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Grand Rapids Short Term Rental Regulation: A Guide For Airbnb Hosts

Grand Rapids, Michigan

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Starting a Short Term Rental Business in Grand Rapids

Grand Rapids allows short-term rentals, but the city is very intentional about using its current zoning laws to regulate them13. The city considers factors like parking, traffic, noise, and other potential nuisances when developing the zoning regulations for short-term rentals3. City leaders feel it's important that short-term rentals be regulated with local control based on how each community wants to balance the needs of permanent residents and property owners3.

Grand Rapids does not allow an entire residence to be used as a short-term rental, based on input from local constituents when developing the zoning laws3. The city has seen some upticks in complaints derived from short-term rentals in certain parts of the community3. However, officials believe the city has responsibly enabled short-term rentals to occur within the context of zoning regulations to ensure quality of life for all residents3.

Short-term rental operators need to carefully review the city's rules before listing their property. Failure to comply could result in fines, legal issues, and removal from platforms like Airbnb and Vrbo. The regulations aim to prevent neighborhoods from having an overconcentration of short-term rentals compared to owner-occupied homes3.

Short Term Rental Licensing Requirements in Grand Rapids

To legally operate a short-term rental in Grand Rapids, hosts must meet the following key requirements12349:

  • Obtain a license from the city to rent out rooms – only about 200 licenses are issued per year citywide
  • Limit rentals to one room with a maximum of two adult guests at a time (children under age 18 are permitted in addition)
  • The owner must live on the premises and be present during the rental period
  • The property must be the owner's principal residence
  • Entire home or apartment rentals are prohibited, only shared or private rooms are allowed

Condo and homeowners associations can prohibit short-term rentals in their buildings even if the city allows them in that zoning district4. The strict regulations aim to strike a balance between preserving residential character and allowing some limited short-term rentals4.

Violations are subject to fines, revocation of the short-term rental license, and other penalties. With the 200 license cap, it's important for hosts to apply early in the year to secure one of the coveted spots before they run out.

Required Documents for Grand Rapids Short Term Rentals

Prospective short-term rental operators in Grand Rapids need to submit the following when applying for the required Home Occupation Class B License9:

  • Valid driver's license for all property owners
  • Proof of no outstanding debts to the City of Grand Rapids
  • Confirmation from the Planning Department that the property is zoned to allow short-term rentals
  • Completed license application with a $518 fee for initial licenses or $160 for renewals
  • Detailed floor plans of the residence showing the room to be rented
  • The Fire Department will contact the host to schedule a safety inspection if deemed necessary after reviewing the application. Once approved, the short-term rental license must be prominently displayed on the property in a location visible to all guests9.

Hosts cannot claim a 100% Principal Residence Exemption on their property taxes while operating a short-term rental9. The presence of paying overnight guests means the home is not exclusively owner-occupied.

Grand Rapids Short Term Rental Taxes

Short-term rental income is subject to various taxes in Grand Rapids and Michigan:

  • State Use Tax of 6% on stays of 30 nights or less1117
  • Kent County Hotel-Motel Tax of 5% on stays of 29 nights or less1517
  • Potential additional city taxes depending on zoning district11
  • Federal and state income taxes on rental profits14

Hosts cannot claim a 100% Principal Residence Exemption on their property taxes while operating a short-term rental9. Renting to overnight guests means the home is not considered exclusively owner-occupied.

Airbnb collects and remits the 6% Michigan Use Tax and 5% Kent County Hotel-Motel Tax on behalf of its hosts1517. However, hosts are responsible for assessing and paying any other applicable taxes.

Hosts should consult with a tax professional to understand their specific obligations and reporting requirements. Failure to comply with tax laws can lead to audits, fines and legal problems down the road.

Short-term rental operators may be able to deduct certain expenses to reduce their taxable rental income, such as14:

  • Mortgage interest and property taxes
  • Rental unit utilities, insurance and maintenance costs
  • Depreciation of the building and furnishings
  • Advertising and host service fees
  • Cleaning, restocking and repairs between guests

Keeping detailed records is key to supporting any deductions claimed on tax filings. Hosts should maintain a separate business bank account and credit card to avoid mingling rental income and expenses with personal ones.

Grand Rapids-wide Short Term Rental Rules

In addition to the licensing requirements, short-term rentals across Grand Rapids are subject to the following regulations123479:

  • Rentals are capped at 200 licenses citywide per year
  • Only one room can be rented with a maximum of two adult guests at a time (plus children under 18)
  • The owner must live on-site and be present during guest stays
  • Whole-home and whole-apartment rentals are banned, only private or shared rooms allowed
  • Condo/HOA rules can prohibit short-term rentals even if zoning allows them
  • Hosts cannot claim 100% Principal Residence Exemption on property taxes
  • Nuisance, noise, parking and other "good neighbor" rules apply

These strict rules aim to limit the negative impacts of short-term rentals on housing supply and neighborhood character. The city wants to balance the opportunity for hosts to earn income against the need to preserve community stability and quality of life.

Fines for violations start at $500 and escalate for repeat offenses. The city can revoke licenses and ban problem properties from short-term renting. Hosts may also get kicked off listing platforms like Airbnb for breaking local laws.

Does Grand Rapids strictly enforce STR rules?

Based on discussions among Airbnb hosts on Reddit, many short-term rentals in Grand Rapids appear to be operating in violation of the city's regulations, particularly by renting out entire homes and apartments which is prohibited7.

One host noted that "literally every Airbnb I look at is in direct violation of the rules" and questioned why they should follow them if no one else seems to be7. Another said their research shows "NO ONE is following the rules" for short-term rentals in Grand Rapids7.

This suggests that while Grand Rapids has strict laws on the books, actual enforcement may be inconsistent or lax compared to some other cities. Many short-term rentals seem to be flying under the radar without the required licenses and in violation of zoning rules.

