STR's are one of the more popular forum topics and 'complicated' investment categories (especially for newbies) so I wanted to share some recent investor and operator experiences on the Oregon Coast and why a coastal STR vacation rental home is worth considering.
- Feasibility & Permit-ability: If you know where to look you can still secure a STR permit in most cities or counties from Brookings to Astoria. Some ares are subject to waitlists, but others have a clear path to permit. We host a STR focused hot sheet that at presents shows 100+ active or eligible STR's listed for sale
- Exclusivity & Trajectory: As popular as STR's are, there really aren't that many (homes in general) on the Oregon Coast. Many cities have implemented CAP's or maximum allowable licensable dwellings used as vacation rentals but some areas allow active STR permits can transfer to new owners upon sale. Those same restrictions can have positive long term investment trends by creating a higher barrier to entry for new investors, and theoretically greater return or demand for those that are operating. Oregon STR's are a limited asset class and likely to be more difficult to acquire during the next 2-5-10 years.
- Comparative Affordability: The Oregon Coast still offers a lot of value in comparison to other coastal states, particularly neighboring California & Washington. A quick Zillow search will show some impressive value, particularly at the luxury end of the market. As an example oceanfront homes STR's typically begin in the $1M+ range, and more conservative initial SFR investments begin around the $350-400k mark. I would say like in most areas, owning a beach vacation rental is becoming more of a luxury asset class and budget. Our last three sales this month were for: $700k, $840k & $1.045M.
- Proximity: The majority of our clientele are from out of the area or State usually originating from the Bay Area, So Cal, Seattle area and Idaho. The OR Coast is remote, but increasingly accessible with low cost flights from most of the aforementioned areas into Eugene, Salem, Corvallis or Portland. For Central California investors most areas are a fairly short day drive on some of the most majestic coastal roadways in the country. Access to an STR isn't essential, but helpful and bonus when it's personal usage time..
- Insurability & Operations costs: Can be considerably lower (especially in comparison to CA) with most coastal regions there is much lower wildfire risk and the properties that are in flood zones, have surprisingly accessible and affordable policy costs. For a $350k+/- riverfront home the recent annual flood premium was quoted at $550 and a $1M+ oceanfront home at $2700/year. On thing to keep in mind are potentially elevated maintenance and landscaping costs, as the weather an be extreme ranging from intense rain to snow flurries on the beach. Other STR related expenses such as electricity and gas are generally more investor friendly and bonus no sales tax in Oregon.
- Distinguishably & Scarcity: One challenge (and opportunity) of investing in Oregon is healthy and happy properties. There is not a lot of new construction occurring on the Oregon Coast and older homes can be dated. Most transfers are occurring between previous generations and younger and updated or modernized properties are few and far between. Regardless of the current condition there is ample opportunity to stand out from existing rental competition with attractive styling, design, decor and pro active management.
- Profitability & Consistency: Last but not least..prime Oregon Coast STR vacation rentals generally do very well financially. I've personally (built) owned, sold and operated everything from a $125k studio shack that grossed $3500/month to a $1.5M oceanfront generating $165k/year. I see dozens of AirBnB rent roles for active listings monthly and on average, a well run STR rental generates roughly 10%+ of the properties valuation in gross annual income. So for example a $550k 3/2 home will produce $55-65k in gross rents. There's an active STR listed for $1.3M grossing $140k. It's not a perfect measure, but it's very close and year to year consistency is highly reliable due to limited new rental inventory.
- Bonus - If you haven't actually visited the Oregon Coast, I would make the effort. The views are breathtaking and many areas are some of the only roadways on the Pacific Ocean (beyond Big Sur CA) that you actually drive along the Coast and still attainable for almost any investor level or experience. It is also one of the few regions in the country that is supposedly becoming more hospitable with climate changes. If you're going to own what is effectively a vacation home that is shared with guests that enjoy the outdoors, the Oregon Coast offers a little bit of everything from surfing, golfing, fishing, hiking and investing..
The bull's eye for STR investment in general is shrinking and constantly moving. I imagine in time, most areas that do not already have rules and regulations (not just in Oregon) will implement them. STR's are a limited asset class and on the Oregon Coast the STR search is compounded by exponential demand and exceptionally finite supply.
The Oregon Coast is about 400 miles long, with usually ONLY around 1000+ active home listings for sale. At any given moment there are 50-100+ properties that secure a vacation rental permit. Oh and if location matters most are within direct beach, lake or river access :)
Hope this helps!
