Welcome to the ultimate guide to investing in short-term rentals (or commonly referred to as investing in airbnb or VRBO) in Orange County, California! This coastal paradise in Southern California is magnet for visitors across the world. Blessed with year-round great weather, short term rentals and vacation rentals are often filled year-round with travelers flocking to Orange County’s beautiful beaches, family-friendly attractions and historic and charming downtowns of its 34 cities. If you are planning to invest in a short term rental property – Orange County should be high on the list.
This guide will cover recommended investment locations, how to finance these STRs with Easy Street Capital’s industry leading STR Loans and the latest updates on the rules and regulations for short term rentals in Orange County, California! A long-time tourist destination located in a state known for heavy regulation, Orange County, California has been on the forefront of balancing airbnb rules and regulations that provide opportunities for short term rental investors while not overwhelming or disrupting the local communities. We’ve got you covered with a comprehensive Orange County STR Guide as well as up to date info on the latest developments in Orange County, California short term rental rules and requirements!
Table of Contents:
Why is Orange County So Popular for Short Term Rentals?
Top Things To Do in Orange County, California (STR Demand Drivers)
STR Rules and Regulations in Orange County
Investing in Short Term Rentals in Orange County
Start Investing In Orange County Today
Why is Orange County So Popular for Short Term Rentals?
When it comes to choosing where to invest in airbnb, many things matter. One of the most important is the market you choose to buy your short term rental in. The most crucial thing in choosing an airbnb market to buy in is “demand drivers.” What are demand drivers? These are things in the area that drive people (i.e. your paying customers or tenants) to come to visit your short term rental. These are the guests that are going to be booking your airbnb or VRBO, paying the rents and providing the all-important returns. So its very important to choose a market with good demand drivers, and ones that your property is close to and can cater to travelers coming to the area.
Orange County is a great market for Vacation Rentals primarily because of its year-round appeal (no slow seasons) and multiple family-friendly draws. Many airbnb investors find success catering to families and large groups since this is one of the biggest weaknesses of STR’s chief competitors – hotels. By offering full houses with multiple bedrooms and lots of space – hotels are often at a disadvantage to STRs in Orange County markets such as Anaheim (home to Disneyland) and beach towns such as Huntington Beach and Newport Beach.
Additionally, Orange County is home to many other significant magnets for visitors such as sports (including MLB’s Los Angeles Angels – who still play in Angel Stadium in Anaheim and the NHL’s Anaheim Ducks) as well as other attractors such as large universities (such as University of California, Irvine and Cal State Fullerton) and many natural landmarks and attractions. The combination of year-round visitors (low seasonality risk), robust and diverse demand drivers and a history of ever-increasing property values make Orange County a consistent favorite among real estate investors pursuing the short term rental strategy!
Top Things To Do in Orange County, California (STR Demand Drivers)
Beach Trips
Orange County, California, is a prime location for short-term rental or Airbnb investors due to its numerous beach-related demand drivers. Known for its stunning coastline and picturesque beach towns, Orange County attracts a steady stream of tourists year-round.
One of the primary factors driving demand for short-term rentals in Orange County is its ideal climate. With over 300 days of sunshine annually, visitors flock to the area to enjoy the warm weather and beach activities. The famous year-round “beach weather” differentiates “the OC” as a top STR market for beach rentals, generally superior to other markets that have a much shorter beach season.
Some of the top cities for beach-focused vacation rentals are Huntington Beach, Newport Beach, and Laguna Beach. These areas offer a range of attractions, including surfing, beach volleyball, and scenic hiking trails, catering to diverse interests and ensuring a steady influx of visitors.
Furthermore, the beaches in Orange County hosts numerous events and festivals throughout the year that contribute to the demand for short-term rentals. Large-scale events that draw outsized visitors can be the difference between an okay vacation rental investment and a big money-maker as high-demand timeframes can deliver rents three or four times the normal rate for savvy STR investors utilizing price engines or knowing the local calendar well!
