The Hotel Next Door

    Let’s say you would like some extra income and you decide to rent out your house. But the thing is, you live in your house, so you don’t want to rent it for the summer, or even a month. Did you know that in the Town of East Hampton you are only permitted to rent it out for fewer than 14 days twice in a six-month period? Otherwise it is considered a motel. Trouble is, on day 15 you have to report that income to the federal government in order to pay taxes.

    While the feds consider it a business if you rent your house for more than two weeks, the town considers it a business if you do it for less than two weeks. And that’s why they don’t want you doing it. According to East Hampton Town Councilwoman Sylvia Overby, the law was put on the books to discourage a house from “becoming a business in the center of a neighborhood.” While she understands that a homeowner may want to defray costs by renting, the town code is meant to encourage longer-term renters, whom she feels can “become part of the community.”

    In other words, transients are not welcome. (Which is why, according to Ms. Overby, there’s a ceiling on the number of hotel/motel rooms in the town, to limit traffic. And we all want that.) However, it is perfectly legal to rent your house out every 15 days to more, allegedly, permanent residents.

    Just visit the multitude of short-term rental Web sites including homeaway.com, vrbo.com, and airbnb.com, and you will find dozens of houses renting by the night. On Homeaway alone there were 355 listings in East Hampton and 226 in Southampton as of Monday. On Airbnb, there were 457 and 468 respectively. Naturally, many are duplicates.

    Airbnb.com lists a room in a Springs house described as a “creative sanctuary by the beach.” The listing is by a woman named Elissa, who is pictured in blond dreads along with images of her attractive abode. Elissa promises “physical and spiritual rejuvenation in a secluded rustic house steps from bay beaches for only $125 a night.” (You are required to list by the night on these sites.) Elissa, hold a room for me, please.

    But Elissa’s place is one of the few affordable to just plain folks. An “exquisite new house with private beach” that looks like a palace on Gardiner’s Bay is listed at a weekly rate of $7,500 to $25,000 (seems as if there’s wiggle room for the negotiator). On roomamrama. com a “European-style three-bedroom villa” in East Hampton, 1.5 miles from the beach, is going for $4,333 a night while a “gorgeous and traditional” house with seven bedrooms and 8.5 baths is listed for a relatively mere $2,000 a night. I’ve missed my calling.

    Agents handling short-term rentals here are few and far between, partly because short-term rentals are a pain in the you-know-where for agents, so they point clients toward these sites instead.

    In Manhattan, a court ruled in May that a man who rented out his East Village apartment for less than a week via Airbnb is subject to $2,400 in fines, sending short-term “hosts” in Gotham reeling. Turns out, a law was enacted in the city two years ago forbidding apartment rentals of fewer than 29 days.

    No doubt the city’s hospitality industry is miffed. Crain’s New York Business reported that around 30,000 New York City residents are Airbnb “hosts” — with 365 days in the year, you do the math. Actually, Crain’s did it. They estimate that such activity will “generate around $1 billion” in the local economy “outstripping the impact of the city’s booming cruise-ship industry five times over. . . .”

    And Bloomberg et al. would be remiss if they didn’t want to tax this Internet-enabled blockbuster.

    Here on the South Fork, Dawn Neway, an agent at Douglas Elliman in East Hampton, told me “I’ve been getting more and more requests for short-term rentals. It’s unheard of; I’ve never seen it before.” Ms. Neway, with her partner Jordan Daniel, closed nearly 40 rental deals since January, though only a few were short-term.

    The recent demand may be a reflection of the economy: Many renters cannot afford to rent for the season, coupled with the fact that many owners need extra income. Ms. Neway also offered another explanation: Hurricane Sandy. “People thought that everyone who normally went to the Jersey Shore would come out here, so they raised their prices” for seasonal rentals. But many of the owners asking high prices didn’t reel in renters, hence a substantial inventory of owners desperately seeking tenants.

    “Not everybody wants to rent for three months,” said Scott Murphy, an interior designer and real estate agent who rents his Shelter Island house on a short-term basis a couple of times each summer. Some renters, he said, prefer to split up their vacation time and “go other places: upstate, down South, out West, Europe.” They don’t necessarily want to get “locked into to coming to the Hamptons every weekend,” said Mr. Murphy who, himself, gallivants off to Nicaragua or Biarritz when tenants occupy his house.

    And they probably can’t afford to either. In a place where $300,000 per summer month is not unheard of, our area has become affordable primarily to the uber wealthy. And they, my friends, are a part of only their own community — of other UHNWIs (ultra high net worth individuals). Somehow I just can’t see the Russian oligarch renting on Lily Pond Lane joining in a local VFW breakfast.

    Mr. Murphy places his three-bedroom, 2.5-bath converted boathouse on VRBO, which gets him “a lot of hits.” He charges $7,500 per week including cleaning and tax, a rate that goes up to $8,500 in August. He even gets the occasional family requesting a weekend, so a family can stay in a place with a full kitchen and living room for coming together, while on the island to attend a wedding or the like. At Mr. Murphy’s house, which has a dock, they can come and go by boat.

    There are a limited number of hotel rooms in the area, he said, and “you pay hundreds of dollars a night for a tiny box.” He is using this season’s income to travel and renovate his kitchen.

    Meanwhile, according to Jordan Daniel, the short-term rental market heats up at the end of the season, when bottom feeders look for houses that didn’t rent. He’s got a house in the Amagansett dunes available for $35,000 for two weeks then.