Short-Term Rental properties can make great real estate investments, and short-term rentals can mean more than just vacation rentals.  But here along the California Coast, the latter usually provides the best opportunity for a good return on your investment.   Buying a second home is a big decision, and doing your research would be critical before taking this step. 

But there are some downsides as well. 

Here are some pros and cons to short-term rental investments.

Pro: Earn Extra Income: The most obvious reason for owning a short-term rental is for the income.  Your income will, of course, depend upon your property, its location, the type of home, and so much more, so we would recommend checking into vacation rentals in your desired area to determine value.  You should also check on peak season rates as well.  There isn’t much fluctuation in weather along the coast, so vacation rentals can be hot year-round. 

Con: Property Management and Upkeep can be Time-Consuming:  Many who choose to own a Vacation Rental will hire a property management company as a part of their operational cost.  Often owners purchase properties that also offer them a place to get away themselves, meaning they are not local.  Having a third party manage the business’s operational end allows the owners to focus more on their personal and professional interests.

Pro:  There Are Tax Benefits: Owning a Vacation Rental is a business venture, so there are tax benefits.  Every state’s tax code is a little different, and I don’t want to pretend to be a tax attorney so part of your research would be to check with a tax professional.  Your mortgage interest and operating expenses, including a property management company, are deductible in most cases.

Con: Unexpected Expenses:  Just like operating expenses can be deductible, there are those pesky unexpected expenses that can pop up.  In a rental, particularly a short-term rental, usually needs to be fixed immediately if something breaks.  As with any business, it is just as important to plan for the unexpected as the expected. 

Pro: Real Estate Appreciation:  It’s Real Property.  And, here along the Ventura County Coast, it is hard to imagine that you wouldn’t find appreciation over time with your real estate investment.  Yes, home prices are higher here than in many places, but let’s face it, there is only so much coastal real estate.  If you can make it happen and it “pencils” out in a manner that works for you, much of the value will come in the property itself. 

Con: Financing the Property will Cost More:  One of the bigger downfalls of buying an investment property is paying more to finance it.  Mortgages on investment properties typically have higher interest rates and generally require larger down payments, though usually not more than 25%.  So be prepared that it may be a little different experience than when you bought your home. 

But even though there are some downsides, the key seems to be to better enjoy the benefits it brings you if you approach it as a business first.  The most obvious reason people want to invest in a vacation rental is, so they have the option to use it themselves.  Much of what we see here is people own live inland but want a personal getaway here at the beach.  As often as not, the potential investors we talk to are also thinking about making the property their full-time home at some point in the future.  Hopefully, even having it paid off or close to paid off when they are ready to retire. 

It is also important to note that not every neighborhood allows vacation rentals, and all that do still require licensure.  For instance, here in the Oxnard area, there are some limitations in the beach areas.  Also, most condominium and townhome communities do not allow short-term rentals as a condition of their association. 

Here is a link to the City of Oxnard to investigate the conditions of short-term rentals. 

https://www.oxnard.org/short-term-rentals-str/

There are two beach areas here in Oxnard that are unincorporated.  Silver Strand and Ocean Drive at Hollywood Beach.  In these unincorporated areas, there are no limitations other than you must apply for a permit and licensure.  There are conditions in Mandalay (formerly Oxnard) Shores and Hollywood Beach from the harbor side Sunset Blvd. to the Harbor.  These areas fall into the incorporated area of Oxnard, where vacation rental licenses are limited. 

The limitations are all related to the potential problems that can come with homes that have constantly rotating renters.  Full-time homeowners do not want their lifestyle compromised because they live next to a party house.  So permits in the incorporated areas of Oxnard are limited, and those permits can be revoked if the house becomes a problem. 

So, it is imperative to do your homework before investing in a property as a short-term rental.  This means understanding the tax costs/benefits, the financing conditions, and making sure the home can be used as a short-term rental. And one last thing.  There is a formula for Return on Investment (ROI), so you can follow this link to get more information.  We can help you with some of your questions. Still, again, everyone’s financial situation is a little different, so it is always important to talk to your financial planner or a tax consultant.

There is no more secure financial investment than real estate, especially with the current shortage of housing inventory.  Those fortunate enough to be able to think about owning a second home as a vacation rental in a place where they like to vacation can also reap the benefits of the real estate investment. 

