Why 2024 will be the last year of selling Oregon Coast Vacation Rentals & STR's :(

[AJ Wong]

It's been a GREAT RUN! I've personally invested in a handful of successful STR's and flips and supported several dozen buyers acquire lucrative Oregon Coast vacation rentals and AirBnB's.

Unfortunately the primary dynamics that brought me to the Oregon Coast (mainly no regulations) have shifted since 2018. As with most areas, jurisdictions and municipalities have regulated or sometimes re-regulated the areas and requirements of where and how you can obtain a vacation rental license. 

This has created both greater barriers to entry and conversely potentially greater return on long term investment. In other words, the window of opportunity to acquire a coastal STR is closing, but those that secure a desirable and licensable property in 2024 will likely yield greater returns.

For example Lincoln City has several vacation rental jurisdictions, within the actual city, within the county and specified VRD (vacation rental dwelling) or designated communities such as Olivia Beach where nightly vacation rentals are permissible outright. Or Road's End where actively licensed rentals can 'transfer' or new owners can obtain a permit, but unlicensed properties can not and in a few months the overall proportion will be reduced by nearly 50% through attrition (sales and non renewals since licenses do not transfer.) 

Within the city, prior to August of 2023, there was a near 200+ waitlist. At the anticipated attrition rate, the wait was a decade. However, with a recent rule change, the county areas were capped (maximum permissible licenses) many of which will be reduced by half of the present quantity and assumedly this will increase the productivity of the remaining active rentals. 

The ordinance also reduced the waitlist for properties with the correct zoning within Lincoln City, creating a dramatically reduced waitlist (with an as of writing expected timeline of only 5-6 months for a permit.)

It is a similar story throughout the Oregon Coast, areas like Tillamook County for example, home of Nehalem, Oceanside and Pacific City was broken up into subareas. Those particular cities now each have a waiting list, and since they are so small, could be sometime until a permit is issued. However, in several of the remaining towns in the area, there are permit slots available or licenses outright transfer for existing rentals, but not many and highly specific to each property. 

So although the performance of coastal vacation rentals is still exceptional and in many cases (especially now) anticipated to grow, the likelihood of an investor acquiring a property that can be live on AirBnB at or close to closing in the coming years will be near impossible except for some very small exceptions. 

Additionally those that operate the remaining productive rentals, will be hard pressed to find a more profitable alternative.

It's not that I don't want to be selling Oregon Coast Vacation Rentals, in fact I think this year is shaping up to be the most active yet, but in the near future, there is unlikely to be a robust market for vacation rental options that are reliably investable. After all, what is better than showing only beautiful beach homes!?

Ultimately, there is very little overall housing inventory on the Oregon Coast, even less that you actually want to invest in (If anyone wants to talk development I have some experience and ideas..) But prime properties near or looking at the beach are assets, some of which can be highly profitable vacation rentals, and are comparatively affordable..for the moment. 

Somewhat paradoxically, the cumulative recent rule changes in some of the most notable coastal areas have created a higher proportion of eligible properties that can obtain a permit outright or reliably. Although there is extremely limited overall inventory, as of writing our STR HOT Sheet shows roughly 40 total existing, and properties eligible for vacation rental usage on the Oregon Coast from Bandon to Pacific City.

In general starting prices are from $450k+/- to north of $1.65M+ for a SFR.

Moving forward I'll dive a little deeper into California Coastal STR's (yes they are possible) and other investor focused realty topics such as multi family and development experience in and throughout Oregon.

Along the OR Coast there is significant opportunity for value add returns. From new construction or for those with some experience with rehab and improvements can make positive long or short term investments, and along the I5 corridor from southern Portland to Eugene has shown explosive multi family and SFR demand.

One area I am also personally focused on is the suburbs of Eugene. I think there is tremendous land value around the Eugene airport and recently noticed a considerable densely constructed community by Lennar that was previously a large continuous residential lot. Side note Eugene has fairly loose and lenient STR regulations and there is seasonally high demand near the University and beyond. Downtown is growing up quickly. One of my favorite little towns in the PNW and gateway to the central and south Oregon Coast.