Last Updated: June 2026
If you’re considering buying an Airbnb or vacation rental in Oregon wine country, it’s important to understand the Dundee short term rental rules before you make an offer.
I’ve helped buyers evaluate investment properties throughout Newberg and Dundee for years, but I’ve also been on the other side of the transaction—as a short-term rental operator and real estate investor. I’ve personally converted two homes into successful wine country vacation rentals: my own home in Newberg and a luxury property on Hoskins Hill Road in the Red Hills of Dundee.
Those experiences taught me that buying the right property is only half the battle. Understanding the local regulations, building the right team, and creating an exceptional guest experience are what ultimately determine whether a short-term rental becomes a profitable investment.
Understanding Dundee Short Term Rental Rules
The good news is that Dundee allows short-term rentals.
The challenge is that the city carefully regulates them to balance tourism with preserving the character of local neighborhoods.
One of the Dundee short term rental rules that surprises many buyers is the city’s cap on permits. Dundee limits the number of short-term rentals to approximately 5% of all detached single-family homes within the city. Once that cap has been reached, no new permits are issued until an existing permit becomes available.
The city also has a spacing requirement. New short-term rentals generally cannot be located within 500 feet of another permitted short-term rental.
What does that mean for buyers?
It means you shouldn’t assume that just because a property looks perfect for Airbnb, it will automatically qualify. Before writing an offer, I always recommend verifying that the property is eligible.
You can review the City’s current short-term rental regulations here:
- City of Dundee Planning Commission – Short-Term Rental Ordinance:
https://www.dundeecity.org/vertical/sites/%7BE14ACB8D-5C5F-45F7-9F7A-A518EB570F6B%7D/uploads/05.17.2023_PC_Packet.pdf
Not Every Property Can Be Used as a Vacation Rental
Generally speaking, detached single-family homes and manufactured homes on individual lots may qualify for a short-term rental permit.
However, Dundee does not allow accessory dwelling units (ADUs) to operate as short-term rentals. You also can’t live in an ADU while renting the primary residence as a vacation rental.
These are the kinds of details that can make or break an investment purchase, especially for buyers relocating from outside the area.
Getting a Short-Term Rental Permit
If your property qualifies, you’ll need to apply for a Type II Short-Term Rental Permit through the City of Dundee.
The process typically includes:
- City application and review
- Business license registration
- Transient lodging tax registration
- Public notice requirements
- Application fee
I always recommend confirming a property’s eligibility with the Planning Department before removing contingencies on a purchase.
Additional permit information can be found here:
https://www.dundeecity.org/forms
My Experience as a Short-Term Rental Operator
One of the reasons I enjoy helping buyers interested in vacation rentals is because I’ve been through the process myself.
I’m not just a Realtor—I actively invest in real estate and have personally converted two homes into successful wine country vacation rentals.
The first was my personal home in Newberg. The second was a luxury property on Hoskins Hill Road in the Red Hills of Dundee.
Through those projects I’ve learned firsthand that owning a successful short-term rental involves much more than creating an Airbnb listing. Pricing, guest communication, professional photography, furnishings, cleaning schedules, maintenance, marketing, and local regulations all play an important role in long-term success.
I’ve also developed great relationships with several of the area’s best vacation rental management companies. Some of my clients prefer to self-manage their properties, while others want a professional company to handle guest communication, cleaning, maintenance, and marketing.
Having those relationships allows me to connect buyers with experienced local professionals who understand the Dundee and Newberg vacation rental market.
Things That Surprise Many Investors
Several of the Dundee short term rental rules catch buyers off guard.
For example:
- Occupancy is limited based on the number of bedrooms, with an overall maximum occupancy established by the city.
- Adequate off-street parking is required.
- Owners must comply with local noise and nuisance ordinances.
- A local representative must be available to respond to issues if they arise.
Perhaps the biggest surprise is this:
The permit belongs to the owner—not the property.
If the property is sold, the short-term rental permit becomes void, and the new owner must apply for a new permit. That’s an important consideration for anyone evaluating the long-term investment potential of a vacation rental.
Is Dundee Still a Good Airbnb Market?
In my opinion, absolutely.
The city’s permit cap creates scarcity, which means there are fewer competing vacation rentals than you’ll find in many resort communities.
That scarcity can be beneficial for owners—but it also means buyers need to perform careful due diligence before purchasing.
Not every beautiful home makes a good Airbnb investment.
How I Help Buyers
Because I’m both a Realtor and an active investor, I evaluate these properties differently than someone who’s simply opening doors.
I help clients answer questions like:
- Does this property qualify under the Dundee short term rental rules?
- What are the biggest risks?
- Is the location likely to perform well?
- Should I self-manage or hire a professional management company?
- Is this property a good investment, or just a beautiful house?
My goal isn’t simply to help you buy real estate.
It’s to help you make a smart investment decision.
Thinking About Buying a Vacation Rental?
If you’re considering buying a short-term rental in Dundee or Newberg, I’d be happy to help you evaluate the opportunity before you make an offer.
Between my experience as a Realtor, real estate investor, and short-term rental operator, I can help you think through the practical side of ownership—not just whether the home is beautiful, but whether it has the potential to become a successful investment.
Whether you’re purchasing your first Airbnb or adding another property to your portfolio, understanding the Dundee short term rental rules is one of the most important steps you can take before buying.
Additional Resources
City of Dundee Short-Term Rental Ordinance
https://www.dundeecity.org/vertical/sites/%7BE14ACB8D-5C5F-45F7-9F7A-A518EB570F6B%7D/uploads/05.17.2023_PC_Packet.pdf
City of Dundee Planning & Permit Forms
https://www.dundeecity.org/forms
About the Author
John Knows Newberg
John Laney is a Realtor serving Newberg, Dundee, and Oregon Wine Country. In addition to helping clients buy and sell real estate, he’s an active real estate investor and short-term rental operator who has successfully converted and managed vacation rentals in both Newberg and the Red Hills of Dundee. His hands-on experience gives clients practical guidance on everything from identifying investment opportunities to navigating local regulations and building the right team for long-term success.