Short-Term Rental properties can make great real estate investments, and short-term rentals can mean more than just vacation rentals.  But here along the California Coast, the latter usually provides the best opportunity for a good return on your investment.   Buying a second home is a big decision, and doing your research would be critical before taking this step. 

But there are some downsides as well. 

Here are some pros and cons to short-term rental investments.

Pro: Earn Extra Income: The most obvious reason for owning a short-term rental is for the income.  Your income will, of course, depend upon your property, its location, the type of home, and so much more, so we would recommend checking into vacation rentals in your desired area to determine value.  You should also check on peak season rates as well.  There isn’t much fluctuation in weather along the coast, so vacation rentals can be hot year-round. 

Con: Property Management and Upkeep can be Time-Consuming:  Many who choose to own a Vacation Rental will hire a property management company as a part of their operational cost.  Often owners purchase properties that also offer them a place to get away themselves, meaning they are not local.  Having a third party manage the business’s operational end allows the owners to focus more on their personal and professional interests.

Pro:  There Are Tax Benefits: Owning a Vacation Rental is a business venture, so there are tax benefits.  Every state’s tax code is a little different, and I don’t want to pretend to be a tax attorney so part of your research would be to check with a tax professional.  Your mortgage interest and operating expenses, including a property management company, are deductible in most cases.

Con: Unexpected Expenses:  Just like operating expenses can be deductible, there are those pesky unexpected expenses that can pop up.  In a rental, particularly a short-term rental, usually needs to be fixed immediately if something breaks.  As with any business, it is just as important to plan for the unexpected as the expected. 

Pro: Real Estate Appreciation:  It’s Real Property.  And, here along the Ventura County Coast, it is hard to imagine that you wouldn’t find appreciation over time with your real estate investment.  Yes, home prices are higher here than in many places, but let’s face it, there is only so much coastal real estate.  If you can make it happen and it “pencils” out in a manner that works for you, much of the value will come in the property itself. 

Con: Financing the Property will Cost More:  One of the bigger downfalls of buying an investment property is paying more to finance it.  Mortgages on investment properties typically have higher interest rates and generally require larger down payments, though usually not more than 25%.  So be prepared that it may be a little different experience than when you bought your home. 

But even though there are some downsides, the key seems to be to better enjoy the benefits it brings you if you approach it as a business first.  The most obvious reason people want to invest in a vacation rental is, so they have the option to use it themselves.  Much of what we see here is people own live inland but want a personal getaway here at the beach.  As often as not, the potential investors we talk to are also thinking about making the property their full-time home at some point in the future.  Hopefully, even having it paid off or close to paid off when they are ready to retire. 

It is also important to note that not every neighborhood allows vacation rentals, and all that do still require licensure.  For instance, here in the Oxnard area, there are some limitations in the beach areas.  Also, most condominium and townhome communities do not allow short-term rentals as a condition of their association. 

Here is a link to the City of Oxnard to investigate the conditions of short-term rentals. 

https://www.oxnard.org/short-term-rentals-str/

There are two beach areas here in Oxnard that are unincorporated.  Silver Strand and Ocean Drive at Hollywood Beach.  In these unincorporated areas, there are no limitations other than you must apply for a permit and licensure.  There are conditions in Mandalay (formerly Oxnard) Shores and Hollywood Beach from the harbor side Sunset Blvd. to the Harbor.  These areas fall into the incorporated area of Oxnard, where vacation rental licenses are limited. 

The limitations are all related to the potential problems that can come with homes that have constantly rotating renters.  Full-time homeowners do not want their lifestyle compromised because they live next to a party house.  So permits in the incorporated areas of Oxnard are limited, and those permits can be revoked if the house becomes a problem. 

So, it is imperative to do your homework before investing in a property as a short-term rental.  This means understanding the tax costs/benefits, the financing conditions, and making sure the home can be used as a short-term rental. And one last thing.  There is a formula for Return on Investment (ROI), so you can follow this link to get more information.  We can help you with some of your questions. Still, again, everyone’s financial situation is a little different, so it is always important to talk to your financial planner or a tax consultant.

Again, there is no more secure financial investment than real estate, especially with the current shortage of housing inventory.  Those fortunate enough to be able to think about owning a second home as a vacation rental in a place where they like to vacation can also reap the benefits of the real estate investment.