Short-Term Rentals and Arbitrage in New Orleans

New Orleans' vibrant culture and rich history attract tourists seeking unique experiences. As short-term rentals demand surges, investors are exploring short term rentals and arbitrage opportunities in this beautiful city.

This article dives into the world of short-term rentals in New Orleans and provides guidance on how to leverage this lucrative opportunity.

• Get to know New Orleans
• What are the requirements for a short-term rental in New Orleans?
• What are the short-term rental license types?
• How to register?
• Taxes and Fees

Discover New Orleans

The allure of New Orleans in the short-term rental market is a fascinating blend of cultural richness and short term rental dynamics. Airbnb has not only raised the value of property in tourist-centric areas but also changed the way long-term rentals work.

New Orleans' charm and vibrant atmosphere attract travelers, driving demand for short-term rental accommodations. Despite legal uncertainties and legal rulings, the city's large market size and over 9,300 active Airbnbs make it an attractive investment in the ever-changing real estate landscape, making it a potentially lucrative destination for travelers.

According to AirDNA, the market statistics for New Orleans is as follows, as at Dec 2023

• Annual Revenue $ 21.9K
• RevPAR $99.2
• Average Daily Rate $ 201.6
• Occupancy Rate 36%

What is Rental Arbitrage?

Rental arbitrage is a smart strategy for running a short-term rental business without owning property. You can host various spaces on platforms like Airbnb, VRBO, and Booking.com, making it a flexible venture.

Importantly, it's perfectly legal as long as you follow the specific laws and liability guidelines in your region.

Changes to short term rental laws enacted on March 23, 2023

The City Council implemented significant changes to New Orleans' Short Term Rental (STR) laws on March 23, 2023. Key points of the modifications include:

Residential licenses

After July 1, 2023, Residential Short Term Rentals (RSTRs) will no longer be permitted.

• Non-commercial STR permits (NSTR) will be required for short-term rentals in areas not zoned for commercial STR permits.
• An ordinance may sunset existing RSTR permits on August 31, 2023, affecting operators and owners.

NSTR Permit applications

Open on July 1, 2023, with a two-week submission window.

• Applicants must complete a comprehensive application, including operator permits, training completion proof, floor plan, evacuation plan, noise abatement plan, sanitation plan, and resolving property violations.

Lottery system for NSTR permits

A maximum of 1 NSTR or Bed & Breakfast (B&B) permitted per square. Lottery allocation for squares with multiple applicants.

Bed & breakfasts

• New B&B applications must go through the City Planning Commission.
• Existing B&Bs on a square affect NSTR permits through a release valve process.

Application review and lottery process

• The department reviews applications for completeness.
• A lottery system, anticipated in August 2023, will allocate permits for squares with multiple applicants.

Commercial licenses

Changes to operator license requirements, applied for in person. Additional requirements for noise, sanitation, and security plans.

Platform changes

Platforms must submit more information to the City, including listing addresses, rental nights, and booking fees. For more details, refer to the official announcement.

Short-term Rental Requirements for New Orleans

Short Term Rentals (STR) in Orleans Parish (City) are regulated through the Short Term Rental Administration (STR Office), a part of the Department of Safety and Permits (Department).

For hosts in New Orleans to operate a Short-Term Rental legally after August 31, 2023, they must obtain a Non-Commercial Short-Term Rental (NSTR) license.

Current RSTR and ISTR Permit Holders

As of August 31, 2023, all existing Residential Short-Term Rental (RSTR) and Interim (ISTR) permits will expire. For compliance with current regulations, RSTR and ISTR hosts must close their calendars after this date.

Due to this expiration date, Short Term Rental Administration will prorate renewal of RSTR permits. Because renewal applications must be submitted 30 days prior to expiration, renewals of RSTR permits will not be accepted after July 31, 2023.

If your RSTR License has an expiration date after February 26, 2020, you are eligible to renew your license. For an Interim STR License, you are eligible for a RSTR License if you were denied a RSTR License for not having a homestead exemption after December 1, 2019. You can submit your application via OneStopApp with your floor plan to STR@NOLA.GOV.

Non-Commercial STR (NSTR)

Anyone wishing to operate a STR in New Orleans that is not in a Residential zone must apply for a Non-Commercial Short-Term Rental Permit (NSTR).

Applications for STR (NSTR)

As of July 1, 2023, applicants will be able to submit their NSTR permit applications within two weeks of the opening date. All applications must be complete at the time of submission. During online information sessions, in-person sessions, and office hours, the Department will assist citizens in completing the application to ensure that your application is complete.

*This service was offered in advance of the NSTR permit application opening in July 2023.

