Hosting Airbnb Guests in Grand Rapids, Michigan

[Lizzie19]

HOW TO LEGALLY HOST AIRBNB GUESTS IN GRAND RAPIDS, MICHIGAN

So you’re interested in hosting Airbnb guests? Awesome! I hope you love it as much as I do! I have to admit though, when I first decided to host Airbnb guests according to the rules set up by the City/State I found myself frustrated trying to find information online. In order to help streamline the process for my future fellow hosts I put together a little guide based on my experience. 

While going through the process of becoming an Airbnb host you will need to interact with several departments within the city of Grand Rapids: the City Clerk’s Office, the City Assessor's Office, and the Fire Department. It’s best to go in assuming that these departments don’t communicate perfectly with one another so be prepared to follow up with them, as necessary. Also, plan to practice a little patience. I was initially told me the process would likely take 5-7 days and it ended up taking 63. Hopefully this guide will help it move a little quicker for you. 🙂 

BEFORE YOU APPLY, MAKE SURE YOU QUALIFY!

• This has to be an owner occupied dwelling (sorry renters!).
• You can only rent out a single room, couch, or other sleeping area.
• You can only rent the space to a max of two adults (children are permitted).
• The owner has to be on premise while the rental is occurring, so you can only offer the “shared room” or “private room” options - not the “entire home/apt” option.
• If you own a condo and the association doesn’t allow Airbnb then that ruling holds over the City. If your association does allow Airbnb rentals you will need to include a letter of approval from your Condo Association along with your application.
• Here is the City’s official fact sheet.

THE STEP-BY-STEP GUIDE TO HOSTING AIRBNB GUESTS IN GRAND RAPIDS

1. You will need to fill out some paperwork and either drop it off, or mail it, to the City Clerk's office at 300 Monroe Ave, Grand Rapids, MI 49501. The items you will need to provide:
   1. A Class B License Application which can be found here.
   2. A non-refundable check written out to the “City of Grand Rapids Treasury” for $280. (There is also an annual fee that you will need to pay every June for the following year which begins July 1. That renewal rate is currently set at $129 but check for possible changes before submitting payment.)
   3. The floor plan of your home (all levels, excluding the basement). These do not need to have exact measurements associated with them so you can always just draw them or mock them up on your computer if you don’t have copies of your “official” floor plans.
2. The Fire Department is supposed to call you to set up an inspection. If they don’t call you within a week I’d suggest calling them directly at 616-456-3900.
3. During your fire inspection they will visit your home and be looking for these things:
   1. That the room you are renting out has a working fire detector with lithium 10 year batteries
   2. That every level of the house has a working fire detector with lithium 10 year batteries
   3. That you have clear exits
   4. That you have at least a two foot clearance around both your furnace and your hot water heater
4. You will receive a packet of information from the City’s Assessor's office that lets you know you need to adjust your Principal Residence Exemption (PRE) percentage within 30 days of receiving the packet. Once you have a Class B License you are no longer eligible to claim a 100% principal residence status exemption.  
   1. What’s a PRE? A Principal Residence Exemption (PRE) exempts a residence from the tax levied by a local school district for school operating purposes up to 18 mills. for the City of Grand Rapids.
   2. How will this effect you? “18 mils” equates to $18 for every $1,000 of taxable value on your home. For example, if your home’s taxable value (you can look up your taxable value here) is $100,000 that would mean you could get an $1,800 ($100,000 / $18) exemption if you had PRE of 100%, but, if you have to lower it to 75%, for example, you would only get 75% of that exemption which would mean $1,350 (75% of $1,800) which is a $450 difference. 
   3. How to calculate your new percentage? (Keep in mind: to determine the square footage of a room just multiple the width and the length of the room.)
      1. Figure out the square footage of the house that is exclusive to you(the owner) and would be “off limits” to your guest (i.e. your bedroom, perhaps a private bath, a private office, etc.).  
         • #1 _________sq ft
      2. Figure out the square footage of the common areas* that you both have access to (i.e. living room, dining room, kitchen, shared bath, den, etc.). 
         • #2 _________sq ft
      3. Figure out the square footage of the house that is exclusively used by your guest, that you would not access while they were staying with you (i.e. their bedroom, perhaps they have a private bath, etc.).
         • #3 _________sq ft
      4. Add #1 + 50% of #2  to determine #4, the total square footage associated with the owner
         • #1 _________sq ft + %50 #2 _________sq ft = #4_________ sq ft
      5. Now, take the total square footage associated with the owner (#4) and divide it by the total square footage of the home (not including the basement) to determine your PRE percentage.
         • #4_________ sq ft/ _________total sq ft of home = _________ %
      6. You will need to enter that percentage on line 12 of the PRE affidavit. That form cab be found here.

