A step-by-step guide to investing in vacation rental in Long Beach, WA

Long Beach is one of Washington State’s greatest and underrated treasures. It’s the epitome of a Pacific County city: cool, coastal, and casual, with all the trappings of a popular resort destination. And with the rest of the Long Beach Peninsula attracting thick crowds of tourists every year– and no matter the season– it’s easy to see why investing in Long Beach, WA vacation rentals is an enticing prospect.

Are you interested in exploring this avenue? We prepared this guide to investing in vacation rentals in Long Beach, WA for you. Continue reading to learn more. Better yet, get in touch with our team.

STEP 1: GET TO KNOW LONG BEACH FIRST

One of the keys to owning a successful vacation rental is being intimately familiar with the locale. Your knowledge of Long Beach will be useful in crafting future marketing strategies and handling the overall management of your investment property. Here are some of the most important things you need to know.

Where is Long Beach, WA?

Long Beach is one of the cities on the southern section of the Long Beach Peninsula, between Oceanside and Seaview. Two of the most popular attractions nearby are Cape Disappointment State Park and Willapa National Wildlife Refuge, located south and east of the city respectively.

The star of the show, however, is none other than the 28-mile Long Beach. It runs parallel to the city, which offers several official beach approaches: Sid Snyder, Bolstad, and Cranberry. The Sid Snyder and Bolstad beach approaches have Discover Trail access. Bolstad also happens to have the iconic “World’s Longest Beach” arch.

In terms of distance, Long Beach is approximately:

• 43 mi. or 50 mins. away from South Bend, Pacific County’s seat
• 47 mi. or 1 hr. away from Raymond, the largest city in Pacific County
• 111 mi. or 2 hrs. away from Olympia
• 141 mi. or 2 hrs. and 30 mins. away from Tacoma
• 171 mi. or 3 hrs. away from Seattle
• 111 mi. or 2 hrs. and 20 mins. away from Portland, OR

Although Long Beach is still in Washington State, the closest major airport is Portland International Airport (PDX)— it’s a little over two hours away via a private car. Meanwhile, Seattle-Tacoma International Airport (SEA) is roughly a three-hour drive northeast from the city.

How’s the local climate?

The Long Beach Peninsula’s mild oceanic climate is one of the reasons why the region is a popular year-round destination. It never gets uncomfortably hot nor cold, with temperatures ranging from 40 °F to 70 40 °F.

Due to its coastal nature, winters in Long Beach can be wet. June to August are considered the warmest as well as the busiest months, but as a future vacation rental owner, expect tourist activity well into October.

STEP 2: UNDERSTAND STATE & LOCAL GUIDELINES

Before you go on to invest in Long Beach, WA vacation rentals, it’s also important to study the laws and guidelines surrounding short-term rental properties. There will always be regulations to consider from the macro to the micro level.

Do you need to have a permit?

In Washington State, you have to register your vacation rental as a business with the state’s Department of Revenue. This is applicable to all property owners with short-term rentals, which are defined to be properties leased out for less than 30 consecutive days. Regardless if your vacation rental is a single-family home or a camping site, as long as it’s considered a short-term rental, obtaining a permit is a must.

Apart from state registration, you also need to secure a permit with Pacific County and the City of Long Beach. Both county and city governments also have certain restrictions and guidelines to regulate the presence of short-term and vacation rentals in the area.

Do you need to pay fees and taxes?

Owning and managing a vacation rental is considered a taxable business activity so, yes, you do need to pay certain fees and taxes. These include retail sales tax, which should be collected from rental charges.

You may also need to pay lodging, convention, and trade center taxes depending on your rental property’s location. Following Ordinance No. 143, the lodging tax in Pacific County is 4%. That is on top of the 2% lodging tax imposed by Washington State.

Since you are providing goods and services through your vacation rental, the state also requires you to pay Retailing Business & Occupation (B&O) tax. That said, you can apply for credit, of which there are two kinds: 720 and 815.

• Small Business Tax Credit [720] applies to you if your business has a taxable income of or more than 50% and meets the total B&O tax liability depending on your filing frequency.

