Need Advice for STR in Pismo Beach

[Lisa H.]

I have never invested in STRs.  I could use any and all advice:

1. How does one acquire the necessary information in determining average monthly income?

2. The properties I am interested in seems to run like a timeshare (its not). How do you determine what type of ownership it is?

3. What if I can't get insured? Still a good income property?  Seems like ocean property won't be insured anyways.

4. Although I have vacationed many times and love the area, any information on Pismo would be great--from a business perspective.

Any other advice, tips or tricks are welcomed!!!!

[Andrew Steffens]

Hi Lisa - I am far from an expert on CA, but on the income I personally have a premium AirDNA subscription and start there.  I get their auto generated number and match up against the comps provided with the paid subscription.  After that I check it using the "Enemy method" and see what properties are doing currently on Airbnb/Vrbo sites.

Hope that helps!

[Bradley Buxton]

@Lisa H.

Pismo is a beautiful area. I lived in SLO for a while and know that area well. 

Check AirDNA to get an idea of daily rates and vacancy rates. Compare your potential property to others currently on Airbnb and other STR sites. What type of guest experience are they offering? Find out what the local regulations are and check the local paper if there are any restrictions being proposed for the area. If you can't get insurance you likely can't get a loan. Write an insurance contingency into the offer. Check the HOA rules if it's a condo and the minutes if there is any talk of limiting STRs. Be sure to add in start-up costs such as repairs and furniture.

[Lisa H.]

@Andrew Steffens Thanks! This gives me a good start to research. 

[Alan F.]

Quote from @Lisa H.:

I have never invested in STRs.  I could use any and all advice:

1. How does one acquire the necessary information in determining average monthly income?

2. The properties I am interested in seems to run like a timeshare (its not). How do you determine what type of ownership it is?

3. What if I can't get insured? Still a good income property?  Seems like ocean property won't be insured anyways.

4. Although I have vacationed many times and love the area, any information on Pismo would be great--from a business perspective.

Any other advice, tips or tricks are welcomed!!!!

 https://pismobeach.org/faq.aspx?TID=36

[John Underwood]

Sounds like you are starting at the beginning so I would recommend you get Avery's book and start reading through older post on this forum. There is a wealth of free information here.

And Google the enemy method.

[Michael Baum]

Hey @Lisa H.

Checking AirBNB and VRBO to see what other STRs are bringing in will help. See what their nightly rate is, amenities and how their calendar looks.

You should be able to get insurance. It could cost more. You need a specific STR policy. Not a homeowners or LTR insurance policy.

[Jon Martin]

SLO County resident of many years here. Pismo is very pricey but guests expect that and you should be able to charge accordingly. You really can't go wrong anywhere in the Pismo city limits. More economical purchase prices in Grover Beach and Oceano, but also less revenue, and also not sure about the regs. 

There are very few true oceanfront properties in Pismo, and only a small area with flood risk  if during a heavy storm, so I don't think insurance will be a concern. If it's in a condo complex then there should be some kind of flood insurance for the building wrapped in, you would only need a "wall-to-wall" policy. 

Feel free to send me listings you have in mind (don't worry, not planning to buy) and I can give you an idea of the neighborhood and what's nearby. 

[Eli Kantor]

Hello Lisa!

After scouring the City of Pismo Beach's painfully vague website, I've noted a few pieces of information which you may find to be helpful. Firstly, it's important to point out that Pismo Beach, like many other California towns, has imposed stricter regulations on STRs in recent times.

The city has drawn a distinction between three types of authorized 'Less Than 30-Day Rentals,' specifically a "Short Term Rental," a "Vacation Rental," and a "Homestay Rental."

Short Term Rental - This is the permit you would apply for when pursuing a non-owner-occupied STR in the R-1, R-2, R-3, RSL, RSM, PR, OS-1 and OS zones. Unfortunately, the city is currently not accepting any new 'Short Term Rental' permits, but they are accepting renewals for existing permits. That means that if you find a property that already has the proper permit, it could continue to be operated legally, if the permit is renewed. However, if the property does not already have the permit, you will not be able to apply for a new one at the moment. Here's a map showing where 'Short Term Rentals' are allowed: Short Term Rentals Allowed Map

Vacation Rental - This is the necessary permit for non-owner-occupied STRs in the C-1, RR, R-4, CD, CD-C, CD-M, and CD-V zones. Luckily for you, the city is currently accepting Vacation Rental Permit Requests. However, given that the permit is only applicable for the above zones, which basically only cover multifamily/commercial properties, it limits your options substantially. Here's a map showing where these rentals are allowed: Vacation Rentals Allowed Map

Homestay Rental - Lastly, there is the option of a "Homestay Rental," but these are unrealistic for most investors. The homestay is an owner-occupied STR in which you basically rent out a part of your home while you live in it. Although the city's website doesn't explicitly address it, I am pretty sure that this permit is the one that is most likely to be approved out of the three, and offers the most lenience in terms of zoning regulations.

Here's a helpful link with additional information: Pismo Beach STRs

I operate out of the Central Coast, so if you have any questions please don't hesitate to reach out!