Some big beach-related “outsized events” in Orange County include the Newport Beach Christmas Boat Parade held in December, the legendary Newport Beach Sandcastle Contest (held annually for over six decades!) in October and July’s San Clemente Ocean Festival. These events cater many times to large groups and families, and Orange County airbnbs that cater to this guest type can thrive around these annual attractions.
Family-Friendly Options
Perhaps the biggest demand driver for short term rentals in Orange County is the abundance and quality of attractions for families, especially those with young children. Families traveling with children (or groups of multiple families traveling together) often need plenty of space – giving airbnb investors a huge advantage over cramped hotel competitors. Vacation rentals that are geared towards families can especially thrive in Orange County due to its many family-friendly demand drivers.
Choosing a large (multiple bedrooms, extensive square footage) property for your Orange County short term rental that’s also located near one or multiple of the attractions listed below could be an extremely lucrative short term rental strategy for success!
Disneyland
Disneyland is a famous amusement park located in Anaheim – and a big-time demand driver for families for decades. It boasts a track record as the most visited theme park of all time, and according to recently published data – in 2022 it welcomed a whopping 16.9 million visitors (second only to its sister park, Disney World in Florida). Spanning over 100 acres and featuring 52 attractions with 49 distinct rides, families can visit Orange County and spend multiple days or even weeks visiting the park – and potentially staying at Anaheim airbnbs the entire time!
Knott’s Berry Farm
Knott’s Berrty Farm is a theme park located in Orange County, this one located in the northern OC city of Buena Park, California! While not as large or well-known as Disneyland, Knott’s Berry Farm still attracts approximately four million visitors per year and features roller coasters, family rides and water-themed options! Buena Park also offers attractions such as the Big Air Trampoline Park and the famous Pirates Dinner Adventure Buena Park that are favorites of visiting families.
Children’s Themed Museums
The Pretend City Children’s Museum and Discovery Cube Orange County are additional demand drivers catering to families looking for some educational attractions to fit into their vacations. The Pretend City Children’s Museum is located in Irvine and is an extremely popular option for young kids. The Discover Cube OC location is in Santa Ana and features exhibits such as Dino Quest, Sea Lab and the Eco Challenge Helicopter Tour that can fill up multiple days on a vacation itinerary.
The list of family-friendly options throughout Orange County can go on and on and include the OC Zoo, plenty of different beach events and state parks and historic downtowns up and down the coast. Family-friendly airbnbs should continue to be a strong STR strategy for investors in the space.
Sports and Surf – Athlete and Fan Paradise
Sports
Sport franchises such as the Angels of the MLB and Ducks of the NHL as well as less professionalized athletic endeavors such as Surfing and Volleyball are also huge demand drivers for visitors to Orange County. Strategic STR investments nearby and catered to these niches can also be a great investment plan for vacation rental investing.
The US Open of Surfing
Every summer in the Orange County beach town of Huntington Beach, The US Open of Surfing is held. It’s the largest surfing competition in the world and generally attracts over half a million people over the course of nine days. Orange County, home to some of the most popular beaches for surfers in the world, is a prime market for beach rentals catering to surfing enthusiasts. Picking an investment location well-located near the beach and geared towards the specific needs of this athletic community can be a recipe for success for STR investing.
Beach Volleyball
Including big time events from the AVP (Association of Volleyball Professionals) as well as casual players, youth and amateur events and more – Beach Volleyball is another big-time demand driver for Orange County, California. The Huntington Beach Open held in May, is generally considered the top annual beach volleyball event in the United States every year. Additionally, the Annual Laguna Open, in Laguna Beach is also on the main schedule of the AVP and is held in September. The endless beach coastline and the beautiful beach weather near year-round makes volleyball travelers a big source of potential guests for airbnb investors in Orange County beach markets.
STR Rules and Regulations in Orange County, California
Is Airbnb legal in Orange County, California?
