Are you keen to invest in a rental arbitrage in New Orleans? Is it profitable? Or just maybe dreaming of becoming a host or a property manager in New Orleans but not quite sure where to start? Let’s take a deep dive on:
Rental arbitrage is a way forward in operating an STR business without actually owning a property and earning an income through real estate. With that said, it allows you to host a wide range of spaces from an entire house to private rooms or even a shared room and list through platforms such as Airbnb, VRBO, Booking.com, etc.
Moreover, it is perfectly legal as long as you abide by the specific laws and liability guidelines in your region.
New Orleans is one of the tourist hotspots in the US and has welcomed 18.51 million visitors in 2018. More importantly, it has been world-renowned for its distinctive music, cuisines, dialects, and never forgetting its annual celebration and festivals such as Mardi Gras.
The City itself has been described as the ‘most unique’ with its vibrant nightlife along Bourbon Street and its French and Spanish Creole architecture, the French Quarter. With that said, New Orleans welcomes short-term rentals business (for less than 30 consecutive nights at a time) as residents benefit from the tax revenue collected going towards improving infrastructure and emergency medical services of New Orleans.
Furthermore, a host earns an average of $10,000 a year in renting out space to tourists based on the Airbnb report revealed in 2015. And likely a majority of the tourist both local and international travelers would revisit New Orleans. According to AirDNA data 2021, there are about 6537 active rentals at current with a daily average rate of $199, accumulating of 60% occupancy rate, and monthly revenue of $2,565.
The permit requirements are as follows:
New Orleans’ short-term rental permit registration website is currently not accepting applications. Therefore, download the application forms and email your completed form to STR@nola.gov. to apply for your short-term rental owner and operator permits.
Take note, deadlines have been extended in obtaining your owner and operator permits for listings.
Short-term rental (STR) owner licenses are divided into two categories: Residential STR (RSTR) and Commercial STR (CSTR). However, the RSTR licenses are split into three types which all require a Homestead Exemption. Mentioned below are as follows:
License Fee- $250
License Fee- $500
License Fee- $500
License Fee- $1000
To register for a short-term license is simple. Follow the steps below:
Firstly, apply through the city’s website and create an account. Once you have created an account, enter your listing information, select the license type, and update a photo identification. An affidavit from the landlord with written permission allows for you to host if you are a tenant.
The processing time of your application will take two weeks and be notified via mail. Once approved, a link will be given by the city to pay for your short-term rental license online.
Importantly, once you have received your both owner and operator license number, add it to your listing to finalize your registration with the city allowing you to continue hosting short-term stays in New Orleans.
The Comprehensive Zoning Ordinance sets out detailed use standards for short-term rental operations, which include, though are not limited to the following, with an effect on April 1, 2017. As follows:
Note: Specific zoning districts are only allowed in specific types of short-term rentals depending on the license type. Mentioned above is for General Short-term Rental Restriction. For more or other details, visit the Short-Term Rental Zoning Restrictions page.
The City Code requires that all licensed Short-Term Rentals collect and report:
Note: On behalf of the guests, Airbnb collects and remits taxes to the City of New Orleans though if you are hosting on other platforms in addition to Airbnb, you are responsible for collecting and reporting the taxes and fees from any rental arrangement made on those other platforms or through any other means.
Register with the Department of Finance, Bureau of Revenue to obtain an account number in remitting the needed taxes and fees to the City of New Orleans after you have been issued a short-term rental license by the Department of Safety and Permits. Take note, it will require filing an application with the Bureau of Revenue for taxes to be properly credited to your short-term rental.
With that said, taxes and fees are reported monthly with Form 8010-STR and reports must be submitted by the 20th of the month following the month of collection. Penalties may be assessed by the city if these reports are not filed as required. For more details and online payments for taxation, visit the Bureau of Revenue-Sales Tax or mail the completed form along with the corresponding payment to:
The City of New Orleans, Bureau of Revenue 1300 Perdido St., Room 1W15 New Orleans, LA 70112
Understanding the market research, laws, regulations, and license types is a highly valuable asset in strategizing your rental arbitrage business in New Orleans. Take note, with the data collected, you can grow your rental arbitrage by:
If you are interested in rental arbitrage in other regions such as Orlando, Nashville, Houston, Montreal, Austin, and Boston, do take the time to do market research and understand its laws and regulations for that particular region.