Anyone have a STR in Three Rivers, CA?
Member since 2021 · 7 posts · 10 votes
Hello,
My husband and I are first-time investors and are considering buying a STR property in Three Rivers, CA, near Sequoia and Kings Canyon National Parks. I searched on the forums, but any post I found about that area was from several years ago, so I'm looking for anyone who has some more recent/current experience with owning a STR in that area. We live in southern CA ourselves, and are also interested to find a place that we could use ourselves occasionally as a vacation rental. I also saw that Three Rivers was listed on Airdna's list of top places to own an STR, which is another reason we are interested in that area and would love to hear from anyone with experience owning a rental property there.
Thank you!
Susan Snodgrass
Just my advice, so take it for what it's worth. I've made this mistake before on STR property selection.
Be very careful when analyzing STR properties that "you might want to stay in now and again". Analyzing a property for an investment should be done with math and underwriting. Basically, how much Net Operating Income will the STR produce in relation to its cost. You are much better off finding the best possible STR as an investment. Then use the profit from that investment to AirBNB rent in your favorite vacation locations. Confusing the two could cost you thousands or maybe tens of thousands per year. The chance that the best possible STR investment property just happens to be at your favorite vacation spot is slim to none.
A very quick for example:
Option 1 - Best possible STR investment is 300k and produces 45k of Net Income annually.
Option 2 - Best STR property in your vacation location is 300k and produces 25k of Net Income annually. You just lost 20k per year vs booking out Option 1 year round and using the profit to stay in an AirBNB now and again.
Investors always forget (myself included) that when you stay in your own STR you are losing the income it could have made, so you never really stay there for "free".
Hope this helps in your search...
@Dawn Asher @Junee Gam ... and anyone else who operate STRs in Three Rivers, i have an underwriting/ financial projection question:
I spoke to someone the other day who mentioned that Airbnb only recently (within the last year) started charging guests the 10% occupancy tax at checkout. Before this, it was up to hosts to pay up at the end of the tax year, which made their gross revenues look artificially high (because they were pre-occupancy tax). This switch creates an issue for me as I run financial projections on deals - I've been projecting based on specific comps using past 12 month data from Pricelabs/ Airdna, etc. who scrape the web for rates at the time of booking and combine them into yearly revenue totals. But if Airbnb only recently started collecting occupancy taxes from guests, it means the months before the switch shows revenue 10% above what they actually were after taxes. (My assumption here is that guests are only willing to pay so much, so if you're charging them directly they'll spend less from a daily rate perspective. 10% is a big miss in projections, so I want to be sure I'm factoring occupancy taxes in correctly.
Do any of you know exactly when Airbnb started automatically collecting occupancy taxes from guests in Three Rivers?
Thank you!
Sean, regarding your question on the 10% occupancy tax, I do not see Three Rivers or Tulare County listed on Airbnb's website (Occupancy tax collection and remittance by Airbnb in California). See below. So I don't believe they are collecting the transient occupancy tax on your behalf. Please correct me if I'm wrong.
@Dawn Asher @Junee Gam ... and anyone else who operate STRs in Three Rivers, i have an underwriting/ financial projection question:
I spoke to someone the other day who mentioned that Airbnb only recently (within the last year) started charging guests the 10% occupancy tax at checkout. Before this, it was up to hosts to pay up at the end of the tax year, which made their gross revenues look artificially high (because they were pre-occupancy tax). This switch creates an issue for me as I run financial projections on deals - I've been projecting based on specific comps using past 12 month data from Pricelabs/ Airdna, etc. who scrape the web for rates at the time of booking and combine them into yearly revenue totals. But if Airbnb only recently started collecting occupancy taxes from guests, it means the months before the switch shows revenue 10% above what they actually were after taxes. (My assumption here is that guests are only willing to pay so much, so if you're charging them directly they'll spend less from a daily rate perspective. 10% is a big miss in projections, so I want to be sure I'm factoring occupancy taxes in correctly.
Do any of you know exactly when Airbnb started automatically collecting occupancy taxes from guests in Three Rivers?
Thank you!
Sean, regarding your question on the 10% occupancy tax, I do not see Three Rivers or Tulare County listed on Airbnb's website (Occupancy tax collection and remittance by Airbnb in California). See below. So I don't believe they are collecting the transient occupancy tax on your behalf. Please correct me if I'm wrong.
I did just that and see a 10% tax being collected however it doesn't specify what that tax consists of. I don't believe the transient occupancy tax is included in that. I spoke with a local STR management company and was told that they are manually calculating the TOT tax and paying it quarterly to the county. This backs up what my link above from Airbnb shows as well.
Susan,
I just closed an STR in Three Rivers end of 2022 with a bigger pockets member from So Cal! We can totally help you here and I can connect you with her directly to ask any questions of her. She's a great person and I am confident would be happy to share how it's going as well.