All Forum Posts by: Taj Richardson

The big gotcha's are the many different regulations/restrictions to be aware of from city to city/county to county. Some places are vacation rental friendly (Rockaway Beach, Tillamook County) others are not at all (Bandon, Lincoln County, Cannon Beach). Not only are there regulations currently set, but in some markets there are open conversations about adding more restrictions (Lincoln County). 

You are going to want to work with a local Realtor or local property management company to learn which beach towns to avoid based on regulations first, then desirability. Ask the local Realtor or property manager what the current conversations are around regulations, if they don't know specifics, find another local contact. Even if you are thinking of self managing, which I don't recommend, you can get a lot of valuable info from working with a property manager to learn about vacation rentals on the Oregon Coast.

For rental income, AirDNAs free rentalizer tool is good, I recommend shaving about 10% off their projected gross rental revenue in general. I find the rentalizer to be mostly accurate. For costs, before mortgage, I recommend considering around $5k in annual utilities costs, property taxes vary by city/county, but are easy enough to find on Zillow, property insurance will runs around $120/mo. for most rentals. Property management fees/costs average around 28% on the Oregon Coast. With this info you can do some easy spreadsheet math to figure out what kind of a down payment you will need to break even... I find the average down payment needed to be around 30%, if you want to break even on the investment. 

If you use the home, use it during the week/winter, and maximize the income on the weekends and during the high season of May to Sept/Oct. 

Last tip, this is more geared towards the North Coast, but should be close on the South Coast as well, you can expect most vacation homes will generate around 7% to 11% of the homes real estate market value in annual gross... e.g. if a home sells for $500k and is nicely set up for vacation rentals it should make between $35k and $55k a year... A $700k home would do $49k and $77k.... and so on. Not every single home will fall in this range, but after working in vacation rental real estate on the Oregon Coast over the last 7 years I find around 90% of homes do fall into that range at just about every price range.

Hi @Eric Jayy this plan could work. The pricing of condos is going to make it tricky to cover the mortgage, but doable. The key is to purchase a condo in a complex that is not on the ocean. The HOAs are very high, averaging over $600 a month & going up as high as $1400 a month for ocean front condos. Also, lending options are not good on ocean front most condos because they are used like hotels, making them conventionally unfinanceable. 

Average rents here on the coast are around $500 to $600 per bedroom, so you can work backwards from there with pricing from an IDX feed website and a mortgage calculator to see how likely it is you can find something.

I have some other ideas if you would like to strategize more on this idea. Reach out anytime.

Rockaway Beach is the most STR friendly Coast town. ...Really the only town welcoming STRs. Seaside and Lincoln City are pretty good, and pretty well set on their regulations (at least for now). Unincorporated Tillamook County (think Pacific City, Neskowin, Netarts, Oceanside) are very reasonably regulated as well. Unincorporated Clatsop County is pretty fair on STR regulations, but not many great options. Florence is pretty fair w/ their regulations.

Lincoln County is a whole other store. The moratorium will more likely than not be extended to May. There is a very alarming group trying to outright ban STRs in unincorporated Lincoln County; working to get enough signatures to get a vote on the ballet in May... Which is why the County Commissioners are most likely going to extend the moratorium until the see what the outcome of that vote gathering effort (and vote) will be.

Stick to The areas from Lincoln City to Seaside and you are both in the most friendly STR areas, and the most popular vacation areas of the Oregon Coast as well.

The South Coast is OK, but not as popular as the North Coast from a guest perspective, so revenue is not as strong once you get south of Florence.

@Eric Sammons thank you for following up. As I get closer to being ready I’ll be reaching out to them to see about adding them to my team.

Hello Roland, my team and my primary focus in on vacation rental real estate on the Oregon Coast between Newport and Seaside. Bare land can look like a great deal, but with development fees and materials costs being excessive right now it is often much more economical on the OR. Coast to find an existing home that works as a vacation rental. We can schedule a time to have an in depth conversation if you think that would be helpful. 

Lincoln City and Rockaway are two of the best markets on the Coast to find vacation rentals. Rockaway has the most friendly rental regulations. Lincoln City is a bit more restrictive, but highly desirable for guests, making it a top market to invest in for short term rentals. The key is ocean view or nearby beach access regardless of the market, or the size of the home for that matter. 

The home prices on the coast lend themselves to short term rental investing more than long term rental investing, unless you can find an off-market or distressed bargain. You maybe have a 1% chance of finding a home that works for the 1% rule... Finding homes priced under $250,000 are becoming harder and harder to get... and no markets on the coast will give you a $2,500 a month rental return for a home priced at $250,000... However, there are vacation homes to be found that will reach the 1% rule when rented as a vacation rental. It is possible to find $350,000 homes that will get close to making (an average) of $3,500 a month in vacation rental revenue. 

The cost to get into a cash flowing rental can be a hurdle for some investors though, to get a vacation home to cash flow the most common downpayment is going to be 30%, not 20%... and 35% or more will start to see a monthly +cash flow of $250 or more... so it takes a chunk of money to get into a vacation rental on the Oregon Coast in the best rental markets (Lincoln City, Seaside, Rockaway Beach).

@Steve Morris we're meeting at the Black Squid in Lincoln City on Nov 12th for in initial REI Meet Up, if you are interested. We're going to see if we can get traction on a 1x a month on the 2nd Thursday meeting. Sounds like 2-4 will be at this first one. If you are around it would be great to meet you.

I'm a Lincoln City based Realtor w/ a primary focus on vacation rentals for buyers and sellers. @Justin Frank is correct, the Oregon Coast is a bit of a weird market for REI... The best thing the Oregon Coast has going for it from an investment perspective is fantastic appreciation over time with tons up upside... but there is really no cash flow for the Oregon Coast for short term or long term rentals.

With short term rentals the seasonality suppresses the gross rental revenue to get great cash flow unless you come in with 50%+ down, with that kind of down I can find vacation rentals starting in the $350k range that will show decent cash flow. For long term rentals the market it just too expense... no such thing as a 1% rule for long term rentals over here, everything is <1%, even with a lack of long term rental options.

I don't know of any active wholesalers over here (if there are I'd love to connect), not enough opportunity to find the deals most likely. There are plenty of dilapidated non-occupied homes rarely/never used over here that someone interested in BRRRR could probably find some opportunities with. Likely it would take a long term mailing campaign to score one.

The large majority of people I end up finding vacation rentals for are happy to break even with about 30% down. The intrinsic value usually plays a big part in their final decision more so than pure investment decisions. Over time appreciation along with debt paydown will pay dividends, but for someone just getting started with real estate investing there are much better markets in the country to get started for both long term rental and short term rental investing.

If a cash flowing short term rental is the top goal do a search engine search for the top 25 vacation rental markets, you will find several articles with some great insights.