact Island Realty Group LLC at 808-689-7407 or IslandRealtyGroup@irghi.com.

 

Short Term VS Long Term - Which Rental Is Right For You?