AirBNB/STR in Los Angeles/Playa Del Rey Possible?

[Chris Strandburg]

Hey everyone. I've followed BP for years but have become serious more recently. I've read multiple books and through some of the forums and blogs. I'm considering doing a short term rental (duplex) in the Playa Del Rey area. From what I've read in the forums, the consensus for STRs in LA seems to be "Don't do it!" 

I think I understand a few of the reasons why (and I'm sure there are many others), but I was curious if anyone is actually making it work. If so, is it sustainable for you? Are you hating your life? Since I've seen some STR listings in the LA beach areas, part of me thinks it might be possible. But I don't know how much pain those hosts are going through. I'd appreciate any tips or insights from anyone--thank you!

[Michael Baum]

Hey @Chris Strandburg, so the reason a lot of folks say stay out is there are a lot of restrictions.

For example from the PDF the city has provided-

What are the main eligibility criteria to participate in Home-Sharing?
• Short term rental of one's own primary residence only
• Not able to rent a room or primary residence for more than 120 days a year, or apply for extended home-
sharing
• Extended home-sharing would be granted if additional criteria are met (see above)
• Possession of a Transient Occupancy (Tax) Registration Certificate from Office of Finance
• Not located in a unit subject to the Rent Stabilization Ordinance (RSO)
• Approval from landlord (if a tenant)
• Home-Sharing takes place in area approved for residential use

Here is the document - https://planning.lacity.org/or...

I would give them a call and see what they say. If you are planning on living on one side of the duplex, you might be able to do the STR for 120 days.

[Brooklyn McCarty]

I would avoid this area. Especially as you said, there's so much negativity surrounding STR there. Look at true, regional, drivable vacation markets instead with established STR presence

[Chris Strandburg]

Quote from @Michael Baum:

Hey @Chris Strandburg, so the reason a lot of folks say stay out is there are a lot of restrictions.

For example from the PDF the city has provided-

What are the main eligibility criteria to participate in Home-Sharing?
• Short term rental of one's own primary residence only
• Not able to rent a room or primary residence for more than 120 days a year, or apply for extended home-
sharing
• Extended home-sharing would be granted if additional criteria are met (see above)
• Possession of a Transient Occupancy (Tax) Registration Certificate from Office of Finance
• Not located in a unit subject to the Rent Stabilization Ordinance (RSO)
• Approval from landlord (if a tenant)
• Home-Sharing takes place in area approved for residential use

Here is the document - https://planning.lacity.org/or...

I would give them a call and see what they say. If you are planning on living on one side of the duplex, you might be able to do the STR for 120 days.

 Great information thank you Michael!

[Chris Strandburg]

Quote from @Brooklyn McCarty:

I would avoid this area. Especially as you said, there's so much negativity surrounding STR there. Look at true, regional, drivable vacation markets instead with established STR presence

 I appreciate your perspective Brooklyn!

[Allen Duan]

I don't have the links to back it up, but I remember reading that a multi family doesn't count as an owner occupied resident that you can STR. It would have to be your primary residence where you either rent out a room short term, or rent out the entire home for a limited number of days a year when you are away for travel for example.

Have you looked into mid term rentals? Those would be allowed in LA and Playa and increase your rental earnings over a LTR. 

If you want to purchase a STR near LA, look for the drivable vacation destinations around LA that have a well established STR ordinance that you are able to comply with.

Happy to answer any more questions about STR and MTR in LA. We've been managing both types of rentals for the past 5 years.

[Chris Strandburg]

Quote from @Allen Duan:

I don't have the links to back it up, but I remember reading that a multi family doesn't count as an owner occupied resident that you can STR. It would have to be your primary residence where you either rent out a room short term, or rent out the entire home for a limited number of days a year when you are away for travel for example.

Have you looked into mid term rentals? Those would be allowed in LA and Playa and increase your rental earnings over a LTR. 

If you want to purchase a STR near LA, look for the drivable vacation destinations around LA that have a well established STR ordinance that you are able to comply with.

Happy to answer any more questions about STR and MTR in LA. We've been managing both types of rentals for the past 5 years.

 Wow that's an incredibly important nuance, thank you for raising that. Do you know who I could contact to confirm whether that is true? I can't picture calling someone in the Los Angeles government and getting a straightforward answer.

