Sonoma County Vacation Rentals: 8 Costly Mistakes to Avoid

If you are thinking of buying a vacation rental, one of the biggest fears is buying a property only to then find out you can’t vacation rent it or worse still you get a permit, the rules change and then you can’t vacation rent it so end up with an asset you can't monetize as planned. So how do you make sure you aren’t left holding a lemon?

In the blog post, I will explain how you can avoid this and also explain how you can use the rules to your advantage to find a high-performing vacation rental in an area adjacent to a zone that prohibits new permits from being issued. I'll also share details of a couple of areas that are likely to get restricted over the next few months. 

Let me start by sharing a conversation I had with a new client last week. She had purchased a property in Santa Rosa City directly from the listing agent on the understanding it was eligible to be vacation rented, she completed the transaction and then found out she couldn’t vacation rent it so had to sell it. This happens more often than you think. However, it is totally avoidable if you know how to navigate the rules.

She isn’t the first person I have ended up working with who has experienced something very similar. There are a few things to unpack here. Firstly, working with the listing agent on something that requires specialist knowledge is a dangerous game. It is most likely that the listing agent doesn’t have a good knowledge of the rules, but more importantly, they are being paid by the sellers to sell the property. They are not going to go into the detailed nuances required by a buyer.

The reason this happened is because the home was purchased in Santa Rosa City, at a time when there were detailed conversations taking place about putting in a 1000 ft limit thereby restricting any property within 1000 ft of an existing vacation rental from being granted a permit. So how could this have been prevented?

The short answer is quite easily. Changes in the rules never come as a surprise. This was proposed and debated at the city council meetings for months so it’s not like it came out of the blue. During this period, I didn’t recommend anyone buy a vacation rental in the city until we knew exactly where the final ordinance would land. That being said, it does rely on working with someone who follows this whole subject closely. It’s not the most exciting thing but it’s necessary if we are going to make sure all of our clients have a successful outcome with their purchase.

So right now, where and what types of properties should you avoid buying as a vacation rental right now?

1) Any Property That Is In A Cap Zone.

If you have already read my guide to the vacation rental rules, you will know that there are total exclusion areas and cap areas.

All the cap areas are limited to 5 percent of the homes in that area being eligible to be operated as a vacation rental. Every single cap area in the county is already over the cap limit meaning that if you purchased a home in one of those areas you wouldn’t be eligible to get a new permit. Most of the areas are in the double-digit percentage density, but there are a couple of areas that are at 6 or 7 percent, so if 2 or 3 existing vacation rentals sell, there could be an opportunity to get a new permit.

If you need a property to be earning income within the first couple of months, you definitely need to avoid all these cap areas. However, if you are able to carry the home for 12 or 18 months then you could get a permit in a micro market that isn’t allowing any more permits which can only be good for the rentability of the home.

2) Avoid Any Home That Isn’t Zoned A Single Family Home

There are so many homes in Sonoma County, and in particular, in the Russian River that have two homes on one lot that look like single-family homes but technically are zoned a duplex. Any property that is not zoned as a single family home is not eligible to be operated as a vacation rental so you definitely need to avoid them.

3) Avoid JADUs

A lot of people like the idea of having a vacation rental home that has a separate unit so that they can enjoy the property even when the home is vacation rented. Personally, I think it is a bit weird an owner to be on the property while it is vacation rented unless of course it is very separate from the main home.

However if a home has an attached ADU it is a JADU and it makes the entire home ineligible to get a permit. This is one of those rules that came in at the 11th hour in August of last year. I am not sure I understand the logic but I’m afraid those are the rules. If a home has a JADU it is not eligible to get a vacation rental permit, ever.

4) Homes With An ADU (optional!)

There is nothing wrong with buying a home with an ADU as a vacation rental, you just need to understand that you can’t incorporate the ADU into the vacation rental permit. So if you have a 3 bed home and a 1 bed ADU you can’t get a vacation rental permit for the ADU.

