AirBnb in a Commercial Zoned (CM2) House

12 Replies | Portland, Oregon

I own a house in Portland that happens to be a commercial zone (CM2).  I've just been renting it out to long term tenants, but I'm wondering if I can legally do short term rentals (AirBnb) even if it isn't owner-occupied since it's zoned for commercial use?

It's not just the zoning that you need to be aware of @Jim P.  It's the approved use under the zoning. You'll need to change the use from residential to hotel, which will require a lengthy process that includes physical upgrades and changes to the building.

Basically the City wants the property to conform to safety standards for that particular commercial use. You'll need to run sprinklers throughout the house (costly for a number of reasons, especially if you have to increase the water main size), have an enclosed trash area with a drain, have electrical exist signs at the egress points in the house, and they will ultimately require you to become ADA compliant. You also may get tripped up by other things like proper support in the structure, ratio of windows to the buildings envelope (I'm not as familiar about this but have heard stories), etc.

For some properties this added cost and hassle may be worth the investment to change the use from residential to hotel. You'll forever more be able to use it as short-term rental, but you won't be able to use or sell it as a residence. You also need to project out if this will also affect long-term decisions to maximize the zoning if you think the highest and best use is to develop.

Well, yeah, that's not as simple as I had hoped.

In general, should I be doing anything else to take advantage of its CM2 zoning?  It's just about in the middle of the most active part of SE Belmont, not right on Belmont, but on a side street, just behind the lot that has frontage space on Belmont.  It's not a large lot (same size as the residential lots in the area), but should I look into partnering with a developer who could turn it into something that takes advantage of that zoning?  Or does it make more sense just to leave it as a residence?

@Jim P.   Just to clarify your original post,  is the current property just rented out as a single family residence?  If you are moving the renters out and want to make the house to an AirBnb, than that is not a change in use to a hotel.  It would still be considered a residential use.  There are an enormous amounts of properties in Portland that are AirBnbs that are zoned residential.   

If your goal is to keep the existing renters and rent out individual rooms on AirBnb, then you would be required to follow some additional rules. As of right now, the City of Portland has not adapted to the new wave of AirBnb short term rentals. See article below. Much of the regulation applies to renting out individual rooms and/or short term rentals in an accessory dwelling unit(attached or detached ADU on the property.

https://www.oregonlive.com/portland/index.ssf/2018/08/80_percent_of_portland_airbnb-.html


As a side note,  CM2 land on SE Belmont is a prime zoning for building plexes.  If you had any interest in exploring that, please send me a direct message. 

@Brett Barton that's a pretty old article. Yes, there are definitely a lot of airbnbs that are not "legal" airbnbs, but that doesn't mean Portland has not adopted code for them. Portland has a pretty strict code for airbnbs in residential zones, requiring a long term resident to live there for 275 days per year. This is a special "conditional use" that allows you to operate a nightly rental (which is an R2 use,......long term rentals are R1) which is not an use that is allowed in our residential zoning designations. 

@Jim P. , as @Neal Collins stated, the "hotel occupancy", which is allowed in the "retail and sales", which is part of the CM2 zone, would allow for nightly rentals. To fully be legal though, it requires to convert the building to an actual hotel. I've been through the process, it's doable, but likely not feasible for a project of small scale. You can always just throw it on airbnb, but you risk $5,000 per night fines.....not to mention the costs to furnish, manage and operate the unit.

In my opinion, airbnb from an ownership standpoint isn't much better than just a good old normal long term rental, unless there are unique/niche like features that allow your building to stand apart from all of the other (and we're talking thousands) airbnb units on the market. 

Brett is right though, that part of town has a ton of demand. Putting your property to a higher and better use is definitely possible. We're hitting the end of this current development cycle, with construction costs, lowering rents and lending changes making new build projects less feasible, but the next building cycle shouldn't be too far down the road. 

@Mike Nuss   thanks for the insight.  I would agree from an ownership standpoint about just keeping it as a long term rental, especially if your out of state.  A lot less hassle. 

on a side note,  that article is only a little over a month old(8/8/18)  Did I miss something?

@Brett Barton I stand corrected. It's only about 1.5 months old with an update one month ago. I thought it was an older article as it is basically a rerun of past articles, with the same "news". The articles are arguing that enforcement of the airbnb ordinance passed a few years ago isn't happening. Which is kind of true, kind of not. I know many people who have received fines. One builder was fined an exorbitant amount. But there are also a ton of people that do not have permits that are renting out on nightly basis. 

Brett, I apologize if my post came off as condescending to you. I hate it when people spew negativity on here....that wasn't my intent. 

Hey All,

Not that this is an airbnb but just curious if anyone knew what the zoning was for the tiny home hotel. For sure they did not do the whole sprinkler thing as was talked about before this. http://tinyhousehotel.com/. It was just a parking lot sooo  if that is the  case, I wonder can you do a similar thing but for longer term tenants kinda like Seattle did for to provide low income housing?     Thoughts?

Per Portlandmaps, the tiny home hotel lot is zoned CM2. 

A collection of freestanding condos in my neighborhood, Butternut Condos (featured in this old WW article: 
https://www.wweek.com/portland/article-23993-hotel-california.html), is zoned CM1. I recall that after the complaint about their unpermitted use on Airbnb, all their listings were changed to 30+ days, but today they are back to nightly rentals on Airbnb. Not sure if they got rezoned or perhaps one of the owners is residing in one of the units?

@Mike Nuss you mentioned in this older thread that you have been through the process of converting a building in Portland to hotel occupancy. 

Do you have any suggestions for where to find the specifics on those requirements besides engaging with BDS about a specific address, which is how they seem to prefer interacting?

BDS has a good Change of Use or Occupancy flyer - https://www.portlandoregon.gov/bds/article/125287 - that lists the exact situation I'm curious about: "changing a house or duplex in a non-residential zone to a short-term vacation rental," but I can't find more detail about it anywhere else.

The City has no shortage of info about accessory short-term rentals that Airbnb will partner with Portland to enforce permits for next year, but I'm interested in requirements for non-accessory short-term vacation rentals (as articulated in that link) located in non-residential zones.





@Scott Pennington this is the exact process you go down. The use is "retail sales" the occupancy is "hotel". Hotel occupancy, or nightly rentals is an R1 occupancy (or R2, I can't remember) versus a 30 day rental which is R2 occupancy (or maybe R1, lol). Group homes are an R3 occupancy. So it's a "residential" occupancy with a different "hazard" rating. But the change of use/occupancy form is what you'll be applying for with the required documents and such. 

@Mike Nuss Thanks, so helpful - as a newbie I had to first understand that by R1 we're talking about State of Oregon/IBC occupancy, not Portland municipal R1 zoning :) So now I'm down the rabbit hole of researching R1 transient hotel occupancy standards (for <10 people, as will be the case for most SFH structures).