Ithaca has hit number 3 in New York State with the most Airbnb guests right after New York City and Buffalo! It had 27,000 guest arrivals and hosts have made an overall $4.3 million in total earnings!
Meanwhile, after reaching such a status with Airbnb hosting and short-term rentals, it only makes sense that the town council is trying to regulate it by limiting the number of annual short-term rental nights to 29 for Airbnb Ithaca.
The town of Ithaca is coming up with a new legislation that would limit the number of short-term “unhosted” rental nights to 29. That is, without having the host present in the property. Meanwhile, if you own a primary residence in Ithaca and you’re using the extra room in your real estate property for extra rental income, you can continue to do so!
Why Is the Town Council Trying to Regulate Airbnb Rental Properties?
There are two issues that arise with Airbnb and short-term rentals. The first one being noise complaints from neighbors of “unhosted” short-term rentals and the second being properties are getting bought for the sole purpose of renting them out on Airbnb Ithaca.
Accordingly, measures are being taken to make sure the real estate market does not get saturated with such rental properties. The majority of residents believe that short-term rentals are changing the Ithaca real estate market for the worse; real estate prices are at all-time highs and they are not showing signs of backing down. This mirrors the situation with Airbnb New York City with Airbnb regulations and laws.
Why 29 Days for Airbnb Ithaca?
According to Ithaca.com, Ithaca’s town supervisor Bill Goodman stated that the 29 day number was decided after careful consideration of the town’s short-term rental needs with major holidays and weekends that witness an influx of Airbnb guests. These major events are festivals, football weekends, or Cornell graduations.
What’s the Future Holding for Ithaca Airbnb Investors?
The new legislation is going to rather eradicate Airbnb investments in the Town of Ithaca. After having hosted 27,000 guests in the summer of 2018. The questions, in this case, should be what to expect for Airbnb Ithaca in the summer of 2019? Are short-term rental prices going to skyrocket during peak times? And is the town eradicating affordable tourism for the average joe?
These questions are best answered by this time next year. Hopefully, the town council is not going to regret this major decision in regard to real estate investors in the Ithaca real estate market.
Now, through the new legislation, which has not been finalized nor taken into effect, Ithaca residents are able to rent out spare bedrooms in their household as long as the owner is present in the property at the time. Meanwhile, if you’re not able to be present at the time of hosting, then you will have to stick to the 29-day limit per year.
Ithaca Real Estate Market Stats
According to Mashvisor’s investment property calculator, Airbnb Ithaca is shining along with top Airbnb cities in the US housing market. Let’s take a look at some stats to better grasp how well it’s doing:
- Median property price: $353,202
- Airbnb cap rate: 8.04%
- Traditional cap rate: 2.1%
- Airbnb rental income: $4,327
- Traditional rental income: $1,687
- Average days on market: 46
According to Trulia.com, the Ithaca real estate market has witnessed a 10% increase in the median home sales prices compared to last year! That’s around $25,000! Accordingly, with an average of days on the market of 46 days only, one can easily see the competition rising in this small yet powerful real estate market.
Could Airbnb Ithaca and the New Legislation Turn the Real Estate Market Into a Buyer’s Market?
This situation is not far from depicting the reality if the new legislation goes through. Many real estate investors who chose Ithaca for Airbnb rentals are going to look elsewhere where their investment needs are being accommodated. Moreover, selling an investment property in Ithaca can turn into a nightmare if real estate investors don’t act fast and list properties.
Looking for information about buyer’s markets and seller’s markets? Look no further and read this blog post: Real Estate Investing Concepts: A Buyer’s Market vs. a Seller’s Market.
On the other hand, when looking at real estate stats for traditional rental investing in Ithaca’s real estate market, you can find great cap rates on many properties. Let’s take a couple of current market listings and their real estate stats from Mashvisor’s property finder:
Property #1: Single-family residential property
- Listing price: $185,000
- Traditional cap rate: 4.46%
- Airbnb cap rate: 12.46%
- Traditional rental income: $1,590
- Airbnb rental income: $3,427
Property #2: Single-family residential property
- Listing price: $150,000
- Traditional cap rate: 5.89%
- Airbnb cap rate: 20.30%
- Traditional rental income: $1,590
- Airbnb rental income: $4,218
The above traditional and Airbnb data are for real currently listed real estate properties that can easily be located through Mashvisor’s property finder feature. Comparing both properties, you can easily spot the great Airbnb cap rates (which is the reason for this Airbnb legislation and law). Meanwhile, traditional cap rates are good enough for a traditional rental investment.
To find more properties and analyze them through a few simple clicks, please click here to use Mashvisor’s property finder and find the most suitable real estate investment properties in the town of Ithaca.
Advice for Ithaca Real Estate Investors
Looking at the current market trends and Airbnb Ithaca in the face of new laws, the real estate market might be heading down a dangerous path with Airbnb rentals. Of course, as a real estate investor, you will have two choices to handle your investment property.
You can either list and sell, or you can turn it into a traditional rental and benefit from above-average cap rates! If you’re looking to turn your Ithaca Airbnb property into a traditional rental, read this blog post: What Rental Strategy to Choose: Airbnb vs Renting Out Traditionally?
Final Thoughts on the Debacle
The Ithaca real estate market will feel the negative effect as soon as the law passes! The best thing that any real estate investor can do is to wait it out and try to cover expenses through traditional rental income. Keep in mind that Airbnb Ithaca laws are going to affect the entire town in matters of tourism, jobs, and overall incoming cash flow. So, let’s not say farewell Airbnb Ithaca and wait to see what’s to come!
If you have any more insights on Airbnb Ithaca, please share them with us in the comments section below.