Although VRBO and Airbnb started out as ways to make money off of the unused rooms in your house, they quickly became full-fledged income streams for many aspiring entrepreneurs. However, this has led to issues in areas like Orange County, where the tourist season is busy and the housing market is competitive. If you’ve considered buying a property specifically for use as a short-term rental, it’s important to know the restrictions and requirements of your cities of interest before investing any real time or money.
*UPDATED 4/2/2024 – Confirmed all policies and valid links to city resources.
Orange County has one of the most established tourism industries in California, making it an obvious choice for those interested in short-term rental investment properties. In 2019, there were 50.2 million visitors to Orange County, bringing in a total of $9.2 billion. All of those visitors need to stay somewhere—perhaps your Airbnb or VRBO?
Discussing your plans with an Orange County real estate attorney should be high on your priority list if you plan on a short term rental business in OC. Your attorney can help you understand the potential issues you’ll face and show you different ways to protect yourself. Use our real estate lawyer listings to start your search.
The city of Garden Grove came down hard on short-term rentals after short-term rental led to disruptions throughout many of the city’s family-friendly neighborhoods. The city completely forbids short-term rentals and allocates a substantial amount of resources to enforcing this ban. Violations could lead to up to $1,000 per day in fines, six months in jail, or both.
The city of Irvine has also banned all short-term rentals in residential zones. Those who operate a short-term rental may face fines of $1,500 per day and be charged with a misdemeanor.
At the end of 2020, the city of Huntington Beach passed Ordinance Number 4224 to outline its requirements for short-term rentals. Those who operate short-term rentals must have a City of Huntington Beach Short-Term Rental Permit. Owner-occupied short-term rentals are allowed throughout the city, and owner unoccupied STRs are only permitted in Sunset Beach. Someone must be available 24/7 to respond to complaints within one hour, and all STRs must comply with noise ordinances.
The city of Fullerton also requires Short-Term Rental Permits for all operators. Rentals must follow Good Neighbor Guidelines, which include accommodating designated trash collection days, overnight parking restrictions, safety policies, and noise limitations. The city initially limited the amount of STRs in Fullerton to 325, but chose to reduce that number further to 100 in 2021. All approved Short-Term Rental Permits are Non-transferable and will be null and void upon property ownership transfer.
Although short-term rentals were banned in Anaheim in 2016, that policy was reversed in 2019 and there are now 277 permitted short-term rentals in Anaheim. However, only current short-term rental operators are allowed to maintain a rental in Anaheim. Current policies forbid the allowance of new short-term rentals.
Orange implemented a Short-Term Rental ordinance in June of 2021. The city currently only allows 125 STRs to operate. They have reached that number and now maintain a waitlist for those who would like to operate a short-term rental. Those who run an STR must have a short-term rental permit and a business license.
The city of Laguna Beach has some of the most complicated regulations for short-term rentals in Orange County. Short-term rentals are not allowed in residential districts, but STRs in operation before the ban went into place may continue to operate. Short-term rentals are still allowed in LB/P, C-N, C-1, and CH-M zoning districts. They are also permitted in CBD-1, CBD-2, CBD Central Bluffs, CBD Office, and CBD Visitor Commercial Districts in the downtown region. Short-term rentals can make up no more than 20% of the units in any area where they are permitted, and there is a citywide maximum of 300 total units.
Short-term rentals are currently permitted in Newport Beach, but the city has taken steps to ensure that the needs of residents are prioritized. Operators must have a Short-Term Lodging Permit and a business license. STRs are only permitted in R-1.5, R-2, and RM Zone. A total of 1,550 STR permits are allowed in Newport Beach, but since capacity has already been reached, no new permits are currently being given out. Existing short term lodging permittees can renew, reinstate, or transfer valid permits. You can get on the Newport Beach STR waitlist here.
When you want to add a short-term rental to your real estate portfolio, make sure you meet all legal requirements and regulations—fines of $1,000 or more per day can leave you financially wiped out and lead to the loss of your STR license.
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