Mid term rentals are quite interesting. I've looked into them a little bit and it seems like it's common to get a 30% rent premium? With that said, given how harsh the anti-landlord laws in the city seem to be, having a higher volume of tenants seems scary with only one unit. It's great to hear you've had MTR success in LA. I would be interested in learning more.

[Robert Reynolds]

@Chris Strandburg, 

If you are interested in running a short term rental, I would look about 2 hours from Los Angeles to one of the different vacation markets that Angelenos visit. Joshua Tree, Big Bear, Palm Springs, San Diego would be good markets to look into. If you want to be closer to LA, there are some cities close by that are still STR friendly, but they are quickly going away.

@Allen Duan is right about looking for mid-term rentals. I've met Allen in person and he's a very solid person to talk about mid-term rentals with. 

Please reach out if you have any questions. 

[Jason Kudo]

Quote from @Chris Strandburg:

Hey everyone. I've followed BP for years but have become serious more recently. I've read multiple books and through some of the forums and blogs. I'm considering doing a short term rental (duplex) in the Playa Del Rey area. From what I've read in the forums, the consensus for STRs in LA seems to be "Don't do it!" 

I think I understand a few of the reasons why (and I'm sure there are many others), but I was curious if anyone is actually making it work. If so, is it sustainable for you? Are you hating your life? Since I've seen some STR listings in the LA beach areas, part of me thinks it might be possible. But I don't know how much pain those hosts are going through. I'd appreciate any tips or insights from anyone--thank you!

 @Chris Strandburg I have a contrarian take on this with a caveat. First thing to know about LA County, except for a few cities (Malibu, Topanga, Long Beach for example), only a primary residence can be utilized as a short-term rental. So, a duplex is not eligible unless you're living in it. If you live in one side and want to STR the other, that won't work because each unit is its own primary residence.

That said, I have clients who have successfully rented out a guest house/ADU in LA on a short-term basis and since they occupy the main residence, they are not bound by the 120 day limit to fulfill the primary residence occupancy requirements.

[Allen Duan]

Thanks @Robert Reynolds! Always happy to answer any questions about MTRs in Los Angeles for anyone.

[Allen Duan]

@Chris Strandburg Our properties are renting out for 50% above long term rates on average. I don't see any additional risks with having a higher volume of tenants as long as you're doing everything right (leases, background checks, etc). There's actually an advantage there since you can adjust your rates as rents go up, rather than have a long term tenant that stays for years and pays under market rent. By having shorter tenancies, you can do more preventative maintenance to take care of your property and make updates between tenants that allows you to increase rent even more. 

Happy to chat more =)

[Kim Leduff]

Quote from @Allen Duan:

I don't have the links to back it up, but I remember reading that a multi family doesn't count as an owner occupied resident that you can STR. It would have to be your primary residence where you either rent out a room short term, or rent out the entire home for a limited number of days a year when you are away for travel for example.

Have you looked into mid term rentals? Those would be allowed in LA and Playa and increase your rental earnings over a LTR. 

If you want to purchase a STR near LA, look for the drivable vacation destinations around LA that have a well established STR ordinance that you are able to comply with.

Happy to answer any more questions about STR and MTR in LA. We've been managing both types of rentals for the past 5 years.

@Allen Duan 
Hi Allen, where do you post your MTRs and how did you get into it? I own a primary residence in LA city and am interested in MTRs and STRs and would love to pick your brain about the MTR idea.

[Kim Leduff]

Quote from @Jason Kudo:

Quote from @Chris Strandburg:

Hey everyone. I've followed BP for years but have become serious more recently. I've read multiple books and through some of the forums and blogs. I'm considering doing a short term rental (duplex) in the Playa Del Rey area. From what I've read in the forums, the consensus for STRs in LA seems to be "Don't do it!" 

I think I understand a few of the reasons why (and I'm sure there are many others), but I was curious if anyone is actually making it work. If so, is it sustainable for you? Are you hating your life? Since I've seen some STR listings in the LA beach areas, part of me thinks it might be possible. But I don't know how much pain those hosts are going through. I'd appreciate any tips or insights from anyone--thank you!

