I don’t like referring to vacation homes as second homes. Vacation homes should be referred to as real estate investments. And if you want a successful real estate investment, you need to buy vacation homes in Southern California.
Vacation Homes as Real Estate Investments?
Are vacation homes a good investment? Yes. While you may have ended up here with the intention to buy vacation homes in Southern California for personal use, you’d be missing out on a great opportunity to make money in real estate.
When vacation homes are left vacant for pretty much the entire year (aside from maybe a week or two, a month if you are lucky enough to get away), they become what we call in real estate investing negative cash flow properties.
This is because as the property owner, you’re spending money on taxes, insurance, and possibly even mortgage payments. With a primary residence, you’d be getting your money’s worth in the form of a place to live. What exactly do you get as a return on investment for the money you put down on vacation homes you use once a year?
That’s why the best route with vacation homes, whether they’re vacation homes in Southern California or anywhere else in the US housing market, is to turn them into real estate investments. Have a positive cash flow property rather than a negative one with this investment strategy and become a real estate investor. All the while, you’ll have a vacation home rental you can enjoy whenever you please.
So, now you have to buy vacation homes in Southern California as a real estate investor, not as a vacationer. Why exactly should you invest in vacation homes in Southern California?
Why Are Vacation Homes in Southern California a Good Choice for Real Estate Investing?
Well, if you were considering at any point to buy vacation homes in Southern California for personal use, it’s easy to see why a real estate investor would benefit from short-term rentals there. It’s simple: tourists love Southern California, whether international or from the US. Warm weather, sunny beaches, and happening hot-spots make vacation homes in Southern California profitable real estate investments.
This is especially true for vacation home rentals used as an Airbnb investment. Southern California real estate investors enjoy high Airbnb occupancy rates and excellent Airbnb rental income. Of course, this isn’t enough evidence. Let’s take a look at some of the numbers.
Airbnb hosts across California have been making money in real estate, lots of it. In 2016, Airbnb hosts made over $1 billion in revenue. This was thanks to the 5 million Airbnb guests the State saw in one year.
Two cities in Southern California, San Diego and Los Angeles, took in close to a whopping 50% of that revenue (along with a Northern California city, San Francisco). Airbnb Los Angeles hosts made $262.6 million with 1 million guests. Airbnb San Diego hosts brought in $69.6 million from 357,300 guests.
That was 2016. We’re dealing with the real estate market 2018, and Airbnb has only grown in popularity and is making more money for Airbnb hosts now than ever. With all of the popular events taking place across the major cities in Southern California (from music festivals to comic-con) as well as major tourist attractions, it’s hardly a surprise that these are the numbers Airbnb hosts are ranking in for the location.
Now that you know why to invest in vacation homes in Southern California, you need to know where to invest in real estate in this vast part of the state.
The Best Places to Buy Vacation Homes in Southern California
The cities that rank as the best places to buy vacation homes in Southern California according to Mashvisor’s investment calculator are (in no particular order):
Los Angeles
For more information about Airbnb investment properties, long term rentals, and just general stats about each of the best cities for Airbnb investment 2018, click on the links above.
To learn more about Mashvisor’s investment calculator, click here.
To make sure you make the most Airbnb rental income from the highest Airbnb occupancy rates, Mashvisor’s investment calculator can show you the best neighborhoods to invest in the best cities for Airbnb investment.
The Best Places to Buy Vacation Homes in San Diego
Golden Hill
- Median House Price: $695,000
- Airbnb Rental Income: $1,859
- Airbnb Cash on Cash Return: 3.99%
- Airbnb Cap Rate: 3.99%
- Airbnb Occupancy Rate: 63.22%
Hillcrest
- Median House Price: $651,944
- Airbnb Rental Income: $3,899
- Airbnb Cash on Cash Return: 3.57%
- Airbnb Cap Rate: 3.57%
- Airbnb Occupancy Rate: 69.26%
University City
- Median House Price: $575,000
- Airbnb Rental Income: $3,514
- Airbnb Cash on Cash Return: 3.02%
- Airbnb Cap Rate: 3.02%
- Airbnb Occupancy Rate: 57.93%
The Best Places to Buy Vacation Homes in Los Angeles
Venice
- Median House Price: $1,847,000
- Airbnb Rental Income: $3,049
- Airbnb Cash on Cash Return: 1.1%
- Airbnb Cap Rate: 1.1%
- Airbnb Occupancy Rate: 60.2%
Koreatown
- Median House Price: $875,000
- Airbnb Rental Income: $1,935
- Airbnb Cash on Cash Return: 0.99%
- Airbnb Cap Rate: 0.99%
- Airbnb Occupancy Rate: 61.36%
Mid City West
- Median House Price: $1,699,000
- Airbnb Rental Income: $3,836
- Airbnb Cash on Cash Return: 0.96%
- Airbnb Cap Rate: 0.96%
- Airbnb Occupancy Rate: 61.61%
The Best Places to Buy Vacation Homes in Long Beach
Rose Park
- Median House Price: $650,000
- Airbnb Rental Income: $1,771
- Airbnb Cash on Cash Return: 1.98%
- Airbnb Cap Rate: 1.98%
- Airbnb Occupancy Rate: 60.23%
Willmore City
- Median House Price: $438,500
- Airbnb Rental Income: $1,524
- Airbnb Cash on Cash Return: 1.82%
- Airbnb Cap Rate: 1.82%
- Airbnb Occupancy Rate: 51.82%
Carroll Park
- Median House Price: $499,000
- Airbnb Rental Income: $1,720
- Airbnb Cash on Cash Return: 1.62%
- Airbnb Cap Rate: 1.62%
- Airbnb Occupancy Rate: 58.66%
To start looking for vacation homes in Southern California, click here.
When it comes to buying vacation home rentals in Joshua Tree or Palm Springs, you can’t go wrong with most neighborhoods. Just take a look at the general real estate investing stats for each of these best cities for Airbnb investment (provided by Mashvisor’s investment calculator):
Joshua Tree
- Median House Price: $189,000
- Airbnb Rental Income: $2,152
- Airbnb Cash on Cash Return: 6.58%
- Airbnb Cap Rate: 6.58%
- Airbnb Occupancy Rate: 57.95%
Palm Springs
- Median House Price: $475,000
- Airbnb Rental Income: $4,713
- Airbnb Cash on Cash Return: 6.28%
- Airbnb Cap Rate: 6.28%
- Airbnb Occupancy Rate: 56.03%
Like the numbers you see? Click here to start your 7-day free trial with Mashvisor and subscribe to our services with a 15% discount after.
Vacation homes should be real estate investments, and the best place to buy vacation homes is in any one of these cities in Southern California.
Don’t forget to use Mashvisor’s investment calculator to find the best vacation homes in California. Not only does this real estate investing tool help you choose a location for vacation homes, but it helps you choose the best investment property to use as an Airbnb investment.
Want to know how? Read: Airbnb Profit Calculator: The Ultimate Real Estate Investment Tool