What STR investors should expect on the Oregon Coast in 2025 and beyond

[AJ Wong]

In the six years I've owned, operated and sold vacation rentals on the Oregon Coast the investment landscape has evolved considerably. 

When I first arrived and invested on the Pacific Coast in 2018 it was still relatively unknown to investors and vacation rental investors. Post pandemic, the secret is out and investors can no longer 'simply' operate a nightly vacation rental in most cities and regions. As with most municipalities and jurisdictions, the evolution of the AirBnB market has spawned regulation and restrictions on where, when and how a STR can operate. The increasing barrier to entry results in fewer new STR's coming available for sale, but also fewer options for guests to rent.

As tourism grows, seemingly so does demand and nightly rates. There are often weekends or holidays that finding even a basic motel for the night in some areas is nearly impossible (especially if you have pets!) 

So.. can investors still acquire a lucrative vacation rental on the Oregon Coast? Absolutely. Last year we helped eight buyers acquire exceptional coastal STR's in; Brookings, Gold Beach, Bandon, Manzanita, Arch Cape and Yachats, with two in 2025 under contract in Seaside and Rockaway Beach. We cover a large geographical area (nearly 400 miles) because there are usually only a few STR eligible properties for sale in any given city. To provide our buyers the greatest probability for success, we cast a wide net to evaluate ALL vacation rental prospects and narrow it down to the handful that meet the search criteria.

The process can take client's anywhere from one month to two years of active and consistent searching, analysis and dealmaking to acquire the right home. Our most recent client has been persistent with us since July 2023!

If you're in the market for an STR on the Oregon Coast (or really anywhere for that matter) here are some tips to be successful this year:

- Know your market. Know you needs. Specifically; rules, regulations and permitting procedure. There is no point in looking at a home that can not reasonably obtain a permit. With that said, investors have different reasons for purchases. For example, several of our clients last year did not have a primary intention of profitability. They were seeking secondary homes for their family that could be rented to help offset costs and didn't require an immediate or transferrable permit. For those that need a property eligible for immediate launch, the target can be smaller. 

- Expect buyer competition. Lucrative STR's are some of the most desirable property types on the market (especially near the beach!) and the demand is amplified when it has a proven rental history, furnishings and a transferable or easily obtainable STR permit. On a recent STR prospect, there were ten calls and six showings in less than one week. Timing is critical. Follow new listings closely and be definitive in scheduling tours and making offers. I have found sellers often place priority on seriousness.

- Post closing Plan. A major part of the success or failure of an STR investment is the design, furnishing and management plan. See managing on the coast is plausible and there are great cleaners and crews on the ground willing to work hard. Historically, full service management on the coast has been costly but in recent months management rates have come down and quality has improved. For properties that need upgrades, rehab or furniture, investors will need the time or team to execute.

- Performance expectations. I think we do a very good job of helping investors to focus on the most lucrative prospects. In fact, I would put the quality of homes we've sold up against anyone's on the Oregon Coast! We truly have sold some stunning properties. A good gauge of performance for a full time rental is roughly 10% of valuation (A $1M home should generate $100K+ in gross revenue.) I'm not sure why that metric has held true but it still applies, the properties that perform well above that ratio are the owners that treat their STR like a business. They've gone all in. Direct booking website, highly attentive to guests needs and experiences and consistently enhance the property during ownership. To reiterate, that's not what everyone is looking for out of their investment, but clients that embrace their hospitality business have been highly successful.

Fearless Forecast: I've written extensively about the wonders of the Oregon Coast, including why I migrated north and why I believe many others will continue to follow. Climate migration is real. Cost of living increases are real. Living on the Oregon Coast is real. There is an abnormally low amount of new construction occurring on the coast in comparison to the demand and the existing inventory can be quite dated, especially for those coming from areas like California. As much as prices have increased, comparatively you still get A LOT for the money. The entry level point for STR's has risen to the $4-500k range with many now pushing $750-850-$1M+ and I would expect that to continue to increase. Over the next decade the 'larger' coastal cities like Coos Bay, Lincoln City, Newport and Astoria will continue to mature. Just in the past few years we've seen rapid growth in cafe's, yoga schools, restaurants and amenities operated by younger entrepreneurs.

- The smaller more 'luxury' coastal areas such as Bandon, Arch Cape, Manzanita, Florence and Cannon Beach could see dramatic valuation increases as could luxury coastal estates. When you compare 'what you get' for the price in Oregon to other locations on the Pacific Coast including; California, Washington and Hawaii, investors generally get more 'bang for the buck' the greater the valuation. These areas are becoming 'micro Big Sur-esque,' a more affordable piece of the Pacific Wonderland. 

Other notes: 

- Higher density multi family properties can be very hard to secure on the coast, but very profitable. I do not anticipate significant new multi family property inventory in the coming year. I do expect greater development of condos and townhomes and higher density single family communities. 

- Acreage will continue to be a very hot commodity. Western Oregon is surprisingly composed of smaller single family lots, usually around .10-.15 of an acre. It's somewhat unusual for a large in town coastal lots or homes on plots of 1-10 acres. 

- Boutique hotels are on fire. The graduation for many successful AirBnB operators are 5-25 units hotels where licensing and permitting are inconsequential. For those with hospitality experience, the coast offers a lot of upside. 

- Storage and Mobile park prices could soften. There has been a substantial increase in inventory of storage facilities constructed and although generally near full occupancy there are greater options for storage space in most coastal regions. Mobile Parks have seen an influx of listings for sale that could keep valuations flatter. 

- Established and actively managed AirBnB's will continue to be consistent income producers with a gradual growth in returns. 

What's going on in your STR market?