 @Chris Strandburg I have a contrarian take on this with a caveat. First thing to know about LA County, except for a few cities (Malibu, Topanga, Long Beach for example), only a primary residence can be utilized as a short-term rental. So, a duplex is not eligible unless you're living in it. If you live in one side and want to STR the other, that won't work because each unit is its own primary residence.

That said, I have clients who have successfully rented out a guest house/ADU in LA on a short-term basis and since they occupy the main residence, they are not bound by the 120 day limit to fulfill the primary residence occupancy requirements.

Hi @Jason Kudo , how are folks successfully renting out ADUs as STRS in LA city over 120 days? Id love to chat more about it if you're available

@Jason Kudo

[Allen Duan]

@Kim Leduff Happy to chat and share! We get most of our bookings through Furnished Finder and Airbnb. We started off doing STR rental arbitrage and pivoted to MTRs as regulations in SoCal became more anti-STR. We currently manage MTRs for other owners and do some arbitrage too.

[Chris Morris]

Quote from @Jason Kudo:

Quote from @Chris Strandburg:

Hey everyone. I've followed BP for years but have become serious more recently. I've read multiple books and through some of the forums and blogs. I'm considering doing a short term rental (duplex) in the Playa Del Rey area. From what I've read in the forums, the consensus for STRs in LA seems to be "Don't do it!" 

I think I understand a few of the reasons why (and I'm sure there are many others), but I was curious if anyone is actually making it work. If so, is it sustainable for you? Are you hating your life? Since I've seen some STR listings in the LA beach areas, part of me thinks it might be possible. But I don't know how much pain those hosts are going through. I'd appreciate any tips or insights from anyone--thank you!

 @Chris Strandburg I have a contrarian take on this with a caveat. First thing to know about LA County, except for a few cities (Malibu, Topanga, Long Beach for example), only a primary residence can be utilized as a short-term rental. So, a duplex is not eligible unless you're living in it. If you live in one side and want to STR the other, that won't work because each unit is its own primary residence.

That said, I have clients who have successfully rented out a guest house/ADU in LA on a short-term basis and since they occupy the main residence, they are not bound by the 120 day limit to fulfill the primary residence occupancy requirements.

Jason, I believe that guest houses and ADUs fall under the same restrictions as the 2nd unit in a duplex. You cannot rent out an ADU or guest house as an STR unless you live in that ADU or guest house > 50% of the year.

[Chris Morris]

Quote from @Kim Leduff:

Quote from @Jason Kudo:

Quote from @Chris Strandburg:

Hey everyone. I've followed BP for years but have become serious more recently. I've read multiple books and through some of the forums and blogs. I'm considering doing a short term rental (duplex) in the Playa Del Rey area. From what I've read in the forums, the consensus for STRs in LA seems to be "Don't do it!" 

I think I understand a few of the reasons why (and I'm sure there are many others), but I was curious if anyone is actually making it work. If so, is it sustainable for you? Are you hating your life? Since I've seen some STR listings in the LA beach areas, part of me thinks it might be possible. But I don't know how much pain those hosts are going through. I'd appreciate any tips or insights from anyone--thank you!

 @Chris Strandburg I have a contrarian take on this with a caveat. First thing to know about LA County, except for a few cities (Malibu, Topanga, Long Beach for example), only a primary residence can be utilized as a short-term rental. So, a duplex is not eligible unless you're living in it. If you live in one side and want to STR the other, that won't work because each unit is its own primary residence.

That said, I have clients who have successfully rented out a guest house/ADU in LA on a short-term basis and since they occupy the main residence, they are not bound by the 120 day limit to fulfill the primary residence occupancy requirements.

Hi @Jason Kudo , how are folks successfully renting out ADUs as STRS in LA city over 120 days? Id love to chat more about it if you're available

@Jason Kudo

You can apply for some sort of 'extended' permit. But note that you cannot rent out an ADU for more than 180 days, as you must be living in it the other 180 days (assuming a year has 360 days...).

[Adrian Jenkins]

Quote from @Jason Kudo:

Quote from @Chris Strandburg:

Hey everyone. I've followed BP for years but have become serious more recently. I've read multiple books and through some of the forums and blogs. I'm considering doing a short term rental (duplex) in the Playa Del Rey area. From what I've read in the forums, the consensus for STRs in LA seems to be "Don't do it!" 

