As a real estate investor, you should always search and understand the different market trends to predict where the mark is heading. This 2018, investing in vacation home rentals seems to be the next big thing in the real estate investing business. These are great properties to own not only for your personal use but also to rent out for the short-term and have an added source of rental income. This is especially true if you’re investing in a hot real estate market like California!
Related: California Real Estate Market: Best Places to Buy a Rental Property in 2018
One thing to keep in mind is that vacation home rentals come in different types – the best of which are beach homes. In this article, we explain why and where property investors should be looking for beach homes for sale, with a focus on the Golden State of California. So, without further ado, let’s dive right in.
Why a Beach Home Makes a Good Investment Property
Owning a beach house as an investment property can be an excellent way of making money in real estate investing. Depending on the location, property investors make positive cash flow and a good return on investment when listing their beach homes on short-term rental sites like Airbnb. In fact, many have found that renting out their properties on Airbnb during the busy seasons will make a rental income that will cover their rental expenses for the entire year!
To find out if buying beach homes for sale and renting them out on Airbnb is a smart investment decision, you should make use of the investment property calculator. This is a real estate investing tool that helps property investors analyze the profitability of investment properties (both traditional and Airbnb) in a location. How does this tool work?
Say you came across a number of beach homes for sale and thought to yourself “should I buy one and use it as an Airbnb short-term rental?” To answer this question, Mashvisor’s calculator will give you an accurate estimation of how lucrative the investment is based on the Airbnb rental income, cash on cash return, cap rate, and occupancy rate – on the neighborhood level and property level!
Related: Why an Investment Property Calculator Tells You More Than Just Numbers
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What to Know Before Renting Out a Beach Home on Airbnb
Before you go ahead and start renting out a California beach house on Airbnb, there are a couple of things that are worth mentioning.
Airbnb Laws and Regulations
Although it’s one of the best ways to make money in real estate investing, a number of cities in the California real estate market enforce strict rules on Airbnb property investors. For example, renting out a property for less than 30 days is illegal in many areas of Los Angeles. So, make sure you know such laws in the city where you’re looking for beach homes for sale.
Airbnb Rental Demand
Successful property investors always buy investment properties in locations where the rental demand is high. This is something that should go hand-in-hand with your rental strategy. For example, you can’t expect to make a good Airbnb rental income in a city where the demand for short-term rentals is low. The rental demand affects the Airbnb occupancy rate, how much you can charge for renting out your property, and thus your overall return on investment.
Want to know in which cities real estate investors are making money with short-term rentals? Read this: Cities with Highest Airbnb Rental Income in 2018
Best Places to Invest in a Beach Home in California
Califonia is a hot real estate market this 2018, especially for short-term rentals. According to Mashvisor’s investment property calculator, the best places in the California real estate market to buy and own a beach house are the following:
Beach Homes for Sale in Palm Springs
- Median Property Price: $603,968
- Airbnb Rental Income: $1,726
- Cash on Cash Return: 4.17%
- Cap Rate: 4.17%
- Occupancy Rate: 50.69%
Beach Homes for Sale in Pacific Beach, San Diego
- Median Property Price: $1,037,345
- Airbnb Rental Income: $3,003
- Cash on Cash Return: 3.33%
- Cap Rate: 3.33%
- Occupancy Rate: 68.67%
Beach Homes for Sale in Shafter, Oakland
- Median Property Price: $244,345
- Airbnb Rental Income: $3,680
- Cash on Cash Return: 9.74%
- Cap Rate: 9.74%
- Occupancy Rate: 72.04%
Beach Homes for Sale in Sherman Acres, Pleasant Hill
- Median Property Price: $499,780
- Airbnb Rental Income: $2,502
- Cash on Cash Return: 3.26%
- Cap Rate: 3.26%
- Occupancy Rate: 47.00%
Beach Homes for Sale in East Richmond Heights
- Median Property Price: $584,750
- Airbnb Rental Income: $3,085
- Cash on Cash Return: 4.03%
- Cap Rate: 4.03%
- Occupancy Rate: 64.575
Beach Homes for Sale in Atchison Village, Richmond
- Median Property Price: $211,000
- Airbnb Rental Income: $1,420
- Cash on Cash Return: 5.66%
- Cap Rate: 5.66%
- Occupancy Rate: 62.73%
One Final Thought!
As you probably already know, investment properties in the real estate market yield different returns. Yes, the location and rental strategy play major roles in this, but what should also be taken into account is the investment property itself! You might find a number of beach homes for sale in your neighborhood of choice, but how can you determine which one will provide the highest profitability? Enter: the property finder tool.
With this real estate investing tool, you don’t need to perform any type of analysis. Instead, just enter the city/cities where you’re searching for an investment property, your budget, and rental strategy (Traditional or Airbnb). The tool will automatically provide you with a list of readily calculated results of the return on investment regarding the best properties that match your criteria! Do you have a free Mashvisor account? Click here to use our Property Finder and find properties in a matter of minutes!
To get access to this tool and others that Mashvisor provides, just sign up for our services or click here to start out your 14-day free trial with Mashvisor!