Is a Short Term Rental a Real Estate Asset I should Consider?

Dustin Edwards • November 14, 2020

Long Beach is a Prime Vacation Destination, is it Right for Your Investment?

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One question we get asked about on a regular basis is regarding short-term rentals. With the continued popularity of platforms such as Airbnb and VRBO and our location in Long Beach we understand why this is a consideration for many of our property owners and potential clients. While we don’t currently manage short term rental properties we understand their value to an investors real estate portfolio and wanted to share more about these investments to help you decide if it is a match for your real estate goals.

What to Consider with a Short Term Rental
  • Occupancy - With a short term rental a key indicator of how much money you will be able to generate is your occupancy rate. Occupancy rate is the number of days you will have your property rented in a given month. For example if your property was occupied 15 days out of a 30 day month then you would have a 50% occupancy. Understanding occupancy is essential, especially if you are considering buying a property specifically as a short-term rental property. Calculate conservatively on a 40-50% occupancy rate and if you beat that, then you are only doing better!
  • Daily Rate - Having a short term rental is like having a hotel and you will be advertising a rate per night of stay. For popular weekend destinations, like Long Beach, the weekend rates (i.e. Friday - Sunday) do tend to be higher than on the weekends. Plan for the variety of rates when you develop your model.
  • Annual Gross Revenue - Your annual gross revenue is driven by calculating the number of days occupied by your rate for those days. Keep in mind that this number can look substantially larger than your mortgage commitment (it should anyway), but there are fees to acquire that revenue that you should consider as well.
  • Fees - With a long term rental, generally you are only served with a property management fee. With a short term rental you could expect a property management fee (if you aren’t managing it yourself), cleaning fees (if you can’t pass on to those who stay at your place), and transactional fees from the platform (i.e. the host fee). As you evaluate the potential benefit of your short term rental consider that the host fee alone can be anywhere from 3% to14%+ depending on the platform.
Forecasting Potential Revenue for a Short Term Rental

If you are considering purchasing a property with the goal of making it a short term rental the occupancy rate and daily rate can vary dramatically based on the location, property, number of occupants possible, etc. While we certainly could help you with a close annual revenue estimate you can use a calculator by AirDNA to help you estimate your true earnings. This is a great free tool you can use to see if based off of what you are putting down, your expected mortgage, and the associated market factors (i.e. oppancy, daily rate.etc.) will yield a positive cash flow.

When it comes to deciding if a short term rental is your next real estate investment (even if it’s your first) there are many items to consider. With our knowledge of the rental market and real estate agents available we can even help you to purchase your first short term rental asset. To help you understand your options you to call us today at (562) 888-0247 and let us know you’d just like to discuss short term rentals. 


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These may include late or missed rent payments , lease violations, or property damage. Additional risks include neighbor complaints and costly eviction proceedings. Replacing a problematic tenant can be expensive and time-consuming. Between lost rent, repairs, and vacancy periods , a single bad tenant placement can cost thousands of dollars. Professional rental property management prioritizes careful screening because prevention is far easier than resolving problems later. The Tenant Application Process The screening process begins with a rental application. A thorough application collects information needed to evaluate whether an applicant meets the property's rental criteria . Applications typically request: Personal identification information Employment and income details Rental history References from previous landlords Authorization for credit and background checks Property managers review this information to ensure the applicant meets established qualification standards. Consistency is critical; property management companies in Long Beach must evaluate applicants using the same criteria to remain compliant with fair housing laws. Credit History Evaluation Credit history is one of the most common factors considered during tenant screening because it reflects financial reliability. A credit report provides insight into an applicant's behavior over time. This includes payment history, outstanding debts, and collections accounts. It also shows credit utilization, which helps assess overall risk. While a credit score alone does not determine whether someone will be a good tenant, it helps identify patterns of financial responsibility. Professional Long Beach property management services evaluate credit reports carefully while also considering income stability and rental history. Some applicants with lower credit scores may still qualify if they demonstrate strong income and a reliable rental record. Income Verification and Affordability One of the most important indicators of whether a tenant can consistently pay rent is income stability. Property managers verify income to ensure that applicants can reasonably afford the monthly rent. A common guideline is that tenants should earn at least two-and-a-half to three times the monthly rent in gross income. Income verification may include reviewing: Recent pay stubs Employment verification Bank statements Tax returns for self-employed applicants This step helps ensure the tenant's financial situation supports consistent rent payments. Professional property management uses income verification to reduce the risk of late rent or financial hardship. Rental History and Previous Landlord References Past rental behavior is often one of the best indicators of future tenant behavior. Property managers typically contact previous landlords to verify information such as: Payment history Lease compliance Property condition upon move-out Whether the landlord would rent to the tenant again A strong rental history suggests the applicant understands tenant responsibilities and has demonstrated reliability in the past. Experienced property managers in Long Beach California pay close attention to rental history because it can reveal patterns that credit reports alone may not show. Background Screening and Compliance Background screening may also be part of the tenant evaluation process. This can include criminal history checks conducted in compliance with fair housing regulations. It is important that background screening is performed consistently and in accordance with local and state laws. California and many cities have regulations governing how criminal records can be considered in rental decisions. 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