Oct, 19

Tips for Purchasing a Profitable Vacation Rental in California
By tahoe-truckeerealestate-com October 24, 2019

Tips for Purchasing a Profitable Vacation Rental in California

 The vacation rental market is growing rapidly, and people are scrambling to jump on this profitable investment strategy. Owning a vacation rental in beautiful California is a no-brainer. Not only can this property provide a solid return on your investment, but it can double as an idyllic place to spend your holidays. California is an extremely popular tourist destination and an excellent choice for your first vacation home—according to Discover Los Angeles, LA alone welcomed 50 million visitors last year! If you’re ready to get into this lucrative market, here are some tips to keep in mind as you search for a property. 

Choose the Perfect Location 

Location is the most important factor when buying a vacation rental. For each location you have in mind, consider the potential for profits and the affordability of the area. Find out how much homes are selling for in your favorite regions by searching listing prices online. For example, over the past month, the average list price for homes in Truckee is $1,045,000.
Avoid stretching your budget for a house in a location that’s more pricey than you expected. There are several amazing California cities to choose from! Once you’ve selected a city for your vacation home, try to find a property that’s close to local attractions or along public transportation routes.

 Create a Budget

 Budgeting for a vacation rental can be tricky. Since most rentals are seasonal, it’s important that you can afford the property even when there are no guests staying there. A vacant rental home still costs a lot to maintain. On top of your mortgage payments, some rental expenses to account for include property management services, state licensing fees, taxes, utilities, and keeping your vacation rental stocked with necessary guest supplies. Don’t forget cleaning costs, which homeowners in Truckee spend around $230 on average.

To ensure you can profit off your rental, find out how much you can realistically charge your guests by checking out your competition. Take a look at similar property listings in your area and examine their availability calendars to ensure that people are willing to pay their booking price. Use this information to estimate your expected rental income. If you won’t be able to profit off the property, consider looking for a smaller home or a property in a less expensive location.

 Consider Property Size and Type 

Vacation properties come in all sizes, from condos to mansions. Choose a vacation rental that you can afford with the money that you intend to invest—avoid splurging on something out of your budget just because you think a larger home will attract more guests.

If this is your first investment property, consider starting with a smaller space so you can manage it a little easier. Think about the types of guests you expect to host so you can decide on the number of bedrooms and bathrooms you need. Some places in California are very family-friendly, so vacation homes in these areas should accommodate 4 to 5 people. Other regions tend to attract honeymooners and couples looking for a romantic getaway—in these locations, you can get away with a one-bedroom suite.

 Seek Out Homes with In-Demand Features

 As you examine properties in your desired area, search homes with in-demand features. A sauna, pool, hot tub, outdoor dining area, and private yard are always fantastic selling points for a vacation rental in warm regions like California. In the bathroom, a jacuzzi tub, heated floors, and modern fixtures are highly sought-after. Lodgify recommends providing a modern vacation rental experience with smart home features, like lighting and temperature controls that guests can access from their phones. Of course, you can make many of these upgrades after purchasing a property. Just remember to budget for the extra costs. 

A vacation rental property in California can be a great introduction to real estate investing. However, this investment strategy does come with its fair share of risks. Choose your rental property carefully so that you can make a profit despite costly expenses and seasonal bookings.

John Biebl & Anna McGee Coldwell Banker Realty

John Biebl & Anna McGee

Agent | License ID: 01220758 & 01947697



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