California Short-Term Vacation Rental

[Jared Lichtin]

I started a brief discussion of this in the BP Pro area, but wanted to get everyone's take on this. 

Bit of an unconventional project that I am seeking to jv with someone. Interested to hear your feedback. Brief specs for the quick reader, and more in-depth story below.

Purchase price: 800,000-900,000, Cash down: $160,000-$180,000

Profit Split 70/30 to 50/50 depending on capital & financing ability

Monthly Expenses (Mtg, Utilities, Insurance, Chef, Cleaning, Driver, Groceries): $8,000-9,500/month

Rent Price: ($120-140 per night, 4-6 tenants) Ability to bring in $15,000-$30,000 per month

I injured my back last year, and multiple doctors said I needed spine surgery. Long story short, I found a chiropractor in Huntington Beach that saved my life over the past 7 months. His practice is thriving, with his strong internet presence, he sees over 150 patients a day, 6 or 7 new patients. Almost all of them have no idea where to stay, and either opt for an awkward Airbnb situation, or a full on hotel without a kitchen. This is really counterintuitive, because most people find out about my chiropractor on the internet, so 2/3 of his patients are not local to LA, many international.

I realized there is a huge opportunity to purchase & operate a 'short-term vacation rental' to these patients, while they heal at the chiropractor. This term is what the city calls it, not me. I see it as a natural healing facility with all the amenities are available to patients. A driver to drive them to the chiropractor twice per day, pick up groceries for them, and a person to cook healthy meals and clean the home. While some patients are there for a week, the majority stay 1-3 months at a time. These are mostly people with neck & back injuries, but they do not need help bathing or grooming, so this does not need an RCFE license... I already confirmed this with the State of California. It does not need to be wheelchair accessible.

I also spoke with the city of Huntington Beach, and the planning commission told me the only codes I would have to abide by is to make tenants sign a lease for at least 30 days. As short-term airbnb's are technically illegal, as these chiropractic patients come into town for a significant amount of time, I could easily comply with local zoning codes by making them sign one month minimum leases.

My hope is to provide a home in where 5-6 patients at a time can stay, a driver can drive them to the office, and someone can cook, clean, and get groceries for them. I would like to close on a place by February 1, 2017. I already have a few booking requests and secured a few down payments to lock in a spot. I know a lot of patients who stay there, and as this progresses, I will set up a nice looking one-page website that the chiropractor's office can send people to if they are interested in booking.

I am seeking an investor who has some experience partnering with financing rehab projects. I have some experience flipping, but I used my own money because I was in a much cheaper market. Now that I am in Orange County, things are significantly more expensive. So, the ideal investor would be located in Southern California, and can qualify for a conventional loan though a bank. The homes I am looking at are listed at $800,000-900,000, so I would need someone with $160,000-$180,000 liquid cash to put down. I can possibly put in $20,000-$40,000. However, I just want to feel okay working with the investor.

The numbers work, but I am curious what you guys think. If you are interested in investing, please PM or email me.

My Experience: Most of my experience is in fix and flips, but I do hold two rental properties in Ohio. I also did a podcast last year called 'Flip'.

I run a law firm in Irvine that focuses on real estate matters, mostly timeshare law, and I live in Newport Beach.

Thanks! Super excited to get this off the ground.