Top of mind for short term rental investors evaluating a market is the rules and regulations and some version of this question is at the top of the list for all airbnb investors eyeing the market. Despite California’s overall strict regulatory climate on business, Orange County has varying levels of rules and regulations for short term rentals. This is likely due to the long history of the county’s economy geared tremendously towards tourism (moreso than other counties in the state).
Generally, there will be different STR rules and regulations depending on the city (and type of city or market) in Orange County. As always, if considering buying and operating an airbnb in California, it is important to consult a licensed attorney in the state for a complete and expert opinion on the laws and regulations, especially since the world of STRs is still generally new and the law is continuing to evolve and change rapidly.
Beach Market Rules and Regulations
Some of the biggest Orange County coastal cities generally allow short term rentals, but have well-established rules and regulations.
Newport Beach allows a limited amount of short term rentals, and requires a short term rental lodging permit.
Can Short Term Rental Permits be transferred in Newport Beach?
Yes, you can transfer short term rental permits in Newport Beach, however it is not automatically transferred if a property with an existing permit is sold. The transfer must be done following the process detailed here – an extremely important step if you are investing in a turnkey Newport Beach airbnb that is already up and running!
Are there restrictions on Medium Term Rentals in Newport Beach?
Mid Term Rentals are becoming a popular alternative to short term rentals for many investors. For investors considering Newport Beach, there are no restrictions or permits required if stays are 30-days or greater!
Laguna Beach
This beach town has extensive and complex rules and regulations for short term rentals including multiple zoning districts with varying limits and caps. Additionally, airbnbs operating before some of the most recent regulations came into place may continue to operate. Check out OrangeCountyLawers.com for more extensive analysis on Laguna Beach STR rules and regulations!
Huntington Beach
Huntington Beach also allows short term rentals but with a “City of Hunting Beach Short-Term Rental Permit” and requires some additional requirements for airbnb operators, such as manager responsiveness requirements and other rules.
Urban Market Rules and Regulations
Cities in Orange County that aren’t centered around beach vacations can have stricter rules and regulations. The city of Irvine has banned short term rentals through it’s city code, however this ban only applies to properties leased for less than 31 consecutive days, so medium term rentals are a potentially alternative strategy in Irvine.
Garden Grove has also banned short term rentals and considers STRs to be hotels or motels. Similar to Irvine however, enforcement and restrictions applies to properties renting out to guests for periods of less than 30 days, so mid term rental investors should also be okay in Garden Grove.
Anaheim, like many cities on the forefront of the growth of airbnb and short term rentals, has seen regulations change over time, with a “ban” in 2016 reversed later to allow STRs with permits and regulations. As of 2019, there are clear STR rules for investors to understand and follow in Anaheim, California. A fact sheet on STR policies for Anaheim can be found here.
For updates on Short Term Rental Guidelines in each distinct STR market in Orange County, California – check out this excellent resource from Orange County Realtors!
Investing in Airbnb (Short Term Rentals) in Orange County, California
Two of the most important aspects for Orange County airbnb investors are understanding and projecting both revenue (income) and expenses. The majority of an investor’s expenses is often the cost of an airbnb loan. Below, we’ll provide recommendations on how to think through each to be a short term rental investing pro!
Revenue Projections
One of the most exciting developments in the STR investing sector is the explosive growth of accessible data for investors. Companies such as AirDNA and Rabbu continue to make great strides in high-level actionable data for investors evaluating short term rental markets.
Key Metrics for every short term rental investor in evaluating revenue (earnings) from STRs include:
Occupancy Rate:
The percentage of days per year the STR will have guests (generally assuming market rates are charged)
Average Daily Rate:
The average price of a days’ stay at the property
RevPAR (Revenue per Available Room):
This is a common metric for hotels. RevPAR is calculated by multiplying occupancy rate and ADR to get total expected earnings over a year (per room).
Expense Projections
The largest and most consequential expense for many airbnb investors is the mortgage payments. This is typically the monthly payment of principal and interest to the lender financing the property. Many investors in short term rentals cover the vast majority of the investment with a loan. Down payments on these loans are only around 20%-30%. Thus, it’s very important to get the best rates and terms on financing to make sure the cash flow is worth it.