In order to be complete, an application must include

• Operator permit, either issued or a complete application
• Proof of completion of the STR Owner training class as provided by the Department
• A floor plan
• An evacuation plan
• A noise abatement plan that provides, at a minimum, a noise monitoring device. NSTRs shall not be required to include a noise monitoring device as part of their noise abatement plan.
• A sanitation plan that includes at least daily visual inspections
• A complete application will also require that the property has no outstanding electrical or mechanical violations, violations for work without permits, open building permits, or unresolved zoning or addressing issues. Applicants are advised to begin working on these issues verifying their zoning and addressing their status with the Department immediately.
• A maximum of 1 NSTR or Bed & Breakfast (B&B) is permitted per square block. Where more than one person applies per square for an NSTR permit, permits will be allocated by lottery
• Applications for NSTR permits will only be accepted during the specified application periods in the calendar.
• Only complete applications, including payment of the application fee, will be eligible for the lottery process.

Lotteries

• Lotteries will be held quarterly.
• The Department will annually publish a calendar with application period, lottery, and renewal period dates.
• Lotteries will be live-streamed via Zoom, YouTube, and/or other similar technology. Lotteries will utilize a bingo or other comparable machine.
• Permit numbers will be drawn in order, so that if there are three applicants for a square, there will be a "first", "second", and "third". This order will only apply if there is non-payment of the permit fees. If the permit is lost for any other reason—forfeiture (a permittee sells, moves, or doesn't want to continue to short term rent the property), non-renewal, revocation, or rescission—unsuccessful permittees may apply for the next quarterly lottery.
• Permittees selected in the lottery will be issued a permit upon payment of all fees. All fees must be paid within five (5) calendar days, or the selected permittee forfeits their right to the permit. If the first selected permittee forfeits their right, the second selected permittee will have five days to pay their fees (and so on).
• Unsuccessful permittees may reapply for the following lottery if the block is reopened for any reason or may apply to the City Planning Commission to participate in the special exception process. An overview of this process is available here.

Permit duration

Permits will be valid until June 30 of the following year, regardless of which lottery they are issued during. Permit fees for the first permit year will be prorated as follows:

July lottery winners: Full fees October lottery winners: 75% fees January lottery winners: 50% fees April lottery winners: 25% fees

Commercial (CSTR)

Property owners or renters in non-residential zones can apply for a CSTR license. CSTR licenses allow Hosts to rent up to 5 guest bedrooms to up to 10 guests in any building where fewer than 25% of the total dwelling units are currently licensed for STRs. The fee for this license type is $1000. There is no limit to how many CSTR licenses a Host can get.

Payments for licences

• The total cost for a Non-Commercial STR License is $500.
• The cost for a Commercial STR permit is $1000.

Renewals

Renewal of non-commercial STR permits

Permit holders who remain in good standing with the Department of Safety and Permits will be eligible to apply for renewal of their permits. Applications for renewal will no longer be accepted July 31, 2023. All RSTR licenses will expire on August 31, 2023.

This requires:

• A complete application
• Permittees to apply within the designated renewal period provided in the annual calendar;
• Payment of permit fees within five (5) calendar days of application approval;
• A valid operator license;
• Proof of completion of a short-term rental course to be provided by the Department;
• Satisfaction of all judgments, liens, fines, and fees related to the property;
• Resolution of any electrical, mechanical, or work without permit violations; and
• Closure of all open building permits or written approval of the Chief Building Official for renewal despite the open permit.
• Permit holders whose permits have been revoked or rescinded are not eligible for renewal. If a permit holder fails to renew timely, the square will be eligible for participation in the next quarterly lottery.

How to Register?

To register for a short-term licence,

Step 1: Get an owner and operator license

Firstly, apply through the city’s website and create an account. Once you have created an account, enter your listing information, select the license type, and update a photo identification. An affidavit from the landlord with written permission allows for you to host if you are a tenant.

Step 2: Pay for your license

The processing time of your application will take two weeks and be notified via mail. Once approved, a link will be given by the city to pay for your short-term rental license online.

Step 3: Add your license to your listing

Importantly, once you have received your both owner and operator license number, add it to your listing to finalize your registration with the city allowing you to continue hosting short-term stays in New Orleans.

Taxes and fees in New Orleans

Occupancy fee

RSTR Occupancy Fee: $5 per night rented. CSTR Occupancy Fee: $12 per night rented.

City sales tax

5% City Sales Tax on short-term rentals.

Equalization occupancy tax

6.75% STR Equalization Occupancy Tax on the paid occupancy of short-term rentals within the City of New Orleans

To Wind Things Up

Getting around the world of short-term rentals in New Orleans requires a thorough knowledge of the rules and taxes. On March 23, 2023, changes were enacted, which have changed the landscape for visitors and hosts.

Keep up with the latest news from the Short Term Rental Administration to ensure you as a host or property manager are compliant and have a seamless experience.

Staying informed about these regulations will ensure a smooth journey in the vibrant city of New Orleans, regardless of whether you're an experienced host or making your first rental.