I think I understand a few of the reasons why (and I'm sure there are many others), but I was curious if anyone is actually making it work. If so, is it sustainable for you? Are you hating your life? Since I've seen some STR listings in the LA beach areas, part of me thinks it might be possible. But I don't know how much pain those hosts are going through. I'd appreciate any tips or insights from anyone--thank you!

 @Chris Strandburg I have a contrarian take on this with a caveat. First thing to know about LA County, except for a few cities (Malibu, Topanga, Long Beach for example), only a primary residence can be utilized as a short-term rental. So, a duplex is not eligible unless you're living in it. If you live in one side and want to STR the other, that won't work because each unit is its own primary residence.

That said, I have clients who have successfully rented out a guest house/ADU in LA on a short-term basis and since they occupy the main residence, they are not bound by the 120 day limit to fulfill the primary residence occupancy requirements.

I thought LA banned ADU's as STR.

[Jason Kudo]

Quote from @Adrian Jenkins:

Quote from @Jason Kudo:

Quote from @Chris Strandburg:

Hey everyone. I've followed BP for years but have become serious more recently. I've read multiple books and through some of the forums and blogs. I'm considering doing a short term rental (duplex) in the Playa Del Rey area. From what I've read in the forums, the consensus for STRs in LA seems to be "Don't do it!" 

I think I understand a few of the reasons why (and I'm sure there are many others), but I was curious if anyone is actually making it work. If so, is it sustainable for you? Are you hating your life? Since I've seen some STR listings in the LA beach areas, part of me thinks it might be possible. But I don't know how much pain those hosts are going through. I'd appreciate any tips or insights from anyone--thank you!

 @Chris Strandburg I have a contrarian take on this with a caveat. First thing to know about LA County, except for a few cities (Malibu, Topanga, Long Beach for example), only a primary residence can be utilized as a short-term rental. So, a duplex is not eligible unless you're living in it. If you live in one side and want to STR the other, that won't work because each unit is its own primary residence.

That said, I have clients who have successfully rented out a guest house/ADU in LA on a short-term basis and since they occupy the main residence, they are not bound by the 120 day limit to fulfill the primary residence occupancy requirements.

I thought LA banned ADU's as STR.

It depends. If the STR applicant can demonstrate primary occupancy of the ADU or if the ADU was completed prior to 2017 then the ADU can be used as an STR for 120 days and possibly longer with extended home-sharing approval.

[Adrian Jenkins]

Quote from @Jason Kudo:

Quote from @Adrian Jenkins:

Quote from @Jason Kudo:

Quote from @Chris Strandburg:

Hey everyone. I've followed BP for years but have become serious more recently. I've read multiple books and through some of the forums and blogs. I'm considering doing a short term rental (duplex) in the Playa Del Rey area. From what I've read in the forums, the consensus for STRs in LA seems to be "Don't do it!" 

I think I understand a few of the reasons why (and I'm sure there are many others), but I was curious if anyone is actually making it work. If so, is it sustainable for you? Are you hating your life? Since I've seen some STR listings in the LA beach areas, part of me thinks it might be possible. But I don't know how much pain those hosts are going through. I'd appreciate any tips or insights from anyone--thank you!

 @Chris Strandburg I have a contrarian take on this with a caveat. First thing to know about LA County, except for a few cities (Malibu, Topanga, Long Beach for example), only a primary residence can be utilized as a short-term rental. So, a duplex is not eligible unless you're living in it. If you live in one side and want to STR the other, that won't work because each unit is its own primary residence.

That said, I have clients who have successfully rented out a guest house/ADU in LA on a short-term basis and since they occupy the main residence, they are not bound by the 120 day limit to fulfill the primary residence occupancy requirements.

I thought LA banned ADU's as STR.

It depends. If the STR applicant can demonstrate primary occupancy of the ADU or if the ADU was completed prior to 2017 then the ADU can be used as an STR for 120 days and possibly longer with extended home-sharing approval.

I am not understanding a reasonable strategy here. One buys a house with an ADU built before 2017, makes the ADU their primary residence for whatever the requirement is and then is able to rent out the same ADU for 120 days (or longer if the permit is extended)? The main house stays unoccupied during the time the host stays in the ADU for the min. time requirement?

