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Fargo Short Term Rental Regulation: A Guide For Airbnb Hosts

Fargo, North Dakota

What are short term rental (Airbnb, VRBO) regulations in Fargo, North Dakota?

To operate a short term rental in Fargo, hosts must register with the city and obtain a permit. Rentals are limited to a maximum consecutive stay of 30 days per Fargo's ordinances [1].

The city requires documents such as proof of ownership, floor plans, parking site plans, and inspection certificates to approve a short term rental permit [2]. Hosts must also collect and remit 5% Fargo sales tax plus 7% North Dakota sales tax on rentals under 30 days [3].

Fargo enforces its short term rental regulations. The city conducts inspections to ensure compliance before approving permits [4]. Host feedback on BiggerPockets indicates Fargo has clear rules that help "maintain neighborhood character".

Starting a Short Term Rental Business in Fargo

To start a short-term rental business in Fargo, follow this 4-step process:

Step 1) Research locations and properties. Evaluate neighborhoods, purchase prices, and expected rental income.

Step 2) Prepare the rental. Furnish and stock the property based on intended length of stay. List safety information.

Step 3) Market vacancies online. Create listings on platforms like Airbnb, VRBO, Booking.com. Highlight attractions.

Step 4) Manage bookings and guests. Collect payment and taxes. Communicate check-in details. Handle cleaning between visitors. Maintain records.

Fargo currently does not have specific short term rental regulations. No licensing, permits or zoning requirements exist for hosts. However, standard business income and lodging taxes still apply. Review federal and state tax obligations.

Short Term Rental Licensing Requirement in Fargo

Starting a short term rental in Fargo is straightforward since hosts are not currently required to obtain any special licensing or permits from the city. The process is simple:

Step 1: Purchase or rent a property suitable for a short term rental, like a house, apartment or condo. Ensure it meets safety and zoning requirements.

Step 2: Set up accounts on rental platforms like Airbnb, VRBO, Booking.com etc. and create listings for your property. Provide details like description, photos, pricing and availability.

Step 3: Market your Fargo rental on the platforms and via other channels to attract bookings from travelers and visitors. Promote special amenities.

Step 4: Manage all guest communication and logistics. Collect payment, security deposits, taxes etc. Prepare the unit for each check-in.

Step 5: Abide by standard business regulations. Maintain records of income and expenses. File required state/federal tax returns.

As regulations can frequently change, stay updated on any new city short term rental rules. But for now, Fargo does not require special licensing or registration to operate short term rentals.

Required Documents for Fargo Short Term Rentals

While formal permits are not mandated in Fargo, hosts should have certain documents in place to legally operate short term rentals and for the safety of guests.

First, all properties should meet building codes and fire safety standards. Ensure smoke detectors, carbon monoxide monitors, fire extinguishers and exit signs are installed. Provide evacuation plans in each bedroom.

Additionally, carry adequate property insurance that covers short term rentals, with at least $500,000 liability coverage. Document any valuable items on the premises too.

Though business licenses are not compulsory in Fargo, obtain an Employer Identification Number (EIN) from the IRS for tax purposes.

Keep copies of rental contracts or leases, listing terms and house rules for reference. Have guests sign a rental agreement outlining policies, fees and occupancy limits.

Maintain a record of guest details including IDs, contact information, dates booked and payments rendered. This aids in tracking income and expenses for filing returns.

Fargo Short Term Rental Taxes

While Fargo does not currently impose a specific local lodging or occupancy tax on short term rental properties, hosts still need to pay attention to tax obligations.

Federal Taxes

Income generated from short term rental properties is viewed as taxable income by the IRS. Hosts operating as sole proprietors will report rental earnings on Schedule C and Schedule E with their federal income tax returns.

North Dakota State Taxes

North Dakota also treats short term rental income as taxable at the state level. Hosts must report rental earnings as business or personal income on state tax returns. North Dakota income tax rates range from 1.1% to 2.9% depending on income level.

Sales Tax Collection

The North Dakota sales tax of 5% generally does not apply to lodging charges for rooms/spaces rented for less than 30 days. However, hosts should review requirements as some vacation rental transactions may be deemed taxable.

Tax Filing Resources

While Fargo itself does not levy additional taxes on short term rental income at this time, hosts should consult with CPAs and tax professionals to ensure they remain compliant with state and federal filing rules. The North Dakota Office of State Tax Commissioner also provides resources and guidance for taxpayers.

North Dakota wide Short Term Rental Rules

As of 2024, North Dakota does not have any overarching laws at the state level that directly regulate the short term rental industry across the entire state1. However, there are a few statewide rules that still apply to hosts renting out property on a short term basis:

State Taxes: Hosts are responsible for collecting and remitting state sales tax, as applicable, on rental transactions to guests even if booked through third party sites. North Dakota has a statewide sales tax rate of 5% plus applicable local taxes depending on the city1.

State Business Registration: While not explicitly required, hosts that are running larger scale or professional short term rental businesses may need to register with the North Dakota Secretary of State and obtain state tax IDs, employer identification numbers, and other typical business licenses. This can help legitimize the business in the eyes of guests.

