If you are considering buying a vacation home that can serve as an Airbnb property in California, what are your options? Airbnb hosts can earn a variety of incomes according to their location and initial investment. Finding an affordable city with great attractions and amenities is key to getting the most value for your money.
Buying an investment property can be a smart financial decision - if you do it right, you can earn passive income, take advantage of tax breaks, and stand to gain equity. The best way to ensure a big return on your investment is to choose and purchase your property strategically, and to work according to market trends and general guidelines that dictate whether the investment will succeed.
The purpose of today's blog post is to explore some of the best cities in the Golden State where you can invest in short-term rental investments using the Airbnb platform.
“You could travel the world, but nothing comes close to the golden coast."
The state of California is a famous tourist destination. Many tourist attractions are located in California, including Hollywood, the Golden Gate Bridge, Disneyland, Yosemite National Park, Alcatraz, and Angel Island.
*Fun Fact: It was the discovery of gold in California around 1848 that contributed significantly to The Golden State becoming an official nickname in 1968. *
Property investment in California will definitely be worth your time. With so much to offer, the Golden State has certainly earned its title.
According to AllTheRooms, there are more than 100,000 hosts in California, with 329,283 Airbnb listings in 2021. Total visits to California reached 213.5 million in 2021, an increase of 52% from 2020. California's total visitation is expected to increase by 23% to 261.7 million visitors in 2022. Inbound travel spending increased 3% in 2021 and is expected to reach $15 billion, or 53% of 2019 spending in 2022.
Tourism spending in California grew to $100.2 billion in 2021, 69% of the 2019 amount. Domestic visitor spending is predicted to rebound to 104% of 2019 levels in 2022, but overseas spending will only return to 53%. In California, total travel-related spending is not likely to approach pre-pandemic levels until 2023. Overall, leisure travel could revive to 94% of 2019 volume in 2022, while business travel will recover to 79%.
California continues to inspire travellers year-round with its mountains, beaches, Redwoods, deserts, and world-class cities. The diverse attractions in California contribute heavily to the state's popularity as a tourist destination.
It can be challenging to determine the perfect location for your rental property, regardless of whether you plan on living in it year-round or renting it as a second home. As California is a vast and beautiful state with many options for rental homes, choosing where to purchase is an important decision.
Let's take a closer look at some of the top California cities where Airbnb can earn big profits, taking all this into consideration.
Known as the home of “the happiest place on Earth,” The city of Anaheim is located in Southern California, outside of Los Angeles. Approximately 351,000 people live in Anaheim, so small-town charm meets big-city comfort. Anaheim is the tenth largest community in California.
Anaheim is a thriving city supporting more than 24,000 businesses and attracts approximately 25 million annual visitors.
Disneyland Resort is the most well-known attraction in Anaheim, CA. Apart from visiting the theme parks, Anaheim is home to the oldest active baseball stadium, Angel Stadium. The Anaheim Ducks play at Honda Centre, which is also a popular venue for sports enthusiasts. Among the city's green spaces are Yorba Regional Park, Weir Canyon Wilderness Park, and Ronald Reagan Park. The Anaheim Historical Society, MUZEO Museum, and Anaheim Museum are all popular tourist and local museums. Performing arts centres Hyperion Theatre and Chance Theatre are two of the city's best-known and most visited venues.
Anaheim's rental demand is very high due to a strong economy. Plus, Anaheim's housing market has appreciated by 14% over the past decade, placing it among the top 30% nationwide. Thus, Anaheim's real estate market is ideal for investing in short-term vacation rentals.
According to Redfin, the Anaheim housing market is somewhat competitive. The average home sells in 36 days.
Average Daily Rate $313 Occupancy Rate 86% Revenue Potential : $5661 Median Home Price $ 850,000 Airbnb CoC Return : 4.78% Annual Earning Potential : $ 98,250
No of Neighborhoods - 06 Most Popular - Anaheim Colony Historic District, The Highlands at Anaheim Hills, and The Summit of Anaheim Hills. Most Expensive - Sycamore Canyon has a median listing home price of $1.4M Most Affordable - The Highlands at Anaheim Hills with a median listing home price of $714.5K.
Home to 7,414 residents, Joshua Tree offers residents a quiet lifestyle away from the hustle and bustle of city life. Joshua Tree is notable for Joshua Tree National Park. There are six different mountain ranges that cover Joshua Tree National Park.
Joshua Tree attracts more than 3 million visitors every year to its art galleries, museums, and music venues, regardless of whether they are art lovers, history buffs, or music fans. Tourists frequent the Noah Purifoy Outdoor Desert Art Museum, World Famous Crochet Museum, and J T & S Railroad Museum, among others. This region has many performing arts venues, plus fine restaurants, and lush green parks such as the Joshua Tree National Park, Joshua Tree National Park West Entrance, and Ryan Ranch Joshua Tree National Park.
This small town located in southern California with a national park and a great location near major cities, Joshua Tree is a great place to embark on an Airbnb business. The Joshua Tree real estate market is definitely one to keep an eye on if you're looking for an investment home in The Golden State. Vacation rentals in Joshua Tree are in high demand due to the increase in tourism. According to Zillow, property values have appreciated 27.7% over the past year, indicating that Joshua Tree properties are in high demand.
Investment properties in Joshua Tree can generate good returns thus making this an ideal city for short-term rental investments.
According to Redfin, The housing market in Joshua Tree is somewhat competitive. Homes sell in about 36.5 days.
Average Daily Rate $ 261 Occupancy Rate 