Modesto Short Term Rental Regulation: A Guide For Airbnb Hosts

Modesto, California

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Starting a Short Term Rental Business in Modesto

The city of Modesto allows short-term rentals (STRs) like Airbnb and Vrbo in residential zones, giving property owners an opportunity to earn extra income. Located in the heart of the Central Valley, Modesto attracts many travelers visiting nearby destinations like Yosemite National Park as well as its own attractions like the Gallo Center for the Arts and historic downtown1.

However, operating a short-term rental business comes with responsibilities. Hosts must obtain the proper permits, follow occupancy limits and parking rules, and collect taxes from guests. It's critical to understand all the regulations before listing a property.

Some key things to consider when starting an STR in Modesto:

  • Check if your property is zoned for STRs and allowed by any HOA rules5
  • Register for a Transient Occupancy Registration Permit with the city10
  • Obtain proper insurance coverage, typically $500K+ in liability1
  • Ensure the unit has required safety features like smoke detectors1
  • Understand the 9% transient occupancy tax and how to collect/remit it1

Assembling a thorough business plan can help map out your pricing, occupancy, revenue and cost projections to ensure the STR will be profitable after accounting for expenses like furnishings, utilities, cleaning, and maintenance6. Identifying your target guest demographic is also key.

Short Term Rental Licensing Requirement in Modesto

The most important licensing requirement for short-term rentals in Modesto is obtaining a Transient Occupancy Registration Permit from the city's Finance Department110. There is no separate business license required specifically for STRs, but this permit serves a similar purpose and must be renewed annually10.

Operating an STR without a valid registration permit can result in fines and penalties from the city. The permit application requires110:

  • Completed registration form
  • Proof of ownership or owner consent
  • Floorplan/diagram of the STR
  • $500K+ liability insurance
  • Local contact person info

Hosts must keep their permit current at all times while renting out on a short-term basis10. Any changes to application details, like the 24/7 contact person, must be reported to the city10.

In addition to the city permit, condo or homeowners associations (HOAs) may have their own rules restricting or prohibiting STRs12. It's important to review any applicable HOA bylaws before applying for a city permit. Getting the proper licensing is the first critical step to legal STR operations in Modesto.

Required Documents for Modesto Short Term Rentals

When applying for a Transient Occupancy Registration Permit to operate a short-term rental in Modesto, hosts need to provide the city with several required documents110:

  • Completed Transient Occupancy Registration Permit application form
  • Proof of property ownership or signed owner consent form
  • Diagram or floorplan of the short-term rental unit
  • Proof of $500,000 or greater liability insurance coverage
  • Contact details for a designated local representative to respond to any issues

The city needs this information to ensure STRs are operating safely and in compliance with local regulations. Hosts are responsible for notifying the Finance Department if any application details change, such as getting a new insurance policy or changing the 24/7 local contact person10.

These documents are all submitted as part of the initial permit application. The permit must be renewed annually, at which time hosts have to confirm all information is still accurate or provide any necessary updates10.

Failure to submit required documentation or providing inaccurate information can lead to a permit being denied or revoked. The city may request additional verification of application details at any time10. Modesto takes STR licensing and documentation seriously, so it's critical for hosts to be thorough and transparent with the city.

Modesto Short Term Rental Taxes

One of the major responsibilities for short-term rental operators in Modesto is collecting and remitting the city's 9% transient occupancy tax (TOT) from guests17. This tax applies to all stays of 30 days or less and is effectively the same as a hotel tax.Key things for hosts to know about Modesto's TOT:

  • 9% tax is charged on the rent/booking amount, excluding cleaning fees7
  • Tax is paid by the guest but the host is responsible for collecting it
  • TOT returns and payments are due to the city monthly10
  • Returns must be filed even if the STR had no revenue for the month11
  • Late filings or underpayment of tax can result in penalties and interest10

Properly accounting for and remitting the transient occupancy tax is one of the most important (and often confusing) aspects of STR compliance. The 9% tax can add up to a significant amount that hosts need to factor into their pricing and revenue projections.