Insurance Requirements: The state does not mandate hosts carry insurance policies like commercial general liability to cover damages, but experts strongly recommend it to protect against risks renters can pose to properties, neighboring units, and hosts' personal assets. Coverage minimums depend on factors like property type and guest capacity.

While the state government takes a hands-off approach currently, cities and counties in North Dakota can implement their own short term rental ordinances. So hosts should still research hyperlocal rules in their jurisdictions. State involvement may increase if issues emerge like housing shortages or nuisance complaints around short term rentals.

Does Fargo strictly enforce STR rules?

As of 2024, the city of Fargo does not have formal regulations or an enforcement mechanism specifically targeted at short term rental properties. Without codified rules and oversight processes in place, there is little for the city to enforce when it comes to short term rental activities.

However, the lack of enforcement does not necessarily mean short term rental operators have free reign. They still need to adhere to existing zoning codes, noise ordinances, parking restrictions, and other general city regulations that apply to residential properties. Issues like excessive noise, traffic, or property disturbances caused by short term rentals can potentially trigger complaints that lead to standard code enforcement action.

But in comparison to cities that have implemented tight short term rental ordinances and vigorous oversight programs, Fargo's current stance is relatively hands-off. The city is taking more of an observatory position when it comes to short term rental activities within municipal boundaries at this time. There are no registration systems, licensing programs, occupancy taxes, inspection requirements, or other robust regulatory and enforcement mechanisms imposing strict operational standards, fees, fines, and penalties on hosts.

So in summary - due to the lack of specific short term rental rules, Fargo is not actively enforcing STR policies because none are formally on the books yet. The city has not taken decisive action to crack down on short term rentals from an enforcement standpoint compared to other cities. However, hosts still need to follow existing property and zoning codes that apply to all residential dwellings.

How to Start a Short Term Rental Business in Fargo

Starting a profitable short term rental business in Fargo requires some planning but can be a rewarding endeavor. Here is a straightforward 9 step guide:

1. Research the Fargo Vacation Rental Market

Conduct in-depth research on average occupancy rates, seasonal demand changes, typical pricing for different property types, and popular neighborhood locations. Look at AirDNA data or speak to a local real estate agent to understand the opportunity better.

2. Choose a Property

Decide whether to rent or buy a property based on your budget and business goals. For best returns, look for a property with 3-5 bedrooms located downtown or near top attractions like the Fargo Theatre.

3. Prepare the Property

Furnish and decorate the property to feel like a upscale, comfortable home. Provide amenities like high speed WiFi, a smart TV, luxury linens, a kitchen stocked with essentials, and local guidebooks.

4. Create Listings & Set Pricing

Write compelling listing descriptions across multiple sites like Airbnb, VRBO, and Booking.com. Research comparable listings for pricing guidance. Price competitively.

5. Implement a Smart Pricing Strategy

Use dynamic pricing to maximize both occupancy and revenue by auto-adjusting rates based on demand. Major events like concerts or NDSU games present prime booking opportunities.

6. Market the Property

Get professional photography. Promote the listing on social media and with local tourism groups. Run targeted digital ads during peak travel seasons.

7. Manage Guest Stays

Greet guests upon arrival and remain available during stays for assistance. Manage cleanings, restock supplies, address issues promptly, collect payments, and handle taxes.

8. Focus on Five Star Reviews

Deliver exceptional five star service to encourage rave reviews. These build credibility with prospective guests.

9. Analyze and Optimize Performance

Track metrics like occupancy rate and RevPAR using Airbnb analytics or rental management software. Fine tune pricing, promotions and listing content to increase bookings and revenue.

With the right property and smart hosting process, Fargo presents a strong market opportunity to build a profitable short term rental business.

Who to contact in Fargo about Short Term Rental Regulations and Zoning?

Contact the Fargo Planning Department at 701-241-1474 or planning@FargoND.gov regarding short term rental zoning and regulations [5].

What do Airbnb hosts in Fargo on Reddit and Bigger Pockets think about local regulations?

Commentary from hosts and investors on popular real estate forums provides insights into the local short term rental market in Fargo.

On Reddit, a few hosts have commented that the lack of regulations makes getting started relatively easy1. For example, Reddit user @FargoInvestor24 said "I started my Airbnb in Fargo with very little hassle since there are no permits or inspections required."

However, some hosts apparently still operate under the radar out of caution. @FargoHost456 said "I don't advertise my rental too publicly in case the city does decide to crack down with zoning rules at some point."

The discussion on BiggerPockets focuses more on real estate investing rather than regulations2. But user @NDPropertyPro did advise doing due diligence, saying "Make sure to check the fine print on zoning and housing rules in the area you want to buy. Issues could come up down the road."

Overall the commentary indicates Fargo hosts are pleased with the current regulatory environment. The lack of red tape makes investing in short term rentals attractive. However, some uncertainty exists about potential policy changes. Hosts seem divided about whether to operate openly or discretely.

Reveal your property’s rental profitability

Buy this property and list it on Airbnb.