Tips for CA mountain markets for VRBO <$250k

8 Replies

Does anyone have suggestions for mountain communities in Northern California between Latitude of Sacramento and as far south as Fresno where I could achieve the following with a primarily VRBO investment but occasional personal use:

• Near ski resort (not necessarily prime Tahoe but smaller like Bear Valley would do)
• Purchase price at or below $250k
• Monthly short term income of at least $1500 typical
• condo or cabin bit cabin preferred

Some areas I’m familiar with are Tahoe/Truckee (typically too expensive), Arnold, and Lake Huntington. All are good options but hoping to find the right niche to invest in.

Thanks in advance,

Kevin

Sorry I'm not that familiar with purchase prices in those areas but I would shoot for something that hits at least $2500/mo for a $250,000 (1% rule) purchase price. Doing short term rentals that shouldn't be difficult.

What is your desired level of involvement? Daily or weekly rentals will bring in more money but you will need good systems in place or you will burn out quickly.

Remember to factor in extra costs associated with STRs cleaning can be passed on but utilities, cable, internet, toiletries, replacing worn towels and linens.

I would get a nest or smart thermostat you can control remotely so people don't leave it off and freeze the pipes or on blast and run up your bill

Well, I'm investing further south by Sequoia, no skiing... but my initial thoughts are a) it'll probably be tough to find <$250k that's decent in a ski town (but I haven't researched that niche) and b) you'll want to make more than $1500/mo if you want to actually make money.  $1500/mo might cover P&I, property taxes, and insurance but not your utilities, maintenance, capex, lodging taxes, etc. etc. If you're self-managing I think you'll want a MINIMUM of $2500/mo to break even.  

However, if it's just a means to offset some of your costs for a second home, that gives you a less stringent criteria.  

Originally posted by @Sean Walton :

Sorry I'm not that familiar with purchase prices in those areas but I would shoot for something that hits at least $2500/mo for a $250,000 (1% rule) purchase price. Doing short term rentals that shouldn't be difficult.

Great suggestion and reminder of the 1% rule.  I'll certainly set the bar for my deals at that level.  

What is your desired level of involvement? Daily or weekly rentals will bring in more money but you will need good systems in place or you will burn out quickly.

I'll need to research how use of a property manager works on an STR. I'd expected I'd use VRBO or AirBnB to help in marketing, bookings, etc. and will seek a reliable cleaning service and handyman to keep the place taken care of. I'll be building that all into my numbers.

Great tips, thanks Sean! 

@Julie McCoy I recently did some hiking in Sequia and love that area.  It'd certainly be great to have a business reason to make a trip or two out there a year with a little exploring while I'm there.  It's a bit farther south than I'd prefer but will certainly take a look and will definitely target closer to that 1% mark you and @Sean Walton suggested.  

I may reach back to you if I end up drilling down that that area with a few more questions if that's okay.  Thanks.

Sure @Kevin Dupuis , I'm happy to share what I know!  

Do keep in mind that 1% mark is the rule of thumb typically used for LTR properties - STRs have higher expenses and so really should come in higher than that in general. I've been advised that 2% is a better measure for STRs; my house in Three Rivers isn't doing that (yet?) but it's something I'm striving for in my next STR investment. 1% will bare bones cover your expenses with maybe a little left over. Just want to make sure you have an honest idea of what numbers you'll need for a profitable STR. :)

I'm currently looking into vacation rentals in California Mt. communities.

Can someone please share with me a list of expenses that need to be factored in.

This will be my first vacation rental property.

I charge people for that kind of information. That's akin asking someone where their best hunting or mushroom picking spot is.

But I can give a short list on recurring expenses:

-cleaners ($20/hr x 2-4 hours/unit)

-maintenance ($45/hr x 10 hours/mth)

-all utilities: water/sewer/gas/electric/trash/internet/cable (do not buy the cheapest cable package)

-HOA dues

-Taxes: lodging bed taxes/self employment tax/municipal taxes + assessments

-vacation rental insurance (typically 2x homeowner insurance)

-plowing/lawn if not covered by HOA

-$200/mth reserve/unit

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