Florence, Oregon

Florence, Oregon, located on the central coast, presents a unique opportunity for short-term rental investors. Known for its stunning coastal scenery, historic landmarks, and outdoor recreational activities, Florence attracts a diverse group of visitors year-round. The population of around 8,500 residents is supplemented by tourism, particularly during the summer months when travelers seek seaside retreats. This market analysis aims to provide insights into the short-term rental landscape of Florence based on current data and trends.

As of October 2023, the current Average Daily Rate (ADR) for short-term rentals in Florence stands at $244.42. Other critical performance indicators include:

• Occupancy Rate: The average occupancy rate for short-term rentals in Florence hovers around 65–70%. This indicates a healthy demand, influenced by peak vacation times and noteworthy events.
• Revenue Per Available Room (RevPAR): RevPAR metrics in Florence yield approximately $160 to $170, showcasing the profitability potential for well-managed properties.
• Average Length of Stay: The average stay in Florence is about 3 to 4 nights, indicating a mix of short getaways and those seeking extended stays.

Over the past decade, Florence has experienced steady growth in its tourism sector, influenced by the expansion of local attractions and amenities. The short-term rental market specifically has benefited from:

• Increased Acceptance of STRs: A growing trend of consumers opting for short-term rentals over hotels has led to an influx of investors entering this market. Historical data indicates that the number of registered short-term rentals has doubled in the last five years alone.
• Visitor Growth: Florence has seen an influx of state and national visitors, primarily due to the promotion of its natural attractions, including the Oregon Dunes National Recreation Area and the picturesque coastal views.
• Investment in Infrastructure: Continuous improvements in local infrastructure, including transportation and tourism services, have created an appealing environment for investors.

The cumulative impact of these factors suggests a larger trend toward increased investor interest and higher occupancy rates in the coming years.

Investing in short-term rentals in Florence can be highly lucrative. With an ADR of $244.42 and an average occupancy rate of approximately 68%, an investor can estimate potential revenue as follows:

1. Annual Revenue Calculation:

   • If a property earns an ADR of $244.42 and is occupied for 250 nights a year, the annual revenue can be calculated as:

   [
   \text{Annual Revenue} = \text{ADR} \times \text{Occupancy Nights} = 244.42 \times 250 = $61,105
   ]

2. Expenses and ROI: While gross revenue might be attractive, investors should also account for various expenses, including property management fees (typically 20–30% of revenue), utility costs, maintenance, property taxes, and insurance. After estimating expenses at approximately 40% of gross revenue, a rough net revenue calculation can be:

   [
   \text{Net Revenue} = \text{Annual Revenue} – \text{Expenses} = 61,105 – (61,105 \times 0.40) = $36,663
   ]

3. Return on Investment: The ROI will depend on initial investment costs, which vary based on property type, condition, and location. Average property prices in Florence have recently ranged between $350,000 and $550,000, indicating a potential ROI of 6.5% to 10.5% based on net revenue figures.

Florence showcases distinct seasonal patterns that significantly affect short-term rental demand:

• Peak Season (June to August): The summer months bring the highest foot traffic, with demand skyrocketing as families and tourists flock to the coast. During this period, occupancy rates often exceed 80%.
• Off-Peak Season (September to May): Demand tends to decline sharply after August. However, shoulder seasons in spring and fall can still yield reasonable occupancy rates, especially during local events or holidays.
• Special Events: Local festivals, art shows, and seasonal celebrations often provide additional spikes in lodging demand, offering short-term rental investors opportunities to capitalize on these events.

Different property types in Florence exhibit diverse performance levels:

• Single-Family Homes: Typically the most popular choice for families and larger groups, these properties enjoy higher occupancy rates and are able to command top ADRs thanks to their spaciousness.
• Condos and Townhouses: These properties serve as affordable options for couples and solo travelers, providing lower entry points while still performing well.
• Luxury Rentals: High-end properties in prime locations can attract affluent visitors, offering potentially high revenue but requiring significant ongoing investments in upkeep and marketing.

