A listing that advertises strong rental income is really advertising the previous owner's paperwork, not a guarantee that comes with the deed. In the City of South Haven, a short-term rental license is issued to a specific applicant for a specific property, and it does not transfer when that property sells. If you're buying with rental income in mind, the number on the listing sheet describes what the seller earned under a license that expires the moment the sale closes. What you earn depends on whether the city issues you a new one, and in 2026 that is no longer a formality.
What Actually Changes Hands at Closing
South Haven's current short-term rental framework runs under Article V, Chapter 14 of the city code, adopted through Ordinance No. 1097, which replaced the older Article X system built on Ordinance No. 1044 from 2018. Every dwelling unit operated as an STR inside city limits has to be registered under this newer ordinance, and any unit still running on an old Article X registration has to transition out by May 1, 2026, according to the city's own short-term rental registration page.
That transition matters to a buyer because the license is not a feature of the house. It's a permission granted to a specific owner or applicant, tied to a zoning compliance review and a property inspection completed under their name. When title changes hands, that permission ends. The next owner starts the application over: a new zoning compliance determination, a new licensing fee, a new inspection cycle. Nothing about the previous owner's rental history, guest reviews, or booking calendar carries forward automatically.
The Backlog Behind This Summer's Numbers
This would be a manageable administrative detail if the city's licensing process were running smoothly. It hasn't been. At a Committee of the Whole meeting on March 2, 2026, city staff told the council that only about 20 percent of South Haven's roughly 700 short-term rentals had completed the new licensing process, with the May 1 deadline weeks away. That left more than 500 properties in limbo heading into the 2026 tourist season.
City Manager Kate Hosier described the pressure to council members directly: "We are barreling towards May 1, which requires all short-term rentals to be registered under the new scheme." Planning and Zoning Administrator Kelly Getman-Dissette made the same point from a different angle, noting that the backlog wasn't a sign of noncompliance: "We've got well over 500 property owners who have applied, who have done the right thing," she said, arguing the city shouldn't penalize operators for a processing delay that was the city's own.
The council's fix was a conditional license, introduced as an ordinance amendment and available beginning March 27, 2026. It lets an existing, previously registered operator keep renting while staff work through the backlog, but City Attorney Dave Eberle was clear that the conditional status is not permanent protection. If the property fails its inspection or doesn't clear zoning compliance review, the conditional license can be terminated. Those licenses can run as long as two years while the city catches up, which means a property you're evaluating today may be operating on a status that is explicitly temporary and explicitly revocable.
Why the City Capped Supply at All
Even once a property clears inspection and paperwork, there's a second constraint that has nothing to do with the individual applicant. South Haven's short-term rental ordinance, in place in some form since it was first adopted on July 16, 2016, caps the total number of licensed STRs at a 1:4 ratio to the city's overall housing stock, which works out to roughly 20 percent of all units, according to the South Haven Vacation Rental Alliance's own explanation of the rule. The exact count adjusts each year as the total number of housing units in the city changes, so the ceiling moves slightly, but the structure is fixed: the city has decided how much of its housing stock can operate as short-term rental inventory, and it does not expand that ceiling for every buyer who wants in.
This is the part that changes how you should read a rental-income listing. Because licenses don't transfer and total capacity is capped, a license that lapses between owners isn't automatically replaced. If the city's ratio is already at or near its limit when you apply, a strong rental history under the previous owner tells you what was possible, not what's guaranteed to be available to you.
City Rules Compared With the Township
Address confusion adds a second layer. A property with a South Haven mailing address can sit inside the city limits or inside South Haven Charter Township, and the two jurisdictions run separate ordinances with different mechanics entirely.
| City of South Haven | South Haven Charter Township | |
|---|---|---|
| License structure | Class I (unlimited rentals, max 2 stays per 7 days) or Class II (6 rental terms or 28 days per year) | Single ordinance, no license classes |
| Stay length | Set by license class, not a fixed night range | Minimum 3 nights, maximum 27 nights per stay |
| Booking frequency | Class I limited to 2 stays per 7-day period | Only one rental term may begin per calendar week |
| Local agent rule | Required for all licenses, must acknowledge complaints within 45 minutes | Required only if the owner lives more than 45 miles from the property |
| Liability insurance | $1,000,000 minimum for Class I | $1,000,000 minimum |
| Supply cap | 1:4 ratio to total housing stock, about 20 percent | No published ratio cap in the township ordinance |
| Inspection | Bi-annual under Article V | Required, tied to occupancy and safety standards |
The township's occupancy math is its own detail worth flagging: two people per bedroom plus two per finished story, capped at 12 occupants regardless of size, and a requirement for septic inspection or certification on parcels without public sewer service. None of that overlaps with the city's class system, and a buyer comparing two listings, one inside city limits and one just across the boundary, is really comparing two different regulatory products, not two versions of the same rule.
What to Check Before You Write an Offer
If a South Haven listing is priced or marketed around its rental income, the seller's numbers are a starting point, not a promise. Before you commit to that number in your own underwriting:
- Confirm whether the property sits inside the City of South Haven or South Haven Charter Township. The boundary determines which ordinance applies, and mailing address alone doesn't answer it.
- Ask the seller or listing agent whether the current STR license is a standard license under Article V or a conditional license issued after March 27, 2026. A conditional license carries a termination risk that a standard license doesn't.
- Contact the city's STR program directly, rather than relying on the listing sheet, to ask whether a new applicant would need to wait for capacity to open under the 1:4 ratio cap, or whether the current count leaves room.
- Verify which license class the property would qualify for. A Class II limit of 28 rental days a year produces a very different income picture than a Class I license with near-unlimited rental frequency, and the difference isn't always obvious from a summer booking calendar alone.
- If the parcel is in the township, confirm septic certification status and run the occupancy formula against the actual bedroom count, since the 12-person cap can bind sooner than expected on larger homes.
A Few Questions Worth Asking Directly
Does a Class II license upgrade to Class I automatically if I want to rent more often? No. Each class is applied for separately and carries its own fee, inspection schedule, and operating limits. Moving from limited personal use to more frequent rental means a new application, not a simple status change.
What happens if I buy a property that was renting short-term without ever being licensed? The city's registration requirement applies to the property regardless of whether the previous owner complied. An unlicensed rental history doesn't establish any right to a license going forward, and it may complicate the zoning compliance review a new application requires.
Is the 1:4 ratio cap the same inside South Haven Charter Township? No. That ratio is specific to the city ordinance. The township regulates through stay-length windows and occupancy formulas instead of a housing-stock ratio, so a cap that binds inside city limits may not apply at all just outside them.
The rental income on a South Haven listing is real, but it belongs to a license that ends at closing, not to the house itself. If you're underwriting a purchase around what a property can earn, that number depends on paperwork the city hasn't issued to you yet, and 2026's backlog has made that gap wider than usual. Talk with Amy O'Sullivan before you write an offer on a South Haven property marketed for its rental potential. She can help you separate what the seller's license produced from what the city is actually prepared to issue next.
