Anyone? experience with beach vaction STR's AirBnB VRBO

[Marcello Di Gerlando]

Hi BP family. Its been a minute since I've been on the forums. First, I want to let everyone know that I have had great success with BP since 2011 hope you all have too. I don't do a ton of deals but the ones I have done are thanks to the BP community. Thanks to BP my net-worth has shot through the roof. Not to brag but I'm working on my 2nd big M$. Thanks @Joshua Dorkin and @Brandon Turner for making this a real thing. I have two single family flips under my belt both purchased at trustee auction, two hard money loans I issued to flippers', two buy and holds one is commercial and now I'm about to open my first STR ski vacation house up after a full rehab....but the reason I really called is...I'm now looking for a STR beach house and need advice from BP on where one would find the best deals on real estate, ROI, occupancy, friendly STR laws/regulations etc. I'm already working with Evolve on my current STR and have used AIR DNA. looking for folks that have personal experience with beach STR's. Maui sounds nice so does San Diego. Any input would be appreciated.

[Dan H.]

We have had an STR duplex 1 block from the beach in San Diego since before Airbnb. Some thoughts:

1. You will not find anything real close to the beach at the lower end of your range.
2. The political environment is not STR friendly. Around 2 years ago the city council passed some anti STR regulations that mostly could only be overcome by living on the property. A petition drive was started to put it on the ballot and got the signatures necessary to get it on the ballot. The council then rescinded their regulation. So all would be fine except the anti STR sentiment at the state level is even greater than at the city level. I am expecting state level anti-STR regulations in the not so distant future. What is less clear is if there will be any grandfather or how stringent the regulations are going to be. I would like to hope that an STR since the last century is grandfathered, but it is definitely not guaranteed (the San Diego regulation had no grandfathering clause).
3. The beach properties are already priced as though they are STRs. What I mean by this is that our well established STR duplex has rent of around $15K/month. Prior to the city regulation the value was over $1.4M (it is likely just under $1.3M today). So you can see that it is barely a 1% property (rent to cost ratio) at its recent market high. This is for a well established STR that has virtually zero vacancy. A STR starting out would find it difficult to achieve the same rent/vacancy numbers as a STR that has existed >20 years. So probably less than 1% property. The STR PM fees are high. If you do not use a PM, STRs are a lot more work than LTRs. To summarize this point, the price to rent ratio on prime STR locations like the beach is not good (too high a price for the obtainable rent).

Overall, I would consider San Diego STRs purchased today to be high risk and low initial cash flow (appreciation could help the cash flow over the hold period).

Good luck