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Best Places to Buy a Vacation Rental Property in California

The Sunshine State has something to offer everyone. The question is, where is the best place to invest in a vacation rental home? Here are a few neighborhoods that continue to provide incredible returns for our homeowner partners.

Beach Cities

Newport Beach

  • Estimated # of Active Short Term Rentals: 1,071
  • Average Daily Rate: $441
  • Average Occupancy Rate: 80%
  • Median Monthly Revenue: $7,380

Malibu

  • Estimated # of Active Short Term Rentals: 509
  • Average Daily Rate: $762
  • Average Occupancy Rate: 75%
  • Median Monthly Revenue: $11,300

Newport Beach is one of the most visited beach towns in the US boasting an average occupancy rate of 80% and at times up to 100% during the summer months. In the last 12 months, the median sales price of single family homes in Newport Beach has increased by an eye-popping 40%. What makes Newport Beach a prime tourist destination is its recreational harbor, which is the largest on the west coast. Newport Beach provides an abundance of summer activities for its visitors, from sunset cruises to stand-up paddle boarding, art walks to live entertainment.

Those looking for a more secluded and quiet beach vacation may find themselves further north in Malibu. The privacy, along with its breathtaking seaside cliffs, makes Malibu a top destination for affluent homeowners and guests. Because of this, Malibu continues to see a high number of short-term rental permits with plenty of room to grow.

Wine Country

Sonoma

  • Estimated # of Active Short Term Rentals: 501
  • Average Daily Rate: $513
  • Average Occupancy Rate: 72%
  • Median Monthly Revenue: $7,330

Napa

  • Estimated # of Active Short Term Rentals: 741
  • Average Daily Rate: $324
  • Average Occupancy Rate: 62%
  • Median Monthly Revenue: $4,040

Wine Country, which includes Sonoma and Napa, is among the top destinations for Northern California residents looking to get away from the hustle and bustle of San Francisco. The picturesque vistas make it the perfect destination for weddings, anniversaries and birthday parties. Locals tend to describe Sonoma as more laid-back than Napa. Although most people visit to see the vineyards and taste wine, Sonoma offers plenty of other activities such as glamping and visiting the cheese trail. Napa, on the other hand, has a reputation for being a bit more luxurious than Sonoma. You can view Napa from the air by riding a hot air balloon or you can ride a 

Wine Country has been the recent target of real estate investors due to its largely untapped potential. With this comes strict regulations in place to ensure the housing market in the area stays healthy for its residents.

The Desert

Joshua Tree

  • Estimated # of Active Short Term Rentals: 1,105
  • Average Daily Rate: $239
  • Average Occupancy Rate: 80%
  • Median Monthly Revenue: $4,467

Palm Springs

  • Estimated # of Active Short Term Rentals: 3,559
  • Average Daily Rate: $452
  • Average Occupancy Rate: 73%
  • Median Monthly Revenue: $6,181

Just 2 hours outside of Los Angeles, Palm Springs and Joshua Tree continues to be a top destination for Southern Californians. Large events like Coachella Valley Music and Arts Festival and Stagecoach Festival bring increased demand from tourists from across the country flocking to this desert oasis. Unlike most other vacation destinations, the desert remains an affordable place to purchase a home. As of October 2021, the median sales price of single family homes in Joshua Tree remains low at $415,000 which results in a great return on investment (ROI). 

Homes far away from the main roads can charge a premium for the privacy and views of the landscape. However, it can be difficult and expensive for utilities to be hooked up in new construction homes. 

If you prefer to be closer to shopping and dining, Palm Springs may be a better fit. Its mid-century modern homes with sparkling blue pools and vibrant green golf courses attract snowbirds from other states looking to escape the freezing winters, maintaining high occupancy rates throughout the year.

The Bottom Line

While the short-term rental industry continues to grow, it also faces scrutiny from local residents concerned about increasing property values and nuisance from tourists. Any great city has a healthy combination of homeowners, long term renters, hotels, and short term rentals. It is important to ensure that the city in which you are looking to buy a vacation home is not already oversaturated with vacation home options. Before purchasing, work with us at OpenAiRE to determine if there is ample demand for short term rentals in the city you are purchasing and to navigate the continuously changing local rules and regulations. 

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