SIOUX FALLS, S.D (KELO) — The number of people who may be sleeping in someone else’s house is increasing in South Dakota.
Travelers may be booking an entire house in a city or on a farm or booking a room in a house in what is a growing trend in short-term rentals. Properties may be listed on their own website or Facebook page. But, others are listed with rental platforms such as Airbnb or VRBO, where the renter finds a property in a chosen area.
The state’s short-term property list for properties listed with Airbnb or VRBO each August over the past five years shows an uptick.
South Dakota had 1,487 short-term rentals listed with Airbnb or VRBO in August of 2017, according to the South Dakota Department of Tourism. The number was roughly 2.5 times more in 2021 at 3,668. The one-year jump was largest from 2020 to 2021 from 3,054 to 3,668.
“The increase in 2020 and 2021 was certainly reflected a growth in this category across the United States as many travelers were looking for these types of properties,” said Katlyn Svendsen global media and public relations director for the South Dakota Department of Tourism.
“We went from zero 10 years ago to what we have now,” said Mistie Caldwell, executive director of Visit Spearfish. Caldwell wouldn’t venture an estimate as to how many short-term rentals are listed with Airbnb, VRBO or similar platforms.
While Airbnb and VRBO collect the state sales tax that applies to rentals through those platforms, such rentals may not be paying a fee or room tax that is applied to motel rooms. Also, zoning, permits and licenses for short-term vacation rentals can vary throughout the state.
The city of Sioux Falls, for example, does not have regulations for short-term rentals but properties must register to pay state sales tax, said Jason Bieber of the city’s planning and zoning department.
“We don’t have anything in our ordinances in place that addresses that (Airbnb and similar rentals). “We haven’t determined there is a need to address (any need),” said Dave Mingo, the community and economic development director for Yankton.
When she and her husband Bill Cooper opened their McKennan park area home in Sioux Falls to renters about five years ago, “We were one of the few in Sioux Falls,” Ceca Cooper said.
Now, there are dozens who may rent one room or area of the house or the full house as a vacation or short-term rental.
Research from property management said 30% of vacation property owners and 32% of investment property have shown interest in renting their homes as short-term rentals. Also, 600,000 Americans use online platforms, such as AirBnB, to rent out their homes, condos, apartments, and/or rooms to short-term guests.
“People are buying houses to re-do as an Airbnb, ” Cooper said.
That’s also happening in some cities and towns in western South Dakota. It’s even impacted the population of one Black Hills small town, a former town official said.
Lynette Gohsman is a former Keystone Town Council member and the general manager of Holy Smoke Resort, located outside of Keystone.
“A few years ago our population was 327 and now it’s 240,” Gohsman said. “Some of that is people passing away and people moving away.”
But, there’s another impact made by people buying houses and converting them to short-term vacation rentals, Gohsman said.
The conversion of houses to rentals has caused concerns because potential residents can’t find a place to rent or live, Gohsman said.
Gohsman manages a resort which she said has not been negatively afected by rentals through platforms such as Airbnb or VRBO.
“We have cabins, several different types cabins (options),” Gohsman said.
The website lists cabins for two-person occupancy and homes for 10 to 12 people.
25-year veteran of renting
John Steever and his wife have operated the Steever House B & B in rural Lennox for about 25 years.
It’s a short-term rental but it differs from what may be available on Airbnb or VRBO.
“We are a traditional B & B,” Steever said. “We serve breakfast. The guests come, we live in the home.”
“We’re a little different animal,” Steever said. “We’re busy. We think people enjoy that sort of thing, the one-on-one service.”
The Steevers do not advertise on Airbnb, VRBO or similar rental platforms but use their own website and Facebook page.
Renters get a room and breakfast at the Steever House and usually stay for one or two nights. There is no access to kitchen or kitchenette.
An Airbnb or VRBO rental could be for one or two nights or for a week and could include the entire property or one floor of a house or apartment.
A retirement plan
Jake Hoffner and his wife have a farm home 15 miles west of Yankton.
They owned the farm for about 20 years before they bought the farmstead including the house in 2017.
They gutted the house and completely renovated it. The house now has eight bedrooms and eight bathrooms. Before the renovation it had eight bedrooms and one bathroom, Hoffner said.