Some platforms like Airbnb collect and remit the Modesto TOT on behalf of hosts, but others leave that responsibility to the host7. Even if a platform is collecting, the host is ultimately liable for ensuring the proper tax amounts are being paid to the city10.

Failing to comply with TOT requirements is one of the easiest ways for an STR to run into legal issues with the city. Modesto can revoke a host's operating permit for not collecting the tax or filing returns10. Staying on top of this monthly obligation is critical for running a successful and compliant short-term rental business.

Modesto-wide Short Term Rental Rules

In addition to obtaining a permit and collecting the transient occupancy tax, Modesto has several other citywide rules for short-term rentals that hosts must follow15:

  • 120 day annual cap: STRs cannot be rented for more than 120 total days per calendar year
  • Occupancy limits: 2 guests per bedroom plus 2 additional guests maximum
  • Parking: 1 on-site parking space required per rental unit
  • Quiet hours: 10pm to 7am nightly
  • No events: Weddings, parties, and other special events are prohibited
  • No signs: Exterior signage advertising the STR is not allowed
  • Safety requirements: Working smoke detectors, fire extinguishers, and posted emergency info required

These operational rules are meant to preserve neighborhood character and limit negative impacts of STRs on the surrounding community. Violations can result in fines, citations, and revocation of a host's operating permit.

For example, exceeding the 120 day annual rental cap or the occupancy limit can lead to a notice of violation and fines from the city19. Repeated infractions put a host at risk of losing their permit entirely.

Some of these rules, like the parking space requirement, must be verified at the time of permit application1. Others, like the event and signage restrictions, are a matter of ongoing compliance that the city may check at any time5.

It's important for hosts to carefully review Modesto's STR ordinance and ensure their property and rental practices are fully in line with city standards. Claiming ignorance of the rules is not an acceptable defense if a violation occurs. Proactive compliance is the best way for hosts to avoid legal issues with the city.

Does Modesto strictly enforce STR rules?

While Modesto allows short-term rentals in residential areas, the city does actively enforce its STR regulations. The city has contracted with a third-party company to help identify unpermitted rentals and take enforcement action3.

Several hosts on forums like Bigger Pockets and Reddit have reported receiving violation notices and fines for operating without a permit or exceeding the 120 day annual rental limit1819. The city is clearly monitoring STR activity and cracking down on problem properties.

However, Modesto is still considered relatively friendly to STRs compared to some other California cities18. Hosts who follow the permitting rules and operational requirements can successfully run short-term rentals. The key is to be proactive about compliance.Here are some examples of how Modesto has handled STR violations:

  • A property racking up neighbor complaints was fined $500 for operating without a permit and ordered to cease rentals until properly licensed19
  • An STR that exceeded the 120 day limit by 30 days in a year was issued a $250 fine and had its permit suspended for 60 days18
  • A host claiming they were unaware of the permit requirement was still fined $750 and had to go through the application process to resume rentals legally19

So while the city's STR regulations are not as restrictive as some California tourist hotspots, enforcement does happen. The city is trying to allow STRs while still preserving quality of life for local residents. Hosts need to operate responsibly and in line with city rules to avoid legal troubles.

Overall, Modesto is a decent market for short-term rentals but definitely not a regulatory wild west. Hosts must do their homework, obtain permits, and closely follow the city's ordinance if they want to be successful. Those who treat STRs like a business and comply with local rules can still do well.

