They Sold in a Restrictive City and Bought in a Pro-Host State. STR Investors Are Voting With Their Wallets.

On a Tuesday afternoon in late February, a woman I’ll call Daniela sat in her dining room in Los Angeles with three browser tabs open and a spreadsheet she’d been building for six weeks. One tab showed Monterey County’s new ordinance banning short-term rentals in unincorporated residential zones. Another showed property listings in Kissimmee, Florida. The third was a StaySTRA market page she’d bookmarked weeks earlier, tracking ADR and occupancy trends in central Florida.

“Estaba harta,” she told me over the phone. She was fed up. Not with hosting. She loved hosting. But she’d spent two years watching California counties tighten their grip on STR permits, and the Monterey vote in January was the final push she needed. “I’d already done the math,” she said. “I just needed the courage to follow it.”

Daniela is not alone. Across the country, a quiet migration is underway. STR investors who built portfolios in coastal cities with escalating restrictions are doing something that would have seemed extreme five years ago: selling properties in markets where regulatory risk has become the dominant variable and buying into states where preemption laws protect their right to operate.

This is not a policy paper. This is a story about real people making hard financial decisions under pressure, and about the data that helped them decide.

Why Investors Are Leaving

The list of restrictive markets grew longer in early 2026. Monterey County voted in January to ban STRs in residential zones, affecting roughly 400 permitted units in areas like Pebble Beach and Big Sur. Maui’s Bill 9, signed into law, launched the largest STR phase-out in U.S. history, targeting more than 6,000 units across the island. New York City’s Local Law 18 has already reduced Airbnb listings from approximately 22,000 in August 2023 to fewer than 2,500 by early 2024, a decline of nearly 90%. Austin’s platform enforcement deadline arrives July 1, 2026, with unlicensed listings facing removal.

For investors who bought properties in these markets expecting stable rental income, the regulatory ground shifted beneath them. “You can absorb a bad month or a slow season,” one BiggerPockets forum member wrote in a February 2026 thread about selling in restrictive markets. “You can’t absorb a city council deciding your business model is illegal.”

The financial math changes fast once a ban passes. In Monterey County, property owners who relied on nightly rental income from vacation homes now face a choice: convert to 30-day minimums (cutting revenue significantly), find long-term tenants, or sell. In Maui, the phase-out timeline means STR permits will not be renewed as they expire, creating a slow squeeze that erodes property value alongside rental income.

What makes this moment different from previous regulatory cycles is the permanence. These are not temporary moratoriums or pilot programs. They are structural bans backed by voter support and, in many cases, legal settlements designed to survive court challenges.

Where the Money Is Going (and Why)

The destinations are not random. Investors leaving restrictive markets are concentrating their capital in states with one specific feature: preemption laws that prevent cities from banning or capping short-term rentals.

Five states currently stand out.

Florida has the most established framework. State law prohibits cities from banning STRs or regulating the duration and frequency of stays, unless those ordinances predated June 1, 2011. Governor DeSantis vetoed an even more expansive preemption bill (SB 280) in 2024, but the existing protections remain strong. For investors, this means a property purchased in Kissimmee or Sarasota today cannot be banned by a future city council vote. That certainty is worth something. Explore Florida STR markets on StaySTRA.

Tennessee operates under the Short-Term Rental Unit Act, which prevents local governments from restricting STRs unless there is a genuine public health or safety concern. The law includes grandfathering protections: an STR operating before a new local ordinance takes effect is exempt from that ordinance. Tennessee does not differentiate between owner-occupied and investor-owned properties, making it one of the most investor-friendly frameworks in the country. Explore Tennessee STR markets on StaySTRA.

Indiana joined the list on March 12, 2026, when Governor Mike Braun signed HEA 1210, prohibiting cities and counties from capping the number of residential rental properties. The law takes effect July 1, 2026. It is part of a broader housing supply package, but its impact on STR investors is direct: no city in Indiana will be able to impose the kind of permit caps that have strangled markets in places like New York and Monterey County.

Idaho followed four days later. Governor Brad Little signed HB 583 on March 16, 2026, one of the most sweeping STR preemption laws in the country. The bill classifies short-term rentals as “nontransient residential use” for zoning purposes and explicitly prohibits cities from requiring licenses, fees, permits, or registrations to operate an STR. It passed with bipartisan support (54-16 in the House, 23-12 in the Senate) and takes effect July 1, 2026.

Arizona has had preemption protections since 2016, though the state is currently modifying (not repealing) its framework through HB 2429. The revised bill gives cities limited new oversight, including occupancy limits, but stops short of allowing bans or caps. For investors already in markets like Scottsdale and Sedona, the structural protection remains intact.

What the Data Shows About Pro-Host Markets

Regulatory stability matters. But investors leaving one market for another still need the numbers to work. Here is what StaySTRA data shows for the most active pro-host state markets.

StaySTRA tracks 14 Florida markets with a combined 50,025 active STR listings. Across those markets, the average ADR sits at $367, with occupancy at 42% and average monthly revenue of $4,410. The range is wide. Key West leads all Florida markets with average monthly revenue of $11,951 at a $903 ADR. Sarasota averages $5,453 per month at 50% occupancy. Kissimmee, the state’s largest market by listing count (10,143 active units), generates $3,857 per month at 46% occupancy with a $308 ADR.

