woman in pied a terre

What is a Pied-à-Terre?

As a real estate term, it’s an apartment used as a second home on weekends or short periods. Typically owned by the wealthy, a pied-à-terre is a temporary residence, usually located in large cities. They range from small studios to luxury condominiums.

Second homes are a growing part of the real estate market and people buy or rent them for all sorts of purposes from business travel to urban exploration. If you visit the same place often, it may make sense to get a pied-à-terre.

Benefits of a pied-à-terre

A pied-à-terre is a comfortable alternative to a hotel room. According to Statista, the average daily rate (ADR) of hotels in the United States was $132.47, as of August 2019. If you’re spending a lot of money on hotel accommodations, it might be cheaper to get a pied-à-terre.

With space to keep your clothes and other personal items, you can travel light and not worry about packing a bag for each trip. You’ll also save money by having a kitchen and the ability to eat in.

Pieds-à-terre are often used for business travel as they provide a cost-effective and comfortable place to stay for people who spend a lot of time working away from home. Many people get a second home to enrich their life with easy access to shopping, dining, nightlife, museums, art galleries and live entertainment venues.

Regularly driving or flying long distances can also be time-consuming and stressful. Having a place in the city could save you time and improve your physical and mental health. It may also give you the opportunity to visit family or friends more often and provide a more relaxed lifestyle.

Renting vs. buying a pied-à-terre

Pied-à-terre

Should you rent or buy? Renting an apartment gives you the opportunity to get to know a place without making a long-term commitment. It’s also cheaper in the short-term.

If you have the financial means to buy a pied-à-terre, it may make more sense to do so. A well-maintained apartment in a good neighborhood will likely increase in value and be a good long-term investment.

You could also use the property periodically and earn additional income by renting it on a short-term basis, through Airbnb or another rental management service. Some cities and specific buildings don’t allow short-term rentals, so be sure to do your homework and learn about the city’s real estate market and local restrictions before investing in any property.

Things to consider when buying or renting a pied-à-terre

  • Location: Spend some time getting to know the neighborhood. Is it conveniently located to restaurants, museums, shopping, arts and entertainment venues? Is it quiet or noisy? Is there good access to public transportation? If you buy the property, will it be easy to resell?
  • Parking availability: Parking in the city can be expensive and spaces can be difficult to find in busy areas. Are there dedicated parking spaces? Is parking an extra expense?
  • Safety and security: Is the apartment located in a safe area? Is there a security guard or a surveillance system? Can you add your own security system?
  • Size requirements: How much space do you really need? Do you plan to have visitors and need extra bedrooms? Do you need a dedicated work space?
  • Furnishings: Is it furnished or unfurnished? Can you afford to buy the furnishings that you need to make your new space comfortable?
  • Terms of the lease: If you’re a renter, is there a short-term lease option? While typical leases are for a full year, a short-term lease gives you more flexibility and allows you to enjoy a second home for part of year rather than making a long-term commitment.

Restrictions and taxes

Short-term rentals are on the rise across the world. Travel industry experts Skift estimates that the global short-term rental market reached a market valuation of $169 billion in 2018. Regulating this growing industry is very controversial.

Every city has its own restrictions on rental property and fines ranging from $100 a day to $7,500 for violations. Here’s a summary of short-term rental restrictions in major U.S. cities:

short term rental laws

Source: 2ndaddress.com
  • New York: It’s illegal for an apartment to be rented out for less than 30 days unless the permanent tenant is present at the same time
  • San Francisco: Owners must be permanent residents and are required to register as a business and register the property as a short-term rental. Apartments can be rented up to 90 nights per year.
  • Los Angeles: Property owners can only rent out their primary residence, not a second home or investment property for stays of fewer than 30 days
  • Washington D.C.: An entire property can be rented 90 nights per year and it must be the owner’s primary residence. All hosts must register with the city. For those who wish to rent out an entire property, they must obtain an additional “vacation rental” endorsement.
  • Chicago: Short-term rental platforms are divided into two categories: “Short-term rental intermediary” refers to properties that are listed as shared housing units, like Airbnb; “advertising platform” refers to vacation rentals or bed and breakfasts, such as VRBO and HomeAway. A city license is required for owners of multiple short-term rentals and all hosts of vacation rentals.
  • Boston: Registration is required to rent out properties for fewer than 28 nights. Those who want to rent out an entire unit can only do so for their primary residence or a secondary unit (such as an in-law unit) in their primary residence. Short-term rental hosts have to pay a 5.7 percent state tax.
  • Seattle: Short-term hosts need to obtain licenses from the city and pay retail sales tax and applicable lodging taxes on rental charges

Save yourself time and energy

If you regularly travel to a major city, it may make sense to get a pied-à-terre, a small apartment that you can use as a temporary residence. Be sure to learn about the real estate market and the short-term rental rules and regulations before making a long-term investment. Consider renting first so you can get to know the area and find the apartment that suits you best.

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