By Bonnie Roseman, December 4, 2018
The phone rings. The caller is a renter in a high price tag part of the country – Los Angeles, San Fran, NYC or the like. The dream is to move to Oregon – someday. In the meantime, how about an investment that can be used for short term rentals, and, you know, a second home for testing out the rainy season in Oregon. Other times the query is from a renter hoping to host a short term rental to help save for a down payment on their own place in the future. Then there are the grandparents who want to be close to the kiddos – sometimes – and host a short term rental the rest of the time. The short term rental host dream stories come in many shapes and sizes, but the hurdles are shared by all.
Oy, I hate bursting bubbles, but there are pitfalls with this frequently sought after dream.
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First, let’s discuss the financing of your new purchase:
- If you get an owner-occupied loan, which will typically come with a lower interest rate and a smaller required down payment, then you are required to live in the property for at least the first year, beginning within 60 days after closing.
- One possibility is to purchase the new place as a second home. This will mean you need to show enough income to qualify for your current rent or house payment as well as the new mortgage, taxes and insurance.
- If you need to show income from the rental of the new property, you will need to get an investor loan for non-owner occupying buyers. The appraiser will include a rent survey in this case, at an additional cost, for your lender to estimate the rental income potential.
City Rules
Next, let’s discuss the city rules for short term rentals in Portland:
I went into the city offices recently and got updates on the short term rental rules: Portland short term rental info.
Here are the key points for rentals under 30 days long:
- The unit must be a primary residence (owner’s or long term tenant’s), occupied at least 290 days a year
- The address must be on the primary occupant’s driver’s license or state issued ID
- The number of bedrooms used for short term rentals is limited
- It is OK to use a part of a home or duplex unit (not whole unit), an ADU, or a condo with some constraints and notice provided to neighbors
Here are the FAQ’s: Short term rental FAQ’s
More Rules and Requirements
- Be sure to familiarize yourself with rules that may be imposed by your landlord if you are renting the place you hope to rent out for short term stays
- Your mortgage lender may impose limitations
- Your insurance carrier may as well
- Condominium associations almost always have rules about this and many strictly prohibit it
- The agency you are listing your place with will also have requirements
Your neighbors may also be resistant to your short term rental, so make sure you follow all the rules and be sensitive to their feelings to keep things friendly.
So, you may be getting the idea that I am against short term rentals. I am not. I love staying in them when I travel and really appreciate how a short term rental can help make ends meet. My real message is to go into it with your eyes wide open and be fully informed. Ask lots of questions, then dot your I’s and cross your T’s and be careful out there!
Bonnie Roseman
Principal Broker | Earth Advantage | ADU Specialist | OR
She/Her
Hello, we’re so glad you’re here! My team and I are ready to answer all of your real estate questions and help you make a move when the time is right...
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- T: 503-515-5973
- bonnie@livingroomre.com