Overall, the best-performing property types can be subject to fluctuations in pricing strategies based on demand; investors should maintain flexibility in their approach.

Understanding guest preferences is critical for optimizing rental performance. Visitors to Florence tend to prioritize specific amenities:

1. Location: Proximity to the beach, restaurants, and local attractions is a must.
2. Outdoor Space: Access to decks, gardens, and outdoor seating areas are frequently sought after.
3. Pet-Friendly Options: Many travelers prefer pet-friendly accommodations, making it an asset to cater to this audience.
4. Local Experiences: Properties that provide information on local attractions, adventure opportunities, and dining options are highly valued.

Investors who tailor offerings based on these insights can create appealing properties that stand out in a competitive market.

The regulatory environment for short-term rentals in Florence has experienced developments that investors must navigate:

1. Licensing Requirements: All short-term rental operators must obtain a business license as well as a short-term rental permit from the city. This process may involve meeting specific safety requirements and passing inspections.
2. Zoning Restrictions: Certain residential areas may have restrictions on short-term rentals, requiring investors to research zoning laws in intended locations thoroughly.
3. Tax Regulations: STR operators are subject to local transient lodging tax, impacting profitability. Familiarizing oneself with tax obligations is crucial for effective budgeting.

Staying abreast of changing regulations is vital to ensure compliance and sustained operation.

Several neighborhoods in Florence showcase distinct characteristics that may influence short-term rental investments:

• Old Town Florence: Known for its historic charm, restaurants, and nearby river access, this area attracts many visitors and is a favored area for short-term rentals.
• Heceta Beach: Properties near this beach location can see consistent demand due to popularity with families and outdoor enthusiasts, often commanding higher rates.
• Florence South: A bit further from the main tourist attractions, this area experiences a more residential vibe but may offer opportunities for budget-conscious guests seeking quieter locations.

Each neighborhood has its advantages and comes with unique considerations regarding occupancy rates and guest demographics.

In the coming years, the short-term rental market in Florence is expected to evolve significantly. Key trends to consider:

1. Sustainability Focus: Increasing demand for eco-friendly accommodations suggests a growing market for properties with sustainable features like solar panels and energy-efficient appliances.
2. Technological Integration: Rising expectations for seamless digital interactions means hosting platforms that support contactless check-ins, smart home features, and enhanced guest communication capabilities will become essential.
3. Market Consolidation: The ongoing evolution of property management companies and service providers could lead to a more professional landscape, potentially improving guest experiences.
4. Remote Work: The trend of remote working allows individuals to book longer stays, which may result in a shift from weekend tourism to extended rentals, particularly in periods of lower demand.

1. What is the average occupancy rate for short-term rentals in Florence?

   • The average occupancy rate typically ranges between 65% to 70%, depending significantly on seasonal patterns.

2. What is the average daily rate for short-term rentals in Florence?

   • The current ADR is approximately $244.42.

3. Are there regulations regarding short-term rentals in Florence?

   • Yes, operators must obtain a business license and a short-term rental permit, in addition to complying with local zoning regulations.

4. What types of properties perform best for short-term rentals?

   • Single-family homes tend to perform well with families, while condos attract couples and solo travelers. Luxury properties can also be lucrative but require higher investments.

5. What are the key attractions that influence short-term rental demand?

   • Florence is known for the Oregon Dunes, coastal scenery, and local events, all of which significantly drive tourism.

6. Is investing in short-term rentals in Florence a viable option?

   • Given the current market conditions, investment potential looks promising, but understanding market dynamics and managing properties effectively is crucial for success.

Overall, the short-term rental market in Florence, Oregon, presents an array of opportunities. Investors must approach the market with careful analysis, an understanding of local trends, and a readiness to adapt their strategies to maximize profitability.