How to Start a Short Term Rental Business in Modesto

If you're interested in starting a short-term rental business in Modesto, here are the key steps to take16:

  • Confirm your property is zoned for STRs and allowed by any HOA rules
  • Register with the city by applying for a Transient Occupancy Registration Permit
  • Obtain proper liability insurance coverage of $500,000 or more
  • Outfit the property with required safety equipment like smoke detectors
  • Understand your responsibility to collect the 9% transient occupancy tax from guests
  • Set up a system for proper accounting, tax remittance, and permit renewal
  • Create a business plan with revenue and expense projections
  • Determine a pricing strategy and target guest demographic
  • Create an attractive listing on platforms like Airbnb and Vrbo
  • Establish cleaning, maintenance, and guest communication procedures

Starting an STR involves some upfront research and planning. It's important to understand the regulatory landscape and have a solid business plan before jumping in.

Many hosts find it helpful to connect with other local STR operators for advice, either in online forums or through local meetup groups.Modesto offers a promising market for short-term rentals given its central location and steady flow of travelers. By following the city's permitting and operational rules, hosts can tap into this opportunity and run profitable micro-hospitality businesses. The key is to treat it like a true business and stay on top of local compliance requirements.

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

For questions about short-term rental permits, taxes, and enforcement in Modesto, contact:

City of Modesto Finance Department
Phone: (209) 577-5389
Email: TOT@modestogov.com10

For questions about zoning and land use requirements for STRs, contact:

City of Modesto Planning Division
Phone: (209) 577-5267
Email: planning@modestogov.com5

These city departments are the official source of information on Modesto's STR rules and can provide guidance specific to your property. They can help walk you through the permit application process, tax collection procedures, and any other regulatory issues.

It's a good idea to contact city officials early in the process of starting an STR, before making any big financial commitments. They can flag any potential zoning or permitting issues upfront.

You can also consult with a local attorney well-versed in real estate and land use law for guidance on STR regulations. Some hosts choose to have a lawyer review their permit application and rental agreement to ensure everything is above board.

Online forums like Bigger Pockets, Airbnb Community Center, and Reddit's Airbnb Hosts forum are also good places to get firsthand insights from other STR operators in Modesto. Hosts often share tips on navigating the local regulatory process.

Just remember that while advice from other hosts can be helpful, it's not a substitute for checking directly with the city on what rules apply to your specific property. Regulations can vary based on zoning, neighborhood, and property type, so it's important to get official confirmation from the city before launching an STR business.

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

Here's a sampling of what some Modesto Airbnb hosts have shared about their experiences with the city's STR regulations on online forums:"Modesto is pretty reasonable with their short-term rental rules compared to a lot of cities in California. Get your permit, pay the transient occupancy tax, and follow the guidelines and you'll be fine. The city does enforce though, so don't try to fly under the radar." (Reddit)19"

I have a few Airbnbs in Modesto. The 120 day annual limit on rentals can make it tougher to turn a good profit compared to long-term tenants. But if you price right and get bookings in the peak times it's doable. Definitely get your permit from the city though, they've gotten stricter on that." (Bigger Pockets)18"

Make sure to build the 9% TOT tax into your nightly rates so you're not losing that from your bottom line. And be ready to deal with the monthly tax filings. It's not hard but takes some time to stay on top of." (Bigger Pockets)18"

I got dinged with a $500 fine for letting my Modesto STR permit lapse. Totally my fault but the city doesn't mess around. Lesson learned to put the renewal date on my calendar and stay on it." (Reddit)19

The general consensus seems to be that Modesto's STR regulations are manageable for hosts who take the time to understand and comply with them. While there are some limitations like the 120 day cap, many hosts are still able to operate profitably.The key pieces of advice that come up repeatedly are:

  • Get your city permit and don't operate without one
  • Collect and remit the 9% TOT tax
  • Follow the occupancy, parking, and other operational rules
  • Stay on top of permit renewals and tax filings
  • Factor regulatory costs into your business model

While the city's enforcement has ramped up in recent years, hosts who play by the book generally don't have major issues. Some even see the regulations as a positive in preventing STRs from overrunning neighborhoods and giving responsible operators a chance to thrive.

Reveal your property’s rental profitability

Buy this property and list it on Airbnb.