To me, if you are focused on getting the best possible vacation rental property for the money, then to spend money on an ADU just means that the main home will not be as nice as it would be if you didn’t have the ADU. Of course, if you want to use the ADU when there are guests there then it makes sense but it doesn’t improve the economic value of the vacation rental.

5) A Home Without A Documented Septic System

Everyone always talks about the vacation rental permit and the license but no one really talks about the septic permit. Without a septic permit at the county you can’t get a vacation rental permit. There are probably more homes than you think that don’t have a permit on file at the county so it is definitely something to watch out for.

It’s not like you can never vacation rent the home, it will just put in a delay of as much as 6 months between you closing on the property and being able to get your permit so if you are looking to buy a vacation rental and are not prepared to carry the cost for 6 months, you need to avoid buying a place without a septic permit on file at the county.

6) Don’t Buy In A City!

Every city has its own rules but with a few exceptions, it is no longer possible to get a new vacation rental permit within a city whether that is Sonoma, Healdsburg or Sebastopol. Not all cities are a hard no because, for example, Sebastopol allows someone to vacation rent a home for 30 days a year. Clearly, that isn’t going to work for most people.

There are a few rare homes that come on the market that have a commercial/residential mixed zoning that do allow for a vacation rental license but they are few and far between. In fact, there was one just recently for sale in both Sonoma and Healdsburg. If you do want to know when one of these comes up then get in touch with me at david@bruingtonhargreaves.com.

7) Avoid Some Homes On Single Track Roads.

This is definitely not a hard and fast rule but it is something that you should be mindful of. When they introduced the changes in August of last year, there was mention at some point in the future of limiting vacation rental licenses for properties that were in locations that could pose a risk to guests in the event of a fire. Notice, I said license not permit. Under the terms of a license, the county could remove a license on public safety grounds if they felt there was a risk to the public. I am not sure if this will happen but it is worth bearing in mind and it is something we always keep an eye on.

8) Be Aware Of New Exclusion and Cap Zones.

There will always be new areas under consideration so you just need to keep up to speed with which areas those are and make sure if you do purchase one in those areas you get your permit before the hammer comes down. The good news is that these things are always signposted months in advance because, like any public office, things move slowly.

For example, at the moment there are a couple of areas that are likely to get a cap or even an exclusion in the coming months. These areas are the homes up by The Madrone Hotel in Healdsburg and the area on the west side of Sonoma around Carriger Road 

Should you be worried about buying something and not being able to get a permit? If you work with someone who knows the rules inside out, absolutely not. Not only are changes flagged months in advance so we always know what is coming and can time a purchase accordingly. But also, there was only one occasion when the county tried to backdate a change which impact people who purchased the home under one rule and then got told that there home was no longer eligible. These homeowners, of which one was a client of mine, formed a group to take legal action against the county, and very quickly the counter backtracked to ensure that everyone who purchased a home under the old rules got their permit and could continue to operate.

Sonoma is still a good place to buy a vacation rental property, you just need to make sure you work with a team that understands the rules and can work with you to get a permit and then introduce you to a good vacation rental management company if you don’t want to manage it yourself

I would go as far as to say, that you should actively look to get a home very close to an exclusion or cap zone because on the whole, these are the best performers as the supply of properties on Airbnb is constrained.

However, you need to avoid cities unless you can find one of the rare gems that is eligible for a permit right in downtown like Sonoma or Healdsburg.

I have published a lot of information on this subject but although a buyer can do a lot of research, I would not suggest you buy a vacation rental property without some expert help because the rules are so nuanced and do change, so the only real way to buy something is to work with someone who knows all the rules.

For clients we are working with we have a private client website where we share every vacation rental-eligible property that comes on the market as well as sharing a weekly email highlighting the best properties, the gross income, average occupancy, and ADR. If you want to sign up to get onboard as a client just get in touch.