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How to Get a Commercial Short-Term Rental Permit in New Orleans

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How to Get a Commercial Short-Term Rental Permit in New Orleans

The Big Easy is an over-the-top experience for the senses. Spectacular live-music scene, mouthwatering food, round-the-clock nightlife, vibrantly colored streets, and so much culture to experience. NOLA really does have something for everyone!

With so many fun options, it doesn’t come as a surprise that the town of jazz kings and queens is visited by nearly 20 million people every year. This, of course, presents an opportunity for those seeking to own a vacation home in the Big Easy that not only pays for itself but also profits. There are still not enough licensed vacation rentals to satisfy the growing demand for accommodations in New Orleans. But to operate a short term rental, you must first get a permit.

In which cases do you need a commercial short term rental permit? How can you obtain one? We explain this and more in the article below.

When Do You Need a Commercial Short Term Rental Permit?

If you decide to get into the vacation rental business in New Orleans, you’ll have to acquire either a Non-Commercial STR (NSTR) or a Commercial (CSTR) permit. Which of the two you require depends on your property’s location. If your home is in a non-residential zone, you’ll need to get a CSTR license, which allows you to rent up to five bedrooms (and ten guests maximum) in any building where less than 25% of all units are short term rentals.

The cost of obtaining a CSTR permit is $1000, and renewal is annually at the same cost. Unlike with the new non-commercial STR permits, there’s no limit to how many properties you can own.

What Should You Know About Getting a CSTR Permit?

Over the last few years, there have been heated debates about the impact of short term rentals in New Orleans. Critics argued that the growing number of short term rentals had reduced housing availability for residents, driven up rents, and changed the overall feeling of neighborhoods.

In response to these complaints, last June, The City Council of New Orleans announced it would ban the acceptance of new applications for short term rentals within the city’s commercial zones, including the Central Business District, for one year. This decision was part of the council’s broader strategy to regulate the rapidly expanding short term rental market. During this time, the City Planning Commission has been directed to investigate the impacts of commercial short term rentals and offer recommendations to the City Council on additional requirements and potential changes to how CSTR permits are issued.

As of now, it’s unclear what new requirements, if any, will be put in place to allow new CSTR permits to be issued. However, the ban doesn’t mean you have to give up the idea of owning a vacation rental in New Orleans. You can still acquire a commercial STR permit, but only if you purchase a property with an active license.

Purchasing a Property With a CSTR

Navigating the vacation rental market in New Orleans can be quite a challenge, especially now that the city’s been changing its laws and dealing with litigation on the matter. There are so many regulations to think about! You must understand the ins and outs of tax obligations, licensing requirements, permit histories, zoning restrictions, and much more. It’s quite time-consuming, isn’t it? But it doesn’t have to be.

At Book NOLA, we’ve partnered with Kayla Springer, a highly experienced realtor specializing in acquiring properties with an active CSTR permit. Working together, we ensure our clients’ chosen property really comes with a CSTR permit and benefits from being grandfathered in. 

Once the purchase has been finalized, we’ll help you navigate either taking over the existing CSTR permit or renewing the permit into your or your business’ name. This process includes providing proof of ownership and meeting the complex local regulatory compliance requirements. Luckily, you don’t have to worry about all the hassle of obtaining a permit. We’ll take care of everything for you!

Remember to Follow Updates

With the growth of the sharing economy, it’s clear that the demand for short term rentals in New Orleans will continue to increase. If you’d like to join the business, make sure to keep up with the latest changes to STR laws by getting in touch with us, as the city has been actively updating its regulations. 

Final Thoughts

Purchasing a vacation home that you can enjoy whenever you want but also turns a profit is a great way to grow personal wealth. However, starting the vacation rental business that comes along with such an endeavor can be time-consuming and costly without proper guidance. At Book NOLA, we not only walk you through every step of the acquisition process to ensure the property you buy will be eligible for the permit you’re looking for, but we also provide turnkey short term rental management here in New Orleans. Contact our team here to learn how to obtain a commercial short term rental permit and realize your peak earning potential.

FAQ

1. What are the specific eligibility criteria or conditions that need to be met for a property to be considered for a Commercial Short Term Rental (CSTR) permit?

    For a property in New Orleans to be eligible for a Commercial Short Term Rental (CSTR) permit, it must be located in a commercial or mixed-use zoning district (with some exceptions) and comply with specific requirements, like having a noise monitoring device, a licensed STR Operator (such as Book NOLA), $500,000 in liability insurance, and several other requirements that we’ll walk you through during the application process. 

    2. Are there any fees or legal requirements involved in transferring a CSTR permit when purchasing a property with an existing license?

    While CSTR permits cannot be transferred, they are grandfathered-in for commercial use. When buying a property with a CSTR license, you have two options. The first being that you can purchase the LLC that owns the property and is on the existing license. While this will avoid an immediate renewal fee of the permit, you will likely have to pay to acquire the LLC. Alternatively, after purchasing the property and putting it in your or your business’ name, you must reapply for the permit in the name of the property owner, either yourself or your business. This would incur the annual $1000 permit fee.

    3. What are the tax obligations and potential financial implications for owners of properties with a Commercial Short Term Rental (CSTR) permit in New Orleans?

    Owners of properties with a Commercial Short Term Rental (CSTR) permit in New Orleans are subject to various tax obligations, including nightly STR Taxes and occupancy taxes related to rental income and bookings. For violations of STR regulations, owners can be fined $500/day up to $15,000 and even lose their license and the ability to operate as a short term rental. 

    However, when your property is managed by Book NOLA, we handle the collecting and remitting of all appropriate taxes for bookings and ensure your property remains in compliance with all applicable STR regulations.


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