However, the city's stated intent to carefully regulate short-term rentals through zoning indicates Grand Rapids is not as "Airbnb friendly" as cities with more relaxed policies13. The 200 citywide license cap and ban on whole-home rentals are quite restrictive compared to other markets.

City leaders have urged state lawmakers to allow them to keep regulating short-term rentals at the local level rather than imposing statewide standards3. They argue a one-size-fits-all approach ignores the work communities have done to craft reasonable rules balancing competing interests3.

So while enforcement may be spotty based on anecdotal reports, Grand Rapids seems committed on paper to keeping short-term rentals in check. Hosts are taking a risk by violating city laws, even if many are getting away with it for now. Penalties could get stiffer if housing availability and affordability concerns continue to rise.

Operating "by the book" is the safest approach for hosts who want to avoid fines, tax problems and getting shut down or de-listed. But the strict regulations definitely make it harder to profit compared to other cities.

How to Start a Short Term Rental Business in Grand Rapids

Here are the key steps to legally start a short-term rental business in Grand Rapids29:

  • Confirm your property is zoned for short-term rentals by calling the Planning Department at 616-456-4100
  • Apply for one of the 200 yearly Home Occupation Class B Licenses (apply early as they go fast!)
  • Gather required documents
  • Submit the completed license application with $518 fee for new licenses or $160 for renewals
  • Schedule the fire safety inspection if required after review of your application
  • Receive your license by mail or pick up in person at the city office
  • Prominently display the license on your property as required, visible to all guests
  • Collect and remit all applicable city, county and state taxes (income, property, lodging, etc.)
  • Ensure continual compliance with all city regulations.

Licenses expire after one year, so submit renewal applications and fees on time to continue operating legally. The Planning Department can confirm your property's eligibility before applying.

Violating the regulations can result in fines, license revocation and getting banned by listing platforms. It's critical to understand and follow the rules to avoid problems down the road.

With the 200 citywide license cap, it definitely takes some effort and advance planning to run a short-term rental in Grand Rapids. Hosts need to be organized, detail-oriented and committed to compliance to be successful.

Who to contact in Grand Rapids about Short Term Rental Regulations and Zoning

Here are the key Grand Rapids city contacts for questions about short-term rental regulations and zoning:

  • Planning Department - 616-456-4100 - to confirm property zoning allows short-term rentals before applying for a license9
  • City Clerk's Office - 616-456-3010 - for questions about the Home Occupation Class B license application process and requirements9
  • Code Compliance Department - 616-456-3053 - to schedule required fire safety inspections for licensed short-term rentals8
  • City Assessor's Office - 616-456-3081 - for property tax classification and Principal Residence Exemption issues related to short-term rentals12
  • City of Grand Rapids Customer Service - 311 or 616-456-3000 - for general questions or to be directed to the appropriate department9

Most city offices are open 8:00am-5:00pm Monday through Friday except government holidays. Emails can also be effective for getting information, though response times may vary.

It's wise for prospective short-term rental operators to contact the city before buying a property or listing their home. Officials can explain the zoning restrictions, license requirements, taxes and other rules that apply to each specific address.

The regulations are complex and vary by neighborhood, so it's important to understand how they impact your particular property. What works in one area of the city may be prohibited in another.

Consulting with the city first can prevent unpleasant surprises and a lot of wasted effort. Starting off on the right foot makes it much easier to run a successful and compliant short-term rental business in Grand Rapids.

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

Here's a sample of what some Grand Rapids Airbnb hosts are saying on Reddit and Bigger Pockets forums about navigating the city's short-term rental regulations:

  • One Reddit user researched the rules and concluded "NO ONE is following them." They questioned why they should be the only one to comply if the city isn't enforcing the laws against violators7.
  • Another host on Reddit said "literally every Airbnb I look at is in direct violation of the rules" in Grand Rapids by renting out entire homes and apartments, not just rooms in owner-occupied properties7.
  • In a Bigger Pockets discussion, one host reported the City Assessor and Clerk told them no permit is required for Airbnb if the property remains a private residence. But this contradicts other sources about the license requirement12.
  • Another Bigger Pockets thread asking about the Airbnb market in Grand Rapids in January 2024 didn't get any responses specifically addressing the regulatory environment13.

The consensus seems to be that many Grand Rapids Airbnb listings are operating illegally by renting full units, not just rooms, without the required city license. Enforcement appears inconsistent so far based on these anecdotal reports.

However, hosts are frustrated by the lack of clarity and consistency from the city. Different departments are giving conflicting information. There's confusion over what rules actually apply.Several hosts seem to be taking a "don't ask for permission, beg for forgiveness" approach - banking on the city continuing its hands-off enforcement. But this is a big risk that could lead to fines and shutdown orders if regulators crack down.

Other hosts want to fully comply but feel they can't compete with illegal operators who have lower costs. The city's strict zoning and license caps also make it hard to operate profitably for those trying to play by the rules.

Overall, there's a lot of gray area, misinformation and frustration among Grand Rapids Airbnb hosts trying to navigate the complex short-term rental regulations. Most seem to be flying under the radar for now, but worry the city could drop the hammer at any time as tensions rise over housing availability and affordability.

Consulting with an attorney well-versed in local short-term rental law may be a wise move before investing in this market. The Reddit and Bigger Pockets discussions show hosts are getting inconsistent guidance from city officials. It's a regulatory minefield to navigate as a small business owner.

Hopefully this in-depth overview of the short-term rental rules and resources in Grand Rapids is helpful for hosts trying to understand their obligations. The regulations are strict but not impossible to follow for those committed to compliance.

⚡️
Reveal your property’s rental profitability

Buy this property and list it on Airbnb.