Big bear,CA vacation rental

[William Valdez]

Hello, I am currently looking into vacation rentals in Big Bear California by the lake. Does anyone have some insight on owning a vacation rental in this area? Are the annual returns from renting it out worth the investment. I am currently looking at homes that are close by the lake and ski slopes. Any feedback will help. Thank you 

[Mark P.]

Hello all! 

We have a property in Big Bear and must inform to pick up vacation rental business up there is not an easy task. It is not simply going there, grabbing a property, installing Airbnb app and taking nice pictures. There is a ton of work involved for it to cash flow reasonably. Many people do invest there and do fairly well but there are things you need to know before spending thousands of dollars and put up your valuable time.

The City of Big Bear Lake has its own regulations. First of all, you need to have a business license to rent your property otherwise, eventually, you will be discovered and will pay fines. I didn’t see anyone mention as of January 20, 2017, In-Person Check-in Agent and 24/7 Complaint Response Agent acting on behalf of a Transient Private Home Rental (TPHR) managing agency/owner manager were required to submit notarized affidavits personally acknowledging their agreement to act as an agent in one or both of these capacities. Additionally, the agent submitting the affidavit acknowledges that they will obtain City of Big Bear Lake certification as an In-Person Check-in Agent and/or 24/7 Complaint Response Agent within 90 days of submittal of the notarized affidavit.

Effective immediately, all new business license application submittals by a TPHR managing agency or owner manager shall include a copy of the notarized affidavit for their In-Person Check-In Agent(s) and their 24/7 Complaint Response Agent(s). A new business license application will not be accepted for processing without these affidavits.

The Code Compliance Division will validate compliance with agent certification requirements during the business license review process. Failure of a Check-in and/or Response agent to obtain City certification within ninety days of their affidavit submittal may result in the suspension of the management agency or owner manager business license and authorization for rental activities at the TPHR unit(s) they represent.

In other words you are not allowed to live in another city and self-manage from your beautiful coast using smartphone with Airbnb app and have auto replies sent from SmartBNB - service all AirB&B hosts love. You need to have someone on the ground, reside no more than 15 minutes away from your rental and be present during all rented days. Things like digital locks with self-check-in codes are not allowed anymore unless someone is physically there to meet your guests.

I spoke with Becky at the City Hall of BBL, Administrative Assistant who is a of these new rules to get a little more info on new check-in process and she said a person who lives there and will be representing your rental must come to City Hall with ID, sign the paperwork and pass a certification where your response agent learns about meeting-greeting your tenants.

Why do that and continue complicate things? Some “responsible” hosts rent their homes and let’s say go cruising. Nothing wrong with that but when stuff happens at your property up in the mountains - there is no one around to help your tenants. People who came to relax and have a great time now on their own with problems. There were situations when people travel far hoping for a warm welcoming ambiance, hit the stupid locked door they cannot open.

While having a wonderful time on Bahamas, not being able to receive calls or messages, the host has no idea that your lovely guests cannot get in. It is ten o’clock in the evening and upset people have nowhere to go but perhaps stay at the Holiday Inn which is the only place really open at this time for very late check-in hours. Hopefully the inn won’t be fully booked that night because it happens to be a busy holiday season. To prevent more situations like that you need to be there or have a person who will be a responsible party who can solve problems.

There are hundreds of rental properties around the lake and like any successful business you need to stand out. To run great cash flowing propriety on Airbnb means to have a unique place thus besides doing math for your investment you need to learn to be creative. People also consider and rent places on Airbnb for experiences so the more distinctive your home is the better. You will need a little bit of financial resources to provide value for tenant’s stay and have some info on what to offer. Make sure it is clean and updated. No one wants to be in your dirty smelly house for the weekend.

To have a good rental in Big Bear you need the fireplace and hot tub. Those are two things people want for their getaways. You have a big advantage by installing a hot tub because less than half of all listings have one. Again, don’t forget to read about regulations by the City for spas. There are things like disinfecting water after each stay, deck structural improvements, etc. If you buy a good modern tub it will save you in a long run. There are updated energy efficient tubs that will cost you about $80-150/mo for keeping the water warm and running, including usage. Take into consideration another $100/mo to keep your tub maintained properly by a local vendor. It will last longer + you have less chances to get people sick after using it.

If you get a one bedroom house you should aim to average about $2500/mo to be in a favorable investing position. For two bedrooms you should get ~$3000, three bedrooms - $4000 and 4+ bedrooms - $6000-7000. If you do less than that you are doing worse than a third of other rentals in the area and should consider to tweak your house, may be provide more amenities to attract more travelers and get more cash out of your investment.

Strongly recommend to obtain Airbnb market report. That will help you with some data and open your eyes on actual numbers.

I’ve read people say that it is hard to find general contractor to get the house in desirable condition and no doubt it is not easy. And it won’t be easy. There is only a handful of reputable GCs live in the region that could complete your project within a reasonable time frame and meet you budget at the same time. Get someone from down the hill to complete the job faster and pay at least 2x for labor.

Our suggestion is to speak with your real estate agent and ask who they know and could recommend. Of course you need good and knowledgeable agent to begin with and then grow your team from there. You will surround yourself with a couple of people to run a business: contractor/maintenance guy, cleaning lady and check-in person. They must be reliable otherwise you earn yourself a headache.

To manage less people, may be your cleaning lady can be your check-in agent so this way you assign two responsibilities to one person. Take her out to 527 Social, sit down and speak with her to explain she has to provide her ID at City Hall, otherwise she won’t get the job :) I heard people pay $5-10 for her to come to the property and meet your tenants or give the keys.

So we agree, the beauty of a rental is 30-90 min of real work a week when the systems are running well. But don’t forget you still need to stand by 24/7 to pick up the calls and answer messages. Sometimes inquiries to book your place come late night. We had messages come in at 7:30 am from guests like looking for a coffee pot. If you are here to provide a great experience and create a successful VR, you want to respond fast. If you don’t, they won’t really leave a negative feedback, but may leave no feedback.

Things will be breaking and you will need to fix them ASAP, sometimes within 3-4 hour window before your next guest arrives. We also suggest to visit the place once in a while to see what needs to be replaced and updated - that also requires time in your schedule. You may deduct your trips from income at the end of the year though. 

To start a VR is hard work from the beginning and it continues afterwards. Don’t assume your smartphone will be doing the project for you and make bookings happen, you still need to be on top of every aspect of your business.

Good luck all!