[Chris Morris]

Quote from @Adrian Jenkins:

Quote from @Jason Kudo:

Quote from @Chris Strandburg:

Hey everyone. I've followed BP for years but have become serious more recently. I've read multiple books and through some of the forums and blogs. I'm considering doing a short term rental (duplex) in the Playa Del Rey area. From what I've read in the forums, the consensus for STRs in LA seems to be "Don't do it!" 

I think I understand a few of the reasons why (and I'm sure there are many others), but I was curious if anyone is actually making it work. If so, is it sustainable for you? Are you hating your life? Since I've seen some STR listings in the LA beach areas, part of me thinks it might be possible. But I don't know how much pain those hosts are going through. I'd appreciate any tips or insights from anyone--thank you!

 @Chris Strandburg I have a contrarian take on this with a caveat. First thing to know about LA County, except for a few cities (Malibu, Topanga, Long Beach for example), only a primary residence can be utilized as a short-term rental. So, a duplex is not eligible unless you're living in it. If you live in one side and want to STR the other, that won't work because each unit is its own primary residence.

That said, I have clients who have successfully rented out a guest house/ADU in LA on a short-term basis and since they occupy the main residence, they are not bound by the 120 day limit to fulfill the primary residence occupancy requirements.

I thought LA banned ADU's as STR.

You can have an STR as long as it is owner-occupied for > 50% of the year.

[Rick Albert]

A couple of things:

1. If the property is subject to Los Angeles Rent Control, you can't do STR under any circumstances.

2. The guidelines are strict (which was already mentioned).

3. I'm not sure the numbers really work anymore. Every time I have analyzed a short term opportunity, the cash flow tends to be close to the same as a traditional rental. Keep in mind you are responsible for the utilities, internet, upkeep of furniture, bed sheets, etc. Plus there are the Airbnb fees and some areas have an additional tax. For example I have house hacking clients in Malibu doing STR and the city imposes a 15% gross income tax.

The popular areas (Joshua Tree, Big Bear, etc.) from what I am hearing are over saturated. When there are options, unless your place is extremely special, the only way you can compete is on price. That's not exciting. 

Mid-Term Rentals are generally the same concerns as STR, but you could argue less potential vacancy and if the property is subject to rent control, it is a potential legal workaround.

Most of my investor clients are either house hacking, mid-term, student housing, or traditional rental.

[Adrian Jenkins]

Quote from @Rick Albert:

A couple of things:

1. If the property is subject to Los Angeles Rent Control, you can't do STR under any circumstances.

2. The guidelines are strict (which was already mentioned).

3. I'm not sure the numbers really work anymore. Every time I have analyzed a short term opportunity, the cash flow tends to be close to the same as a traditional rental. Keep in mind you are responsible for the utilities, internet, upkeep of furniture, bed sheets, etc. Plus there are the Airbnb fees and some areas have an additional tax. For example I have house hacking clients in Malibu doing STR and the city imposes a 15% gross income tax.

The popular areas (Joshua Tree, Big Bear, etc.) from what I am hearing are over saturated. When there are options, unless your place is extremely special, the only way you can compete is on price. That's not exciting. 

Mid-Term Rentals are generally the same concerns as STR, but you could argue less potential vacancy and if the property is subject to rent control, it is a potential legal workaround.

Most of my investor clients are either house hacking, mid-term, student housing, or traditional rental.

I am coming to the same conclusion as well. Perhaps the only benefit for the STR is the active investment status since it can potentially offset W2 while the mid term or long term cannot. If the revenue for the short term is as much as the long term due to the STR restrictions, maybe the STR strategy wins based on that. However, there are so many nuances such as where does the home owners stay? In the second unit that was a STR but now is owner occupied to meet the IRS requirements etc..

On a Separate note, do you know if a duplex where owner lives in one unit is exempt from rent control in LA? I read this somewhere that the rental can be exempt in this scenario.

[Rick Albert]

There are fees to be paid with rent control. If you live in the unit, you are exempt from some of the fees. But the other units I'm pretty confident are still subject to rent control. You can call LAHD to confirm.