• Small Business Tax Credit [815] applies if your business has a taxable income of less than 50% and meets the total B&O tax liability depending on your filing frequency.

For more details about the Retailing B&O tax and small business tax credit, click here.

Can you set up a vacation rental anywhere in Long Beach?

Vacation rentals may be scattered throughout Long Beach, WA, but that doesn’t mean you can set up shop just about anywhere. In fact, the City of Long Beach strictly enforces restrictions depending on local zoning districts. Some zoning districts completely allow vacation rentals, while certain parts of Long Beach are out of bounds.

Zoning districts where short-term rentals are allowed outright:

 

Zoning districts where short-term rentals are allowed conditionally:

 

Zoning districts where short-term rentals are not allowed:

To better illustrate where vacation rentals are allowed outright or on a conditional basis, check out this map.

What are the policies for vacation rentals in Long Beach, WA?

Following local and county policies is key to ensuring the success and long-term profitability of your vacation rental. While these regulations may seem too much at first glance, they’re ultimately for your protection as well as Long Beach’s year-round residents.

According to Pacific County’s Department of Community Development, owners of vacation rentals should do the following:

1. Set and enforce occupancy limits: County policies dictate that vacation rentals should have a maximum of two occupants per bedroom and must also accommodate two additional overnight guests. Vacation rentals in Long Beach, WA can only accommodate a maximum of 10 guests at any given time, including young children.

2. Post public notices around the property: The public should be made aware that a particular property is operating as a short-term rental. Owners are also required to give their neighbors within a 300-ft. radius written notices.

3. Follow road standards: Vacation rentals must have a side clearance of at least 20 feet between obstructions as per the Uniform Fire Code Standard. If the vacation rental has private lanes and driveways, make sure this policy is observed to avoid fines and obstruction issues.

4. Post accurate floor plans: Floor plans should clearly identify all of the available sleeping areas in the vacation rental. Apart from confirming what was posted in an ad, this information also helps in case of emergencies. Vacation rental owners are required to submit these floor plans to the city and county for permit application. In case of any changes, the new floor plan must be submitted to the proper authorities for reapproval. Depending on the circumstances, changes to the floor plan might require inspection. Lastly, for the benefit of guests, the rental’s floor plan should also be posted clearly in the rental.

5. Submit the vacation rental to regular inspections: Pacific County requires all vacation rentals to undergo Fire and Life (F/L) Safety inspections. The first one is typically done before the issuance of the initial permit, followed by other inspections for license renewal.

6. Observe density limitations: If a vacation rental is located in R-1, R-2, and R-R zoning districts (or their local equivalents; please check with the City of Long Beach), the property should be at least 500 ft. away from other dwellings. These include both residential homes and other short-term rentals. Furthermore, only one vacation rental is allowed per parcel.

7. Provide designated parking spaces: To keep traffic flowing smoothly and streets free of obstructions, vacation rentals in Long Beach, WA and Pacific County are required to have a minimum of two off-street parking spaces.

8. Make sure that the vacation rental doesn’t disrupt the neighborhood: Owners of vacation rentals are expected to outline house rules that help prevent disturbances of any kind, from loud music and noises to excessive traffic and garbage accumulation.

Failure to abide by county and city policies can result in hefty fines or the revocation of your vacation rental’s license.

STEP 3: PLAN YOUR INVESTMENT

Now that you’ve been oriented about Long Beach, WA and the county policies for short-term rentals, it’s time to proceed with your own personal investment plan.

Financing your real estate investment

Obtaining a rental property loan is a straightforward process with important considerations to take into account. You may be charged with higher interest rates and down payments. Furthermore, the actual application may be stricter. That’s because lenders are taking greater risks with rental property loans; it’s not uncommon for many borrowers to default over time.

For a successful rental property loan application, make sure to meet– better yet, exceed– the following minimum threshold requirements:

• A credit score of at least 620; better terms are typically offered for 740+ scores.
• A generous down payment of at least 15 to 20%; making a higher down payment may reduce your monthly payments depending on the terms.
• A debt-to-income (DTI) ratio of at least 40%; you’ll have more wiggle room if you have a stronger credit score, but 40% is perfectly acceptable.
• Six-month cash reserves; your savings should be able to cover not only your monthly mortgage payments but also insurance, interest, and taxes.

