Short and long term rentals.
Short and long term rentals. So these are items here when you’re renting out a property that you purchased. Right. Let’s go ahead and discuss the basics of this here. So as real estate professionals, if we have investor clients, we definitely want to be a little cautious with this.
Right. There’s a short term rental, I guess, feud going on in the city of Plano right now. And there’s one particular neighborhood that has an Airbnb and the surrounding neighbors are furious. They’re going before the city council meetings and just in a rage. So I think, one, that’s something we’re going to see at the legislative level that they’re going to they’re going to work on these short term rental issues and long term rental issues, because what we’ve heard is the caps, you know, they they place caps.
The HOA was place caps, rental caps that you can only have a certain percentage of homes that are used as rentals. Everything else must be owner occupied. Well, there was an instance in Plano where when this investor purchased the property and leased it out, he was grandfathered in right during the lease. He during the lease, the rental cap changed. And so once his tenant moved out and he replaced the tenant, he couldn’t do that and he was received. These topics are so interesting, right?
Because you have the property owners rights, you have the best interest of the neighborhood. You have the property going up in value. And you need to look at it during those times in your highest and best use. And then when property values are going down, you want to be allowing the person to do something else. It’s super complex.
Yes. And it seems like there’s not a great solution to it. But you want to let the free market work, but then you want to protect the property owner. You do. And you allow for. Yes, control and you do. But, you know, going back to when I went to the NAR leadership and we heard from Lawrence Yu and he mentioned it several times, he’s like, if our country becomes a rental country, right?
So there should be some control on it. If it becomes a rental country, that is not good. It’s just not good. So, you know, I heard that yesterday. What was it? So I heard a stat that 82% of wealth when a person retires comes from their real estate holdings that they own. And if you rent, you don’t have them. Then the same person also told a story about he had two young daughters. Right.
And one of them just jumped in and bought a house and was maybe premature on it. And the other one he described as bougie and was not ready to buy and wouldn’t do it till she was prepared and fully had all our ducks in a row and, you know, didn’t want to move into a place that was like that. Right. So the other one buys a place. It’s like falling apart and less than desirable neighborhood.
I think it was Summersville or something. So she bought where she didn’t really want to go but just did it and the other one held off, put some money into it, you know, did some cosmetic updates and turned around and and then she sold it.
Right? So then the one that bought real estate ends up selling it. And she’s younger and she makes, I don’t know, 100 and some thousand dollars on it when she sells it. Right. When the market’s right. Yeah. And then she goes and buys three acres of land and she starts on her next thing. And then the other one, the bougie one, didn’t buy any real estate because she wanted to be the right piece. So now prices are up here.
So that’s a good lesson when people say, Should I wait, do I wait? Do I buy? Do I wait, do I buy? What do I do? So you can tell the story of two sisters, the story of two sisters. But going back to the short and long term rentals, if you have an investor client, you know, we don’t want to be on the hook if something like that happens, right?
So it’s really important that you talk to them about these rental caps and what’s going on. And and, you know, but tell them you you know, you’re not you can’t be responsible for that. And some things could happen. So they need to understand how all of that works. Because if you know. Lo and behold, they get a notice that they’re over cap and they’ve got to sell their home.
I mean, there’s a lot of issues with that, too, I believe. So reach out to your investor clients and if they have. Issues like that, if they receive notices or they’re they’re facing some obstacles from having their rental properties. We would love to hear those stories. They still have that my ho my story dot com website up and they go through all of these stories because they need to gather the information in order to be able to take it to the, you know, the legislative. So why are we talking about this?
Right. The key reason why we’re kind of discussing this here with you as agents is because this is currently a hot topic. People are financially affected for it. They’re motivated on. I’m against it and they’re motivated for it. I’m for it. There’s a big money at play here on what’s going on. There’s a lot of institutional investors going out and buying up a ton of properties. So it’s a super hot topic.
Yeah. And you as the agent use the agent are the professional that know a lot about it and you can help direct people to either, number one, avoid said issues in certain neighborhoods or help them find the right places where they can invest in real estate, where this issue is avoided in total. Right. And, you know, I also learned that it is not legal for an HOA to restrict the owner’s right to lease a property like it’s it’s very broad in scope in the details.
But they are not allowed to do that. They don’t have that authority to do that. So I know Frisco, the city of Frisco in recent months, they now have an application. If you’re going to short term rent your property, you must fill out this application. And I do feel that that is a solution that you have to adhere to certain guidelines. Right. I mean, it seems like they want to collect taxes. Well, they’re looking.
Yeah, that’s a huge thing. They call them hot taxes. Okay. So because it’s not like but it’s expensive, but if you want to really be in the thick of it, there is the Plano City Council meeting on September 12th, and supposedly it’s going to be super heated with all these short term rentals issues are on the agenda. So I think it would be interesting to go and attend this meeting and that just happened.
I have no idea. You oh, there’s the date. I was looking on her notes and I’m like, where in the world did she pull this September 12th date out? And how did you possibly just know it off the top of your head? But I found the note over there you had. Yeah so attend that anyone and then report back. Yeah I would love for we’re actually going to be out of town but I would love for someone to be able to attend that and report back.