How & Where (NOT) to buy a vacation rental on the Oregon Coast - Rules and Permits

[AJ Wong]

By sheer force I've learned the hard way where you can, cannot and should consider purchasing a permittable vacation rental on the Oregon Coast. 

Partially by circumstance, albeit those that I created, I will confidently say that I am the amongst the very few local Real Estate Professionals that are as intimately familiar with the rules, regulations and requirements to reliably invest in a permittable vacation rental property ANYWHERE on the Oregon AND California Coast's. 

For context, in 2018 I purchased my first Oregon home (specifically intended for STR usage) and moved from LA to Port Orford. I did so because at the time to purchase the property was about half the cost of renting, and there were no STR regulations in Curry County or really beyond..

I recognized early that the regulations that quickly developed to restrict my BNB business in Los Angeles were likely to reach other areas and by being ahead of the curve, could own a long term vacation rental, in a land I wanted to be anyway, before there were rules that would prevent that goal. 

Moving forward, in early 2020 I came across a Vacasa card after staying at a Vacasa managed property in Kauai. I was curious about who and what they were and eventually joined their RE division as a broker and worked with our wonderful team from 2020-2023. For those that are unfamiliar, Vacasa is primarily a STR Property Management company. They are founded in Oregon and as a result also had a strong conventional RE division that supported buyers and sellers of Vacasa managed properties. As a result, my primary duties were to determine (often through specific communication with the direct local municipality or planning individual) whether a property could be utilized as a vacation rental.

Anyone that has ever read or communicated with a city, county or public regulatory authority can attest to the often frustrating and unclear answers that are received (think DMV) but multiply it by twelve when it has to do with sometimes illogical or biased short term rental permissions. 

It should be said that despite all the resistance and discourse surrounding STR's (which we won't get into here) it's important to remember that this is still a relatively new area for real estate. Many communities (like those on the OR Coast) are small and have genuine housing shortages and challenges. Similar to ride sharing and UBER, this technology is disruptive and can have profound effects if not closely monitored. There should be rules. There needs to be. We can discuss the how, where and when and pros and cons at another time..

Investing is all about certainty. One cannot invest confidently in property, if they cannot assuredly utilize the real estate for its intended use. That's like buying a lot to build a gas station, but it's zoned residential currently...but maybe you can get a permit. 

Well maybe you can't? Even if it's a nice home, without being able to produce the income your expecting, it's likely going to be a losing investment. 

As such, due diligence on precisely if and when a property is eligible for short term rental usage in a given area is the most paramount qualification there is. Since eligibilty is often hyper specific to a particular board, it is essential to get direct validation from that entity prior to even touring a property. 

This is tedious, cumbersome and annoying, but a better use of time and energy then analyzing a property, seeing it, speaking with the listing broker or getting a pre qualification. It's numero uno. Why?

Because nobody, and I do mean nobody actually knows the rules. Seriously. 

Have you ever played the game telephone? How does it end? 

Inaccurately. 

My BEST advice and the truest advice of any REAL estate professional is to confirm for yourself. Directly. From the source. 

Ask you RE broker for an email to the direct planning or vacation board in the city or county you are interested. 

Pick up the phone, dial the number, ask them what you need to know. 

Send them an email. Type the question. Say thank you. 

That's it. Five minutes. These are tiny municipalities. They will answer the phone. Their job is to help their community. 

BUT keep in mind if you are buying a vacation rental in their small community, that it's not just about dollars and cents. 

You're investing there, paying taxes, making friends, bringing your friends and hoping to create a safe space for others to visit where the people on the other end of the line live full time. 

Vacation rentals work on the OR Coast because it's one of the most beautiful and unique places in the world to vacation. 

Those that live their year round don't want to be anywhere else. Or put another way, there is no where else to be. 

Tourists are willing and able to spend $1500/night or more for the experience. For one night in paradise. That's a month's rent or mortgage for most people.

It's also an experience that wasn't really an option a decade ago. At least, not on an app, by phone. 

Certainly it was not an investor experience, unless you were a hotel or ACTUAL BED & BREAKFAST OWNER. 

So have some patience with your search. These communities are entitled to (no offense intended) keep these 'Californians and Washingtonians' from buying the available housing and renting it to their friends. Obviously that's not the full story...I'm Canadian/Floridan by WAY of California..just kidding 

The reality is that the value of the Oregon Coast is enticing whether the intended use is for STR or not. Most of my clients are absentee, but more often from other parts of Oregon than out of state. Also they're not looking just to make money, well some of them are, but MOST are looking for a second home for their families and children to grow up with the same summer and holiday experiences they had as a child.

The STR is often a way to supplement the cost of ownership. If they can own their dream escape, eliminate the costs and annoyance of booking a rental every time and carry most of some of the costs by house sharing with someone else, that's good enough for them.

They want the community of the coast. They want to know and help their neighbor. They just might not want to be there or pay for it full time.

There are two sides to the street. Likewise there are many ways to occupy a house. 

Modern investors can get fixated on the necessity for an STR license and they hear all about 'how much' their friends made on BNB.

You can make a LOT. Still. But running a short term rental is a small business. Just like an UBER driver is a taxi driver. An AirBnB is a Bed and Breakfast. You can earn a high return, because there is a real service provided. 

