INVESTMENT STRATEGY
REGULATORY CHANGES
4 Regulatory Changes Investors Must Understand THE EVOLVING REGULATORY ENVIRONMENT DEMANDS THAT INVESTORS PAY ATTENTION.
By Luke Babich
S
mart investors know they’re not just up against the market. They’re also up against the regulatory environment. Regulators aren’t the enemy, but the evolving regulatory environment does demand close attention. Ignorance isn’t an excuse. Investors who find themselves out of compliance with new regulations can face very steep penalties. Real estate regulations (e.g., building codes) can be modest in scope or far reaching. After the financial crash in 2008, regulators made changes that dramatically reshaped the housing and financial markets. The repercussions of those changes are still felt today in the booming housing market. Innovative services, such
as discount real estate brokers and companies that buy houses for cash, have emerged in response. Here are four regulatory changes real estate investors should know how to navigate.
rent and increase noise and foot traffic. Hotel operators claim they represent unfair competition. As a result, the regulatory environment for these rentals has evolved rap- idly—and not usually in their favor. New regulations range from total bans to strict usage limits and new permitting processes. In New York City, for example, new regulations that took effect in September have essentially banned Airbnbs. Because regulations are applied locally, investors who want to stay current on short-term rental regulations need to engage with their local government officials. Doing so has the added benefit of helping you build relationships with the regulators who may investigate
1. SHORT-TERM RENTAL REGULATIONS
Many first-time real estate inves - tors purchased properties for the short-term rental market during the past decade. During that time, the short-term rental market operated in a Wild West environment with few, if any, regulations governing their use in most municipalities. In many markets, local residents claim short-term rentals push up
46 | think realty magazine :: november – december 2023
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