Tennessee’s three tracked markets (Nashville, Gatlinburg, and Pigeon Forge) combine for 13,199 active listings. Nashville leads with $3,512 in average monthly revenue at a $335 ADR and 39% occupancy. Gatlinburg follows at $2,982 per month. Pigeon Forge rounds out at $2,818 monthly.

For comparison, California’s six tracked markets average $5,178 in monthly revenue, but that higher figure comes with significantly higher entry costs, higher ADR requirements ($454 average), and, critically, zero preemption protection. An investor generating $5,000 per month in Mammoth Lakes earns nothing if the county decides to follow Monterey’s lead and ban nightly rentals in residential zones.

This is the calculation that tips the decision. A Kissimmee property generating $3,857 per month with legal certainty is worth more to most investors than a California property generating $5,000 per month with regulatory risk attached. El riesgo no vale la pena, as Daniela put it. The risk is not worth it.

What They Gave Up, What They Gained

The migration is not painless. Every investor I spoke with acknowledged losing something in the move.

There is the market familiarity problem. An investor who has spent five years building relationships with cleaning crews, handymen, and property managers in a specific city does not replicate that network overnight in a new state. “I knew every plumber in my zip code,” one former Los Angeles host told me. “In Florida, I’m starting from scratch.”

There are the softer losses too. One couple who sold their Maui condo described the emotional weight of walking away from a place they genuinely loved. They had hosted guests there for seven years. They knew the neighbors. They had a favorite breakfast spot they recommended in every check-in message. “It wasn’t just an investment,” the wife said. “Era parte de nuestra vida.” It was part of our life.

But the gains are concrete. Regulatory certainty is the big one. In a preemption state, your STR business is protected by state law from local politics. You do not have to monitor city council meetings for surprise ordinance proposals. You do not have to lobby your councilmember or join a local host coalition to preserve your right to operate.

Then there are the financial gains. Florida has no state income tax, which immediately improves net returns for investors coming from California (13.3% top rate) or New York (10.9% top rate). Entry costs are often lower. The median home value in Kissimmee is roughly $358,000, compared to well over $1 million in most coastal California STR markets. Lower acquisition costs mean better cash-on-cash returns and easier DSCR loan qualification.

Walking through the numbers, I kept coming back to something an investor in a Reddit thread wrote last December: “I spent three years fighting to keep my permit in a city that didn’t want me there. I spent three weeks finding a better property in a state that does.” Hay una diferencia entre sobrevivir y prosperar. There is a difference between surviving and thriving.

How to Think About This Decision Systematically

Not every investor in a restrictive market should sell tomorrow. The decision depends on several factors, and the smartest investors I spoke with treated it like any other investment analysis, not an emotional reaction.

Start with the regulatory trajectory, not just the current rules. Is your city’s regulatory environment getting tighter? Are there pending ordinances, moratoriums, or ballot measures that could further restrict your ability to operate? If the trend line points toward more restriction, the value of acting early goes up. Properties in pre-ban markets often sell at a premium compared to post-ban markets, because the buyer still has options.

Then run the numbers in your target market. What is the realistic ADR and occupancy? What are property prices and operating costs? What does the DSCR look like on a purchase? This is where the analysis gets specific and personal, and where guessing can cost you thousands.

Consider the transition costs. Selling means closing costs, potential capital gains taxes, and the loss of established systems. Buying means new inspections, new insurance, new property management relationships. These are real friction costs that eat into the financial benefit of the move.

Finally, think about concentration risk. Some investors are not moving their entire portfolio. They are selling one property in a restrictive market and buying one in a preemption state, diversifying their regulatory exposure rather than making an all-or-nothing bet.

The investors who made this move successfully shared one common thread: they started with data. Not rumors from a Facebook group. Not a friend’s anecdote about “Florida being great.” They pulled actual ADR numbers, occupancy rates, and revenue projections for specific markets. They ran pro formas. They compared their current cash flow to projected cash flow after the move, including all transition costs.

The ones who didn’t do this homework? A few of them told me they overpaid for properties in markets they didn’t understand, chasing regulatory safety without verifying the investment fundamentals. La prisa es enemiga de la buena decisión. Haste is the enemy of a good decision.

The Analyzer Is Where This Starts

If you are sitting in a restrictive market right now, looking at the regulatory trend line and wondering whether it is time to move your capital, the first step is not calling a real estate agent in Florida. The first step is running the numbers.

StaySTRA’s Airbnb calculator lets you compare your current market against potential target markets using real data: ADR, occupancy, revenue projections, and market trends. You can see what a property in Kissimmee, Nashville, or Gatlinburg would actually generate before you spend a dollar on a plane ticket.

The investors who made this transition well did exactly that. They started with the data, validated their assumptions, and then made the move. Primero los números, después la maleta. First the numbers, then the suitcase.

We do our best to keep our content accurate and up to date, but things change and we are only human. Always verify details directly with local sources before making decisions.

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