As STR Regs tighten: Oregon Coast offers AirBNB vacation rental investment potential

[AJ Wong]

We've had a bit of an influx of interest from out of State investors turned off by recent proposed and implemented STR regulations in some HOT investment areas in the South.

Like most regions, the Oregon Coast (and beyond) the STR regulation environment is constantly evolving and changing. Some coastal cities that were historically very welcoming to vacation rentals (like Rockaway Beach OR) have recently passed new CAP's or rules on STR permitting or vacation rental licenses. In RB for example, actively licensed properties have a window where the permit can transfer to the new owner. Beyond that period, new applicants will need to wait until the current active rental list declines by roughly 100 permits.

On the bright side for investors, there are still cities all along the Oregon Coast from Brookings to Astoria that a permit can still be obtained or transferred outright. We keep a daily updated list of all active and eligible STR's for sale and currently there are well over coastal Oregon listings for sale with vacation rental or STR AirBnB eligibility and generally focus on properties that can reliably secure a permit within 30-60 days of closing. We also try to identify hot prospects in areas subject to waitlists for those that intend to personally utilize the property for vacation usages or rent mid term (30+ days) until a permit can be secured. Some of these areas include Manzanita, Arch Cape, Lincoln City, Oceanside and Yachats.

Some of the top producing areas we've noticed in terms of pound for pound ROI and generally smooth path to STR permit currently include: Florence, Brookings, Waldport, Nehalem, Lane, Coos and Curry Counties, and case by case Rockaway Beach (three oceanfront STR's for sale with permits) Lakeside and Bay City.

A high level overview of anticipated rental production is high season of June, July and August and roughly 10% of valuation in gross annual income. For example there is an active two unit STR listed for $1.3M (target of $1.245M) that grosses $140K annually. Those able to self or hybrid manage can anticipate constant and positive returns.

Last year we supported roughly a dozen luxury STR investors get their coastal beach homes launched, and so far in 2024 five out of state SFR STR investors and one two unit STR eligible property pending. Prices so far this year range from $420k-$1.05M all with ocean views or ocean access. The majority of investors have utilized low down payment conventional mortgages, or DSCR loans and the majority were able to secure seller concessions between 1-3%.

So far this season, most STR occupancies and revenue on the coast are up compared to last season 2023.

What areas are on your radar this year for STR vacation rental investment? Anyone launching out of the country?