*Per MCL 211.7cc (32)(b) "Common area" includes, but is not limited to, a kitchen, dining room, living room, fitness room, porch, hallway, laundry room, or bathroom that is available for use by guests of a bed and breakfast or, unless guests are specifically prohibited from access to the area, an area that is used to provide a service to guests of a bed and breakfast.

AFTER YOUR LICENSE IS APPROVED

• Once you receive your Class B license you must include the permit number in all advertising, so make sure you post it on your listing!
• Within 10 days of issuing a permit, the City Clerk’s Office will mail postcards to all owners and residents within 300 feet of a one-room rental.
• You are finally good to go!

FINAL THOUGHTS

Keep a positive outlook, even after all the fees and taxes you will have to pay (license, income tax, adjustment to PRE), you’re still providing a great service to visitors to our community. 🙂 If you find yourself with other questions or concerns you can always reach out to the City Clerk’s office, contact one of our City Commissioners or leave a comment here and I'll do my best to respond!

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This content was originally posted on my personal blog on 10/3/16 - http://www.lizziewill.com/words/2016/10/3/airbnb-me-the-how

[Alice-and-Jeff0]

I'm not even in Grand Rapids and I'm thoroughy thankful for such an amazing post!  

[Lisa-And-Rick1]

Wow! Waymore than I thought I had to consider. My place is in Houghton Lake. So I guess now I either have to take down my listing, reject my guest or start making some serious phone calls. Thanks so much for the information

[Lisa-And-Rick1]

I wanted to share what I found out for Denton Township. Both the City Assessors office and City Clerk said that there is no permit required. As long as the property is still a private residence, even if Air bnb is used/some other form of renting, no permits. Their approach is to encourage tourism and ensure people pay the property taxes. So it is all good. 

Denton Township does not cover all areas of Houghton Lake. 

[Kelsey5]

Amazing post - do you have any more info on how to renew the class B license annually in June?

[Jen242]

So, is there a work around to rent your entire apartment in GR?

[Jen242]

In our case we have a house. if we register our house as a rental property, will that work for short term rentals?

[Kelsey5]

When we did Airbnb in GR they were very specific that the only thing you could do is rent one room in your space and it must be owner occupied (you must be present at the same time as your guest). We even went to court with the city over it, they're outrageously strict for no good reason. So doing it "legally" is really a huge pain.

[Charity27]

I'm looking into doing this for a house I'm buying because I'm seeing many listings for GR on airbnb that appear to be a whole dwelling. Do you think these people applied for a Class C license to make it a legit rental unit? The house I'm buying could have the entire basement rented (has it's own bathroom and kitchenette), but since it can be closed off to the upper part of the house, the city is saying it wouldn't qualify for the one-room rental as @Lizzie  laid out above. So I was looking into making it an official rental in order to do airbnb. The more I dig, it sounds costly. Does anyone have any expertise in this?

[Venkata-Subba-Bhavya-Teja0]

Cheers for great post! Appreciate your effort!

May I know if this is applicable for Forest Hills, Kent County as well?

Thanks In Advance