Tuesday, June 28, 2022

Part I: A closer look at the impact of Covid-19 on short-term rentals

From condos to waterfront homes, short-term rentals are a big industry in the Cape Fear area but the local governments have banned rentals in some towns due to Covid-19 concerns — so what are the impacts of these bans? (Port City Daily/Michael Praats)

SOUTHEAST N.C. — The coronavirus pandemic has affected virtually every type of business there is. While the government has ordered the closure of many so-called non-essential businesses, there are some businesses that were seeing a loss of revenues even before the government-mandated closures.

The loss of rentals for the area not only affects landlords and property management companies, but it also impacts other small businesses across the region. Cleaning crews, local restaurants, and even local government all rely on the revenues brought in by tourists — without them — the economy takes a significant hit.

Short-term rentals in the Cape Fear area

The Cape Fear Region is one that relies on tourism to support its economy. From beach towns like Carolina Beach or Kure Beach to Downtown Wilmington, the region attracts plenty of visitors with the need for places to stay.

For years short-term rentals have provided a much-needed service for the region’s visitors. But last month, right around the start of many Spring Breaks, local leaders shut down short-term rentals, bringing the start of the busy season to a halt.

Governor Roy Cooper recently announced his plans to reopen the state, and as it stands right now, the earliest that the stay-home order would be lifted is right around the beginning of June.

This is when restaurants and stores could reopen for business, but still not business as usual as they would be restricted by reduced capacity limits.

Cooper laid out his plans in a three-phase program that would first begin, at earliest, May 8 that would still restrict restaurants and stores from operating. Once phase one is over, which will take a few weeks minimum, the stay-home order could be lifted, Cooper said.

In New Hanover County, short-term rentals have been a topic of debate for years and the City of Wilmington finally passed an ordinance (three years in the making) restricting these rentals. However, in places like Carolina Beach and Kure Beach, vacation rentals are a way of life. Many of the homes are not owner-occupied except for a few weeks out of the year. When the coronavirus outbreak began to get serious in the United States, localities took steps to slow the spread of the virus in their communities.

In New Hanover County that meant restricting short-term rentals and closing hotels — to try and prevent people from flocking to the coast as they tried to escape virus hotspots. But the limiting of short-term rentals has severely limited the income for thousands of property owners, business owners, and more.

Significant cancellations

David Paul and his wife own A1 Property Managment Inc., a vacation rental management company that serves both Kure Beach and Carolina Beach and they have already seen significant cancellations due to Covid-19 scares.

“My wife and I own A1 Property Management Inc, a short term vacation rental management company that services Carolina Beach and Kure Beach. We’ve had to cancel reservations for the end of March, all of April, and have also had guests cancel a slew of May, June, and even some July reservations. We have heard so many awful stories: sickness, loss of job or job uncertainty, people not traveling due to their high-risk morbidity issues, canceled weddings, canceled family trips, etc. While we offer trip insurance, most people didn’t elect to purchase it as they weren’t expecting a pandemic,” Paul said.

In most situations, short-term rentals don’t offer refunds or rescheduling due to last-minute cancelations, but the current situation is unprecedented and property owners along with management companies are working to accommodate everyone. While the losses of income will be significant, hopefully, they will not be absolute.

“We’ve worked hard to either refund or reschedule everyone the very best we could. We work with great property owners who understand that we’re all in this together. As our busy season really starts in April we’ve lost rental income for the last two weeks in March, all of April, and about half of May,” Paul said.

“We’re not sure if the PPP or the EIDL program will ever come through, it’s not looking likely,” Paul said.

While New Hanover County recently lifted its restrictions on short-term rentals, Carolina Beach extended its ban on rentals until early May.

An unwelcome reception

Despite being a property owner in Oak Island, one family has been treated like outsiders when they decided to spend time at the beach town. (Port City Daily/Mark Darrough).

Allen Homan lives in Ohio most of the time but he owns two rental properties in Oak island. He has owned property in the state for about 15 years. His properties are typically rented out to serve as a source of income and at times Homan and his family use the home for a beach getaway.

The family had planned on spending some time at their home at the beach in March but soon extended their stay until May — however — their reception by ‘locals’ has been far from friendly at times.

“We love Oak Island, the beach, and the people. We tell everyone we know and everyone we meet to visit Oak Island and to bring their vacation dollars to North Carolina and to this community. We rely heavily on every penny that is generated from our two properties to pay for the never-ending expenses that comes from owning on the beach,” Homan said.

When the virus began spreading and the implications become more realized, Homan said he thought having a rental home at a small beach town would be ideal to ride out the coming ‘storm’ — but he was wrong.

“When we realized that this Covid-19 was the real deal and that the social distancing was here to stay we thought to ourselves…what a better place to stay than at a small beach community and in a small house where no one is around you. Then, in my opinion, the panic and never-ending complaints of a few very vocal locals on the Facebook post and calls into the mayor led to the STR ban. That’s when we started to panic,” he said.

Renters were canceling their trips to the beach before short term rentals were banned, but there will still some who were willing to rent, then the bans came. To make matters worse, the layoffs affected Homan’s wife since she was deemed ‘nonessential’ and the family’s income was cut in half.

“We went from a best-case scenario of breaking even for the year to losing a lot of money on these properties. In addition, my wife was not allowed to work her job as of March 20th, due to her job not being essential. So there goes half our income and all of our rental income from the Oak Island properties,” he said.

When Homan’s son had to have surgery in early March the family had decided to spend a week on Oak Island where he could recover. When his wife was told she would no longer be working and his son would be taking online schooling, they decided to say until May.

Despite being a property owner in the town for nearly two decades, their experience has been anything but welcoming.

“This is when it gets crazy, instead of being able to walk the beach and get fresh air and exercise, both of which will boost the body’s natural immunity the Town of Oak Island banned being out on the beach. My wife and son were forced to walk on the streets to get his mandatory exercise in with busy traffic. To continue with the craziness, my wife told me that a woman came to our house and was taking pictures of our car with our out of state license plates. I guess the lady was thinking we were outsiders sent from another state to infect everyone. Also, my wife told me of numerous times when she did go to the store she was getting dirty looks and people yelling go home,” he said. “One person even drove up within inches of her car when driving. My wife could see the person’s rage in their face and the person flipped her off.”

While Homan does not necessarily blame the residents of Oak Island, the implications of the bans are far-reaching.

“We know the people of Oak Island are good people, but a few of the locals have gone mad. All the homeowners of the vacation homes need all possible rentals to afford their properties. In addition, the homeowners employee handymen, contractors, cleaners, and rental companies. The visitors to these homes buy gas, food, visit local businesses’ and eat at the restaurants. Lastly, we own these properties and pay taxes. It should be our right to visit our own properties and to rent them out. This affects everyone,” he concluded.

Editor’s note: Stay tuned for Part II tomorrow, looking at long-term rentals and the ways in which the economic damage of Covid-19 goes beyond just landlords.

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