By Henry Moore
California is the third largest of the United States and offers a diversity of attractions, from the glitz and glamor of Hollywood to the serene redwood forests. Given the variety of sightseeing options, it’s no wonder that the state is a hot spot for tourists: Tourism brought in $140 billion in 2018 alone. Thanks to its popularity, California is an ideal choice if you want to buy a property that you can rent out as a vacation home. To make a profit, however, you need to choose your real estate wisely. Find out how to set up a profitable property with these tips:
Target a popular tourist area
California is vast. Before you buy, narrow down your search area based on popular tourist sites. There’s no point buying a bargain piece of property if it’s located in the middle of nowhere and won’t attract traffic. Possibilities include Los Angeles, where you can go shopping on Rodeo Drive or visit the homes of Hollywood stars. Or you could look in San Francisco for access to all the Bay Area has to offer. Another area to explore is San Diego. La Jolla has stunning cliff views and is ideal for seal and sea lion watching, and a home in the Gaslamp Quarter will put you near the world-famous San Diego Zoo.
Compare location prices
With your geographic area narrowed down, you can start to compare real estate prices to ensure you find something within your budget. Some neighborhoods will be more affordable than others. Using a real estate search tool allows you to get an overview of the average costs of different districts. For instance, Redfin notes that homes in San Diego sold for an average of $632,000 over the last month. Compare this to San Francisco, notorious for its expensive homes, where the average price is a whopping $1.2 million.
Calculate potential profits
Figure out your operating costs. There isn’t just electricity and water to consider, but also cleaning fees, property taxes, your mortgage, and insurance. Then there are advertising prices—you have to find your guests, after all. Next, calculate your expected monthly income based on how much you are charging per night and how many nights you expect to rent out the property. Compare the two figures to make sure you will turn a profit. If not, see if you can reasonably increase the price on the property. Otherwise, you might want to keep looking for a more cost-effective option.
Set up your vacation home for business
You can’t just put a vacation home up for rent as is. People want to feel like they are getting a “home away from home,” and it’s your job to deliver this experience. Stock the place with everyday amenities like kitchen tools, toilet paper, WiFi, and linens and towels. Homeaway’s checklist includes lots of small but important items you might not otherwise think of, from garbage bags to a hairdryer (which Amazon sells for under $10). If you really want to make the rental attractive and justify a higher price, install “luxury” perks like barbecue, jacuzzi, or fireplace.
Start advertising
There are many online vacation rental platforms available to choose from when listing your rental. Business Insider provides several options, from Airbnb to OneFineStay. Airbnb alone has over one million properties listed worldwide, so with this wealth of resources at your fingertips, you should have no problems finding guests.
Use the above list to ensure your vacation home is marketable in terms of location, area, and amenities, and you’re sure to get business. While it will initially require an extra investment of money, time, and effort, once your California property rental is up and running, you will enjoy a wonderful source of primarily passive income. Plus, for those times when it isn’t in use, you can use it for your own enjoyment!
Photo Credit: Pexels.com
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