When financing a short term rental in Orange County, there are several options. These can include loans from traditional “conventional” lenders like a local mortgage broker. However, counting on traditional loans can be a big mistake for airbnb investors. Because short term rentals are still a new and rapidly changing asset class, lenders that are flexible around STRs can be very valuable. Utilizing a lender that understands and embraces short term rentals is often key, and that is often not true for many banks and credit unions that are typically slow and inflexible in newer asset classes like STRs.
Unlike most lenders who offer loans on short term rentals, Easy Street Capital embraces the unique aspects of STR investing. Options to qualify based on projected short term rental revenue, from cutting-edge data sources such as AirDNA – can make or break success in STR. For more information, FAQs and free projected numbers for any potential STR address in Orange County, check out our short term rental lending program resource page here!
In addition to making sure your lender understands and qualifies the loan based short term rental realities, utilization of advanced strategies to get the best rates and terms can be key to minimizing your monthly expenses.
Best Cities for Airbnb Investment in 2024 for Orange County California
Because there are many different submarkets (including cities) in Orange County, California, the projected returns and market analysis needs to dig deeper than the county as a whole. AirDNA announced in June 2024 an upgrade to their map and market analysis – adding another great level of analysis and markets that’s a great fit for this exercise!
According to AirDNA, the undisputed leader for STR market analysis, some of the best markets STR investments in 2024 in Orange County include:
Anaheim
As of June 2024 – AirDNA gives the Anaheim Market a Grade of “80” a good rating and indicative of a strong choice. It reports an average annual revenue of $71,900 per airbnb (stable and up 1% year over year) and an average daily rate of $373 per night (also stable, down 1% year over year).
Santa Ana
The city of Santa Ana is a top choice from AirDNA for investment markets for short term rentals in Orange County in 2024. It gets a 90 market grade – considered “great” with tremendous metrics (as of June 2024) including a $240 ADR (up 6% year-over-year) and a solid occupancy rate of 63%. It scores very high on seasonality and rental demand – a potentially great market to target for airbnb investors looking to rely on strong and stable year-round guest demand.
Dana Point
Dana Point also gets solid marks from AirDNA – given a great rating of 82 as of June 2024 with an ADR of $334 and Revenue per Available Room (RevPAR) of $204. It also receives a score of 93 on Revenue Growth – showing great potential for future growth in returns. Dana Point could serve as a good market for investors looking for higher price points in Orange County.
AirDNA gives less passing market grades to a couple of markets in Orange County as well. STR investors looking in the below markets may want to take a closer look at the analysis, however as always, there are good investments in challenging markets (and vise versa) and it is always wise to take in a bunch of opinions and hone in on the local specifics when choosing a vacation rental market to invest in.
Capistrano Beach
While showing high price points for revenue and ADRs, Capistrano Beach gets a lower market grade of just 28 from AirDNA as of June 2024 – likely to due declining revenue metrics compared with growth of listings. Investability in this market is challenging as well with many properties at price points out of reach for the typical airbnb investor.
San Clemente
Also receiving less than stellar market feedback from AirDNA, San Clemente, is given an overall “okay” score of 44 and revenue and metrics shown to be plummeting year-over-year as compared to the start of 2023 (metrics based as of June 2024). Despite strong rental demand and seasonality – it looks like a crowded market for airbnb investors currently, and hard to get a competitive edge.
Start investing in Orange County today!
Have your eye on purchasing an airbnb (short term rental) investment property in Orange County, California? Easy Street Capital is America’s best lender for short term rentals – see options below to explore financing options!
About the Author
Disclaimer: The information provided in this article is not intended as financial or legal advice of any kind. Regulations regarding short-term rentals are subject to change and all investments are subject to risk. Information included in this article may contain information that has not been verified by licensed attorneys and should be subject to independent verification. Readers are advised to consult with qualified legal or financial professionals prior to investing in real estate investment properties.
Stay in the Loop
Subscribe to our newsletter