Still can’t decide how to rent my first investment property

[gzz]

I’m closing on a SFH in Ocean Beach in 2 weeks.

It is very comparable in size, parking, and physical condition to this place (also a 3/2 plus 1/1 studio), but 3 blocks further form the beach (minus) with a larger lot, newer kitchen, and better view (plus):

http://www.vrbo.com/3847964ha

What type of occupancy do you think I can expect over the summer if I do this? I’m not so sure I really want to deal with vacation rental management year round, but summer short term rates seem to be 3x more than long-term monthly rates.

I’m a people person and enjoy interacting with summer tourists in limited doses and don’t expect to be especially busy with work.

[flyer]

Some of our family live in Sunset Cliffs and Point Loma, and have had rentals in those areas as well as OB for years.

If you choose the vacation rental route, you’ll probably do very well. That said, most in the family (including myself) prefer leasing to long-term tenants so we don’t have the ongoing demands and issues short-term rentals require, and things are pretty much functional on autopilot.

You could always try short-term for a summer, and see how it goes, then revert to long-term in the future, if you find you don’t care for it. Just my opinions, and not intended as advice.

BTW, congrats on your purchase. As we all know, beach rentals can be “gold.”

[FlyerInHi]

Yes, congrats. Beach property are gold.

If I were you I’d make it a vacation rental. Remodel it to look like a W hotel suite. At the beach, don’t use carpet. Lay sexy dark rectangular tiles so dirty grout doesn’t show. Sexy glam look.

You need a certain wow factor because your business depends on review.

If you don’t mind sharing, what kind of cap rate are you expecting?

Btw, I own vacation rentals and mine get more business than surrounding properties.
I put in finishes touches such as glam chandeliers, hotel style sconces and phone charging outlets over the nightstands (no wires), etc….

Indirect focused lightning to created shadows and a clubby feel. Of course you would want beach elements like painting of surfing, waves, etc…

[gzz]

Thanks Flyer and FlyerinHI

Yes I don’t think it hurts to try it out vacation rental, especially because I’ll be closing a week or two before Independence Day and ComicCon.

Cap rate is probably awful, the gross monthly rent will probably be about equal to the mortgage payment, maybe $200 more. The annual rent will be about 6% of the purchase price.

I am buying more because I want to live there eventually when I need a bigger house, and because it is zoned for 4 units on a large-for-OB lot.

When I ran the numbers and included expected expenses, the return on my downpayment, mostly in the form of equity payments each month, will be about 4% the first year.

A W suite sound really aspirational, I will have to overcome my natural cheapskate nature, as my current house is full of curb finds, homemade furniture, craigslist and thrift store furniture. The only W I’ve stayed at was in San Francisco and it was exceptionally nice, sort of ultramodern and slightly Japanese.

[FlyerInHi]

Sounds like you have an awesome property with lots of potential. If you will live there in the future, you won’t mind making the improvements. You will have a great family home with separate guest quarters. OB is on the way up. Great location near downtown.

My experience with vacation rentals is that you want to target the guests who can easily afford book a couple rooms at the Hilton but would rather have a private home experience. It takes a bit of effort to create an upscale welcoming home. If you’re not good at it, you can hire an interior designer or use the advise provided for free at the furniture stores.

The pictures and listing should be realistic otherwise the guests will experience a letdown upon arrival and that will affect future bookings and referrals.

Lighting is very important. Notice that furniture always looks better at the store because they have better lighting.

[gzz]

I have a friend in the South who always raves about what a professional decorator did with his house. I have no personal or family experience hiring one, everything I know is from watching Designing Women with my parents when I was a little kid.

[Author]

Posts