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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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By Dustin Edwards November 18, 2024
Be aware of these 3 common issues when the rainy season arrives at your rental property.
Cold weather can come fast and strong so it's best to ensure your property is ready for this climate
By Dustin Edwards November 12, 2024
It's important to prepare your rental properties for the colder weather. Although we don’t need to prepare for snow and freezing temperatures, we do need to prepare for the cold and rain. By ensuring your rental is cozy inside and prepared for the fall season , you can not only reduce energy costs for your tenant but also maintain your rental property value. Today, we’ll go over three signs your property is ready for this upcoming cold weather.  Sign #1 Proper Weatherproofing During the colder seasons, it's much easier for a tenant to notice any cold spots in your rental. Well-insulated doors and windows can not only help maintain the warm temperature but also prevent it from lowering. It can also prevent cold spots and drafts, which can help with tenant satisfaction . Doors and windows should be properly sealed and insulated to prevent drafts and maintain proper temperatures. A visual inspection of the weatherstripping around doors and windows to ensure they’re intact is a great place to start. If damaged, consider replacing them, as trying to seal gaps can be tricky and rarely lasts. Other seals should also be checked, as well as any areas that need to be caulked in order to keep cold air out. Insulation during the summer helps keep the cool air in, and during the winter, insulation in the halls and attics helps retain desired heat. Hot air rises, and if there isn't adequate insulation in the ceiling, heat will continually be lost. Luckily, adding insulation to an attic is not uncommon and typically only requires a day or two for installation. Sign #2 Energy Efficiency Measures During the winter, it's not just the cold you need to keep in mind. As days are much shorter, there is less sunlight to keep the rental warm and more hours of darkness. For this reason, it's a good idea to keep energy efficiency in mind when preparing for the cold weather. Energy-efficient lighting or smart lighting helps reduce overall costs since your tenant will likely use electricity to keep warm. Ensure your outdoor lighting is rated for external use, as this can provide crucial illumination during longer nights. Draft guards on doors and windows help reduce the load on your rental’s HVAC system which can significantly improve its lifespan. This is also a great time to replace filters and clean the ductwork in your rental to improve energy efficiency. Additionally, consider installing an insulative film on older windows, which helps retain heat and keep rooms warmer without the need for extra heating. If your rental has a programmable thermostat, ensure it’s in working order, as this can help tenants manage an energy-efficient heating schedule more easily. Sign #3 Property Exterior Southern California is a great place to settle down, and while we don't need to worry about snowfall or deep freezes, ensuring the exterior of your rental property is ready for the cold weather is important. With our cold season mainly bringing with it rain, inspect your rental property’s rain gutter system . Remove debris from drains and check for leaks or signs of wear and tear. Walkways should be clear of debris and well-lit. This may require you to prune and trim trees and bushes that may leave behind leaves. When combined with rainfall, a single wet leaf can cause someone to slip and hurt themselves. Consider adding non-slip mats or tape to areas where people may have tripped in the past. Much like during the hotter weather, it's important for your rental to be ready for fall and winter. By keeping your property ready for any weather Southern California has to offer, you ensure your rental property and tenants will provide steady rental income every month. If you need help preparing your rental for the cold weather or if you need help managing Beach City rental property, we invite you to call us today at (562) 888-0247 or complete our Owner Application online .
By Dustin Edwards November 4, 2024
Owning a rental property in a beach city like Long Beach, CA , offers a number of advantages, like great weather and a strong real estate market. However, the cold ocean breezes can pose some challenges for landlords and tenants, making it convenient for property managers . Although the weather is generally great, these ocean breezes can sometimes make properties drafty and uncomfortable during the fall and winter seasons. Today we’ll go over four measures that can improve tenant comfort and protect your investment from the cold ocean breezes. Weatherproofing Againsts Drafts Drafts are caused by gaps between doors and windows which can make a rental feel colder than it is. This leads to unnecessary energy use and tenant discomfort. Sealing these gaps is not difficult and quite doable for a landlord who doesn’t mind getting their hands dirty. Replacing worn weatherstripping and adding fresh caulking to seal minor gaps blocks air from permeating the property. For additional protection from drafts, you can provide your tenant with inexpensive door sweeps. Improve Heating Efficiency Having efficient heating is crucial to countering the cooler ocean breezes while keeping costs low. Schedule regular maintenance for your HVAC system , such as replacing filters, cleaning vents, and cleaning the compressor to keep it running smoothly. This not only provides more efficient heating, it also extends the life of your HVAC system. Installing a smart thermostat is another way for tenants to adjust heating schedules efficiently. Protect Outdoor Spaces Outdoor areas such as patios, balconies, and even porches can oftentimes be exposed to the coastal breezes. This can be an issue in the long run, especially for rentals next to the beach , as the wind can carry sand and salt, which can accelerate the deterioration of metals, wood, and paint. This can be mitigated by adding windbreaks to the property, such as lattice panels or outdoor curtains, to create a more comfortable and functional outdoor space. Exterior finishes will require more frequent maintenance. This includes resealing wood and metal surfaces. As well as repainting is important to protect against wear from salt, sand, and moisture. Wind Mitigating Landscaping Much like with the curtains and lattice previously talked about, the landscaping can also be used as a windbreak. For example, planting wind-resistant shrubs or trees alongside exposed areas creates a natural barrier. This helps reduce the impact of the gusts of wind hitting the property. Many native plants thrive in coastal climates while also requiring minimal maintenance. While expensive, the results can greatly improve your rental’s longevity and curb appeal. Alternatively, you can strategically place planters to provide protection. Durable Furniture Furniture and fixtures exposed to the cold coastal breezes need to be able to withstand that wear and tear. Choose resilient materials such as treated wood, powder-coated metals, and outdoor-rated plastics. These are less prone to being damaged by the salt or wind. Furniture that is lightweight should be secured or anchored in place to prevent it from being blown away. By investing in durable furnishing, you can provide tenants with a comfortable and functional outdoor space for years to come. Protecting your beach city property from the cold ocean breeze doesn't necessarily require extensive renovations or investments. Try to focus on any relevant feedback from your tenant, this can help you pinpoint what part of your rental needs attention. If you need additional help protecting your rental property from the cold ocean breezes or if you need help managing Beach City rental property, we invite you to call us today at (562) 888-0247 or complete our Owner Application online .
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