You need to be on point and most of the work is not rewarding work. Keeping even a very small accommodation five star clean is dirty work. Doing it well and on time for the next booking is HARD work. If you can afford to invest in a STR you probably can't afford the time it will take (unless you work at home) or have a spouse or partner that can. If you can't self mange (the most profitable way to operate) you can hire a full time PM like Vacasa.

Effective solution, (especially for absentee owners) but you get what you pay for. Usually you will pay 20-35% of gross income. 

Let's say 30%. A property that grosses $50,000 in annual income would yield $35,000 less utilities, carrying costs and never be accessible when booked. 

A popular and profitable alternative is medium term rentals or 30+day stays. These are NEVER restricted by eligibility of an STR license, some HOA's might have different rules.

But generally you can rent anywhere for 30+ days AKA a seasonal rental or MTR. 

You know, the way that it was done before house sharing? 

You stayed for a month.

Besides no rules..and huge savings..and accessibility..seasonal rentals reduce property wear and tear. Instead of twelve families per month you might have one for three months. 

Now will you 'make the same?' That depends on the data inputs. 

Let's look at a recent example in Rockaway Beach Oregon. 2/2 home. Close to the beach. Furnished. Licensed STR with $45k gross income in 2021 & 2022.

$3750 Gross. 70% = $2625 minus utilizes, repairs, licensing costs..$2100 net monthly income sound fair? 

Can you rent an equivalent home or hotel for less than $100 on AIRBNB? Anywhere on the Oregon Coast? 

No. But you can rent your entire property, furnished, with utilities, on AIRBNB, for a minimum stay of 30 days and allow pets for $25-2750+ 

No management, no property destruction. Block it off when you want, with a tenant that can afford $750/week and afford to be on vacation. 

I mentioned a housing shortage...the Coast still has Dr's, nurses, everyday residents and a major influx of buyers that are waiting, building and looking for a dwelling. But don't believe me..look for a rental on Zillow or Craigslist on the Oregon Coast..

Investors can reliably invest in the usability of a property, often more profitably and reliably, without the necessity of the permission of others. 

Vacation rental permits are not the end all be all for successful investment, but fortunately, for the moment, there are sanctuaries still available. 

So...even when not utilized, securing a vacation rental permit, while still an option, is an excellent and worthwhile struggle and investment. 

We went on a bit of a detour but fast forward five years later and there are very few areas investors and buyers can reliable still secure a vacation rental permit on the Oregon Coast. 

Since the information is difficult to find, comprehend or contradictory, I'll provide some insight into the areas that are the most problematic, some of my experience, suggestions and the most accurate information currently available. Please note, buyers and sellers and brokers need to do their own diligence. This post is for informational purposes only and for context as rules a regulations are always subject to change...and do. DO NOT RELY ON ANYONE. Double and triple check. Often it's not intentional, it's that without regularity and familiarity, the target moves. 

The elephant in the Coastal OR room is Lincoln City. What a mess! My oversimplified and overgeneralized advice is to forget it**

Roughly speaking there are 400 Active STR's in Lincoln City/County. The current guidelines reduce to 50%+/- and there are the equivalent on the waitlist. The list does move, but realistically this could be a 3-4-5 year wait, presuming nothing else changes in the proposed wait period. Five years ago there were no rules..

That's not to say, it is impossible to get a vacation rental license in Lincoln County or Lincoln City Oregon. You can!? Very specific areas are not subject to the waitlist, or zoned intentionally for their use. Existing permits will not transfer but some can reliably be granted within months or just post closing. This is a needle in a haystack and generally comes with competition and valuation premium, as well as lost opportunity and memory making costs.. 

Your best bet is to keep a pulse on the area and fresh listings, but to otherwise venture just north or south.

Focus on the areas that are more inviting and often even more monetizing, if you want to improve your chances for a short term rental permit on the Oregon Coast. 

Other areas to conscientiously avoid are Newport, Waldport, Yachats and Depoe Bay. Why? Lincoln County. There are exceptions, such as existing rentals in commercial zones that transfer, but do your research! 

Further north there are some options, like Rockaway Beach. Within the city limits there are essentially no regulations and one can reliably obtain a permit with some due diligence, however as a result the geography is saturated with active vacation rentals. 

Beyond that, Tillamook County Oregon vacation and short term rental permits was supposed to end their multi year moratorium on new short term rental licenses July 1st 2023. That has since been extended until September 1st with no clear indication of processes or procedures or potential issuance. 

Within Tillamook county, properties that are currently licensed as active STR's can sometimes transfer the license, one time, to the new buyer, at least for now...

Cannon Beach is a PRIME Pacific Destination, the regulations for vacation rentals are also quite restrictive. There are two STR license types available, one is a limited use, maximum of 30 days per calendar year, and the other is unlimited but recently the full allowable quantity of proposed licenses have been issued.

Seaside Oregon is an option for an STR permit on the west side of town. Pockets of Pacific City are also eligible for a new OR coastal vacation rental permit.

I won't cover all of the eligible and ineligible areas here... for sake of an already too long post..

I will add that NOTHING is impossible. Things evolve and change very rapidly in this space. DO YOUR DUE DILIGENCE and you will be appropriately rewarded. Contact your local planning department for validation. Their job is to answer your questions, consult with a professional (broker, attorney, title company) when you don't know what, who or how to ask :) 

The central and south coast does offer quite a bit fewer hurdles to permit, more on that later... 

Cheers.