Short-Term Rental Rules Tighten in NYC & Chicago—Should You Pivot to 30-Day DSCR Financing?

Author

George Tsividakis
June 11, 2025

New enforcement waves are squeezing nightly Airbnb hosts. 30-day “mid-term” rentals—financed with DSCR loans—may be the smarter, regulation-proof play in 2025.

1 | What Just Happened?

City

2025 Regulatory Flashpoints

Quick Impact on Hosts

New York City

• Local Law 18 (Short-Term Rental Registration) now fully enforced—platforms must refuse unregistered listings.
• “Less-than-30-nights” rule reaffirmed; entire-unit stays under 30 nights are effectively banned unless host is present.

15 k+ Airbnb & VRBO listings removed since January; average RevPAR down > 45 %.

Chicago

• 2024 Shared-Housing Ordinance update capped licenses in multifamily zones; requires owners in 2- to 4-flats to live on-site.
• New 90-day annual cap in “high-impact” precincts near the Loop and lakefront.

License backlog > 4 months; nightly-rate supply down 28 %. Fines start at $5,000.

Bottom line: Nightly STR cash flow is no longer a given in two of the nation’s hottest tourism markets.

2 | How the Crackdown Hits the Pro-Forma

Metric

Nightly STR (Pre-Rule)

30-Day + Furnished

Long-Term Lease

Avg Occupancy

75 %

90 %

95 %

Avg Effective Rate

$225/night

$120/night (≈ $3,600/mo)

$2,600/mo

Gross Monthly Income

$5,100

$3,600

$2,600

Regulatory Risk

High

Low (meets 30-day rule)

Low

Management Intensity

High

Medium

Low

If nightly rentals crash to 40 % occupancy under new rules, mid-term rentals can out-earn the “new reality” while keeping you compliant.

3 | Why 30-Day DSCR Loans Fit the Pivot Perfectly

DSCR (Debt-Service-Coverage-Ratio) loans qualify on property cash flow, not borrower W-2 income. Key pivots:

Loan Feature

Benefit for Mid-Term Model

Qualify on Monthly Rent

Underwriters accept 30-day+ corporate/temporary leases as valid income.

Up to 80 % LTV (SFH)

Preserve capital for furnishings & higher utility costs.

30-Yr Fixed or 5/7-Yr ARM

Hedge rate risk while keeping flexibility to exit if rules relax.

I/O Options

Maximize early-year cash flow as you ramp occupancy.

LoanFunders.com Mid-Term DSCR Guideline Snap
• Min FICO 660 (700+ for max LTV)
• Min DSCR 0.80 (1.15 for best pricing)
• 1–8 units; foreign nationals max 65 % LTV
• Rate table: 30-yr fixed 7.35–8.05 % (July 2025)

4 | Case Study—Brooklyn Brownstone Pivot

Before

After Pivot

Entire-unit Airbnb, 4 bed

Furnished 30–89-day rental to travel-nurse groups

Gross: $5,400/mo @ 65 % occ. post-ban

Gross: $4,200/mo @ 95 % occ.

NOI: $2,500

NOI: $2,900 (lower cleaning fees & OTA costs)

DSCR on $550 k loan: 0.95 ✔?

DSCR: 1.10 ✔ (now qualifies)

Result: Host keeps property, avoids fines, and secures a 75 % LTV DSCR refi to pay off high-interest bridge debt.

5 | Five Steps to Execute the Mid-Term Pivot

  1. Research Demand —Corporate relocations, medical campuses, film crews; use FurnishedFinder & Blueground data.

  2. Adjust Amenities —Fast Wi-Fi, dedicated workspace, linens for 60-day stays, off-street parking.

  3. Secure 30-Day DSCR Term Sheet —Present sample leases or LOIs to lender; show 3-month rent comps.

  4. Reprice Cleaning & Utilities —Include in rent; budget 8–10 % of gross.

  5. Stay Compliant —Register with NYC OSE or Chicago BACP even if over 30 days; maintain local tax remittance.

6 | What Brokers Should Tell Clients

  • “Nightly rates are sexy, but regulation-proof cash flow wins underwriters.”

  • “Bring 30-day comp leases to the loan table—lenders accept them as income proof.”

  • “Higher LTV still possible if DSCR ≥ 1.15—insist on accurate expense underwriting (utilities, cleaning).”

  • “White-label mid-term DSCR loans through LoanFunders.com for faster approvals and bigger YSP.”

7 | Key Takeaways

  • NYC & Chicago nightly STRs face heavier scrutiny, higher fines, and mass delistings.

  • 30-day+ furnished rents can maintain strong NOI with far less regulatory risk.

  • DSCR financing is tailor-made for mid-term rentals—focus on cash flow, not tax returns.

  • Pivot early; secure compliant income streams before enforcement widens to additional cities.

Ready to lock a mid-term DSCR loan? LoanFunders.com can issue a term sheet in 24 hours—no pay stubs, no nightly-rent headaches.

Turn regulatory lemons into 30-day cash-flow lemonade.