Buying an STR in big bear CA, missed the train or never too late?

Question

Hello, my wife and I have been reading through some old forum posts about buying a rental property in big bear CA. We have been focused on a 3bed 2bath in the moonridge area.

A decent place with not much to do before renting it out will run us about $650k. We are looking to put 10% down. The place will either have a hot tub or we will put one in. We live in LA (2 hours away) so we would need a cleaning service but would like to manage it ourselves. We are confident in our marketing ability and small maintenance's. At this price we are looking at (what we can estimate) monthly costs of about $3200 (mortgage, electric, gas, PMI, taxes/insurance).

Our concern is that renting it out will not bring in enough throughout the year to cover the 40k cost to own and operate it. It seems like the housing prices are just too high to see a profit confidently. We are also concerned about post covid revenue, will the popularity of big bear decline once travel becomes more common again. We are looking to make a profit on this property and at the very least break even.

We did sign up on airdna and it claims to see pretty good revenue even at the 50th percentile, but this site seems to have a lot of hand wavy information. We did get a few rental reports from houses we were interested in and we can't see the whole story on these reports (personal use, blackout dates, ect...) but they don't seem to make enough after BBL taxes and cleaning fees to cover what would be our monthly costs.

Does anyone have any helpful information on this type of scenario? Anything we have overlooked/underlooked? Maybe a 2bed 2bath for around 425k is more reasonable? We would love to pull the trigger on some of these nice 650k places but are worried we may be biting off more than we can chew.

Thanks for any help

Cory Randle · Answer

Moonridge is one of the better performing area in Big Bear. I’m local, been here over 20 years. FYI, Moonridge is split between county and city. Anything with 5 digits in the address is in the city and 3 or 4 digits is typically county. I would read up on both regulations, as self-managing is almost impossible. Both city and county permits require someone local. (County within an hour drive and city within 15 mins or miles, I’d have to look to see which) Both will perform well, you may get a slightly higher occupancy in the county. Both are taking about 4-6 weeks to receive str permit and there are huge fines for operating without one.

I am a sales executive for Vacasa in Big Bear and we don’t offer a self-management option, but if you have any questions, don’t hesitate to reach out. I’m happy to help.

Trist Baylon · Answer

@Jason Shyn

Hi jason,

We have an STR in big bear city We bought in April and finished in JULY so far we have been ok and only few weekends left this year.

I would be very careful and choose the right cabin,with home prices now its tough if you can recoup your expenses.

I would do research on similar cabin sizes youre buying in the area and checking theyre booking also,BBL has more regulations than BBC and make sure you can be issued a permit.

For the right cabin and the right price YES its still doable..

Good luck happy investing.

John Underwood · Answer

Don't buy on emotion, run the numbers to make sure you can be profitable.

If you pick the right property and location you should be able to do better than 50% occupancy.

Look at the top properties and see what they are doing to be successful.

Madeline Dapper · Answer

I don't own a property in Big Bear but my husband and I were in a similar situation. We live in south Orange County and wanted to buy a cabin as an investment in Green Valley Lake... quaint, less STVRs, and still close to the ski resorts. Air DNA rated it as a A+ market at the time (this was summer/fall of last year). We decided to invest elsewhere because friends of ours bought in Arrowhead, renovated the cabin to look super trendy, and they have had nonstop issues since putting it on airbnb. They are barely making money because neighbors really dislike the whole STVR fad and complain to the city/county. They have had over $2k in violations because of vacationers being loud, bringing more cars than allowed, bringing pets, etc. I think the caliber of people you get coming out to Big Bear is going to be different because it is an easily accessible location for people in inland empire, LA, OC, SD etc. These aren't people wanting a lavish stay at the Ritz, they're just wanting to get away and bring family or have a party in a cabin.

I know I am making a lot of assumptions/stereotypes but you have to look at your potential customers and be ready for worst case scenarios. It does seem like a more volatile market too. Lots of ups and downs. Lots of people trying to do the STVR thing there, I feel like it is going to fade. Its also harder to charge more than 200-300 a night unless you have a high room count. Got to have ample parking and try not to bother neighbors. Just seems like there are better places to invest.

Jason Shyn · Answer

Thanks for the replies, and the suggestions. We have a lot of researching to do and jumping all in on a 650k house may be very risky as tempting as it is. Unfortunately houses come and go in days still and winter is fast approaching. Do 2 to 3 to 4 bedroom places make considerably more than the previous? It is looking to maybe make more sense to grab a 2 bedroom for 200k cheaper, make it really nice and bring in similar or slightly lower monthly revenue.

Buying an STR in big bear CA, missed the train or never too late?

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