“It’s just one of a kind,” Hoffner said. The house is in the country and Lewis and Clark Lake can be seen from the property.
The Hoffners don’t live in the house. They rent the entire house for an expected two-night minimum stay.
“We very much target the family reunions, birthdays…,” Hoffner said.
The house and property are geared to larger gatherings of people who want to stay on the same location. It can comfortably hold 18 people but some gatherings have been slightly larger, he said.
The property, Dakota Country Home, is advertised on Airbnb and VRBO. It also has its own website.
The bookings are increasing but there was a point when the couple, a retired teacher and a retired crop duster, wondered if they were doing the right thing.
But Hoffner doesn’t see any decrease in tourism activity or the desire for a space like their property.
The Coopers decided to rent the main floor of their Sioux Falls house as a way to pay off their student loans and prepare for retirement. The couple has five grown children. They have traveled extensively in Europe where they frequently stay in Airbnb rentals, Cooper said.
The basement area of the home had been remodeled for an apartment but the Coopers decided to live there and rent the upper floor.
“It works incredibly well,” Cooper said of the arrangement.
“Generally, we get a lot of couples,” she said. The couples want a quiet place to stay. That includes one couple who live eight blocks away who rented the house as a short stay away from the kids, Cooper said.
Renters have included parents with two younger children who were on their way to Yellowstone National Park.
Six months into Airbnb
Lindsay Chicoine and her husband Brian opened their Airbnb house rental six months ago.
They bought a house in their backyard with the intent to have it be a short-term rental with a specific client in mind, Chicoine said. The rental is in a neighborhood near a hospital. Chicoine said the hospital has traveling nurses and similar health care workers who are in Sioux Falls on a temporary basis.
That is the clientele they wanted to attract with Airbnb rental, she said.
“We were inspired by the fact that people need a home away from home while they are here,” Chicoine said.
So far, the rental has been mainly filled with traveling nurses and similar but it’s also attracted people who need a main level home to recover after surgery or families who need a place to stay for medical reasons, Chicoine said.
Neighbors, housing and rent
Although some U.S. towns and cities are concerned about houses being bought for vacation rentals such as those found on Airbnb, a Yankton official said that hasn’t been the case in that city.
“What we see are actually owner-occupied houses. People are moving here and bringing their families,” Mingo said of Yankton.
Gohsman said Keystone has experienced the loss of potential long-term rentals and affordable houses to conversion to short-term vacation rentals.
It’s happening in Webster as well, said Mark Anderson, owner of the Stone Fire Motel and Lodge.
“Everybody wants a piece of the fishing (tourism),” Anderson said. Buyers are buying good houses and junk houses to use for short-term vacation rentals, he said.
Anderson said his motel is geared toward fishermen and has features a rental house doesn’t have.
A study published in November 2021 in the Harvard Business Review called “Restricting Airbnb Rentals Reduces Development” repeated what researchers said they found in a prior study: “… home-sharing through Airbnb alone is responsible for about 20% of the average annual increase in U.S. rents.”
The November 2021 research story said there is evidence to show that Airbnb rental can play a big role in real estate markets and increase the local tax base.
Operating a B & B or another short-term vacation rental in a rural spot with no next-door neighbors is different than one with neighbors next door in a town or city.
The neighbors were notified when they decided to rent the first floor of their house through Airbnb, Cooper said.
“We haven’t had any complaints from the neighbors,” Cooper said.
“We hardly ever get any complaints (about vacation rentals),” said Jason Bieber, an official in city planning in Sioux Falls. “We get (a complaint) maybe once a year.”
In Spearfish, “disturbing the peace is the most common complaint,” city planner Jayna Watson said. Another complaint is guests blocking driveways of neighboring properties.
Cooper said they have strict rules with their rental. Guests can only park in front of the Cooper house. The hot tub shuts off at 10:30 p.m. so as not to disturb neighbors.
They also rent mainly to couples who want a quiet spot to stay, she said. The couple lives in the basement level of the house and rents the main floor.
Chocoine said when they bought their twin home they talked with the immediate neighbor. The Chocoines also live in a backyard across from the rental property and renters know that she said.
Airbnb hosts also rate their renters which is a way to weed out those who could cause any problems with the rental or the neighborhood, Chocoine said.