The type of rental property loan ultimately rests on your financial capacity and goals. Apart from traditional financing, some of your options include asset-based loans, hard money loans, home equity line of credit (HELOC), as well as private financing. The best way to determine which loan to apply for is to take a hard look at your finances and talk to your bank to explore all available options.

Choosing the right property

As explained in Step 2: Understand State & Local Guidelines, local zoning districts determine whether you can turn your investment property into a vacation rental. Based on this map, vacation rentals are allowed outright along the stretch of Pacific Avenue and some of the smaller streets that branch from it.

While Long Beach’s zoning districts already narrow down your choices, there are a few more things to consider when choosing a prospective vacation rental:

1. The type of vacation you want to offer: Long Beach is known to be a relaxed resort destination in southwest Washington. That said, you can always put a spin into the typical Long Beach experience. If you intend your vacation rental to be a respite from it all, finding a property in areas with relatively less activity may be beneficial. But if you want to showcase the best of Long Beach, a vacation rental property near official beach approaches or the main drag may be better.

2. Your target market: Who is your vacation rental property geared towards? A larger vacation rental, preferably with more outdoor space and parking, is ideal if your target market is families or large groups. You can do with a comparatively smaller property if you intend your rental to be occupied by solo travelers or couples. If you want to open the vacation rental to older as well as disabled guests, the property should have certain accessibility features, such as wide entryways and ramps. A centrally located vacation rental is just the property intrepid travelers who want to deep-dive into the local lifestyle are looking for.

3. Potential for flooding: One of the things you should be on the lookout for is a neighborhood’s flood risk, especially in a coastal city like Long Beach. Fortunately, the community only has a minor risk of flooding in the next 30 years. While safety measures are ultimately the responsibility of the city government, you can also take proactive steps to protect your investment. Consult local flood maps to see which areas are particularly susceptible to flooding in case of rising sea levels, heavy rain storms, and hurricanes. You can start by checking Washington State’s Coastal Atlas.

Hiring a local property manager

In Pacific County and Long Beach, investors are highly encouraged to hire a local property manager. That’s because running a vacation rental is a 24/7 job, similar to managing a hotel or a smaller bed-and-breakfast. If you intend to self-manage your vacation rental property, your day-to-day tasks will range from fielding inquiries to facilitating the ingress and egress of guests.

Having a local property manager allows you to reap the benefits of your vacation rental property minus all the stress. Furthermore, they’ll keep you and your investment on top of local and county obligations, from bi-annual inspections to license renewals. They will still defer to you for major decisions, but in general, you can focus your energy on activities you love and enjoy.

How can you find a local property management company in Long Beach? Well, they’re a dime a dozen in the area. That said, don’t hire the first property manager you meet. Collect a few names, check out local reviews, and compare their rates and services before committing to one professional or company.

For your consideration: Pacific Realty’s property management team. We have 50+ years of cumulative experience managing vacation rentals in Long Beach, WA and the surrounding area. Apart from property management services, we also offer customized home watch programs to help out-of-town homeowners keep tabs on their properties.

STEP 4: SUBMIT YOUR APPLICATION

Before you post listings of your vacation rental property online and elsewhere, don’t forget to get the necessary permits. One of the most important registrations you need to file is with Pacific County’s Department of Community Development: the Vacation Rental License form.

Before filing the form, make sure to read the document thoroughly and double-check all of the requirements. These include the following:

How much does a permit cost?

If your vacation rental is located in permitted-use areas, you’ll need to pay $975. Meanwhile, owners of vacation rentals in special-use areas must pay $2,175 for the permit. Both fees cover technology, application, zoning, and license charges. Considering the higher fee for vacation rentals in conditional zoning districts, you may want to focus your search for properties exclusively within permitted-use areas.

LET PACIFIC REALTY HELP YOU WITH YOUR VACATION RENTAL PROPERTY

Pacific Realty Property Management is firmly established in the Long Beach Peninsula rental market. We have 20+ years of experience managing rentals and monitoring properties in the area. Hear directly from our team to learn more about how we can help you