Property Management Blog

What to Consider Before Buying Vacation Rental Property in San Diego

System - Monday, June 14, 2021
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Are you thinking of buying a vacation rental property in San Diego, California? 

San Diego vacation rentals come with a long list of considerations in order to make your investment a success. You have to factor in cost, amenities, location, and even your own capabilities. However, when it’s done right, vacation rental ownership can be a lucrative opportunity

Not sure where to start? No worries! We here at North County Property Group have compiled a list of what to consider before buying a vacation rental property in San Diego. 

Defining a Vacation Rental 

Vacation rentals fall under the umbrella term of short-term rentals. In places like Europe, these are often holiday homes or villas. In the USA, however, these are mainly non-hotel accommodations. 

Vacation rentals are rented for one night or multiple nights, but usually not more than 30 nights. As such, if you’re looking into purchasing a vacation rental, you must be prepared for the frequent turnover and cleaning required between vacationers. 

Unlike long-term rentals, there’s a lot of inconsistency involved in vacation rentals since you won’t be retaining tenants with lengthy leases. This means a heightened risk in both finding renters and with potential damages. Still, it can be even more profitable with proper management.

What to Include in Your Vacation Rental 

If you’re considering buying vacation rental property in San Diego, you must take into account that renters will want it to be furnished. Not only this but the utilities, Wi-Fi, amenities, and cable TV are usually included. 

vacation rental

This means that potential real estate investors for vacation homes must be willing to shoulder the expense of providing all these elements for their vacation rental. While this pays off in the long run, you must prepare for a hefty cost at first.

You should also consider that vacationers may not be familiar with how the items in your rental work, and they most certainly will not be aware of details like the Wi-Fi password. As such, you should include a printout with passwords and instructions. This differs from regular rentals where it’s usually up to the tenant to learn how everything operates. You must anticipate their questions in advance for their convenience and your peace of mind. 

Vacation Rental Markets

When buying a vacation rental, there are two markets you must consider: urban markets and vacation markets. 

With urban markets, the demand is throughout the year. People visit on work-related matters for 3 nights on average, and they book their stay less than 30 days in advance. In this scenario, you’ll have to be prepared for more short notice when it comes to your income. 

With vacation markets, the demand is seasonal. These vacationers usually stay for 5-6 nights on average and book around 3 months in advance. Through booking sites like Airbnb, this means you’ll receive all or part of their payment much earlier. You’ll often find this in San Diego, where the vacation market is popular with Canada’s “snowbirds” or people from colder states looking to escape the winter. 

The Ideal Vacation Rental Landlord Profile 

Vacation rental ownership isn’t for everyone, but for those that fit this rental strategy, it can be a major boost to their finances. 

vacation rental landlord

To begin, the profile of an ideal vacation rental owner is someone who owns a secondary residence and wants to use it on a periodic basis. They often live in a different city, limiting their time on the property. This means less of an emotional attachment to the property, making it easier to rent out

Secondly, the importance of this rental income to the property owner must be taken into consideration. Is it critical to maintaining your lifestyle and paying your bills? Or are you considering buying a vacation rental to earn supplementary income? Maybe you could even afford to take a vacation yourself now and then! If it’s the latter, vacation rental ownership is for you. 

Where To Buy a Vacation Rental Property in San Diego

Like many popular travel destinations, San Diego has neighborhoods that are hostile to vacation rentals. Because of all the comings and goings of vacationers, locals may find that it disrupts their peace and quiet. The last things you want are complaints or even legal disputes about your rental’s operations. That’s why you have to be selective in where you chose to buy your vacation rental investment. 

HOA-managed communities also have a tendency to cause headaches for vacation rental owners. Similar to certain San Diego neighborhoods, these have placed limitations on the minimum lengths of stay or even barred vacation rentals completely. Before you purchase your vacation rental home, check with your real estate agent to see if the property is within an HOA-managed community or located in a city that has vacation rental restrictions in place.

The most vacation-friendly neighborhoods in San Diego are West of Interstate 5: namely, La Jolla, Pacific Beach, Mission Beach/Mission Bay, Ocean Beach, and Imperial Beach. They’re popular vacation spots that offer a warm reception to visitors. This will make both your experience as a property owner and your vacationers’ experience much more enjoyable. 

Communication Between Renters and Owners

While we’ve discussed the profile of an ideal vacation rental owner, the expectations are a whole other ballgame. 

vacation rental communication

If you want to be a vacation rental homeowner, you have to factor in communication. As we discussed in episode 9 of our Property Management Brainstorm podcast, in hospitality or travel, you have a 5-minute golden window for responding. This basically means that a lot of communication goes into the lead-up to booking and before check-in, or if maintenance issues come up. If you have a full-time job, being responsive can be hard to accommodate, and you may lose income as a result. 

By hiring a property management company like North County Property Group, we can cover all communication between your renters. In fact, through a branded “autoresponder,” we have immediate replies to all inquiries as well as follow-up calls.

Pricing Vacation Rentals 

Another factor to consider is pricing. While many people have a vague idea of the rental value of their property, it’s not a clearcut as it may seem. You have to consider things like negotiation pricing, high season vs low season for vacationers, and how many competing units are on the market. These all have a massive effect on your unit’s value. 

If you overcharge, you’ll have trouble finding people to rent your vacation property. Vacancies, as we all know, can be costly. If you undercharge, then you may have your unit filled, but you’ll be losing money that you could’ve made with the right pricing. 

With our professional management, we use a yield management tool that determines ideal property rental rates through an algorithm. This tool incorporates many market factors for vacation rentals such as the day of the week, seasons, and supply and demand. 

Bottom Line

There’s a lot to consider when it comes to buying a vacation rental in San Diego. From what to include in your unit to where you should buy to what kind of person fits vacation rental ownership, it can be overwhelming. You might even need to consult with a mortgage lender for funding. But when you get it right, the rewards can be great. 

By hiring a property management company like North County Property Group for your San Diego vacation rental, you can maximize the return on your investment without the stress and time dedication. We have everything covered for you. What we mentioned above is just scratching the surface of our services!

If you’re interested in buying a vacation rental property in San Diego and/or need help managing it, contact North County Property Group today. We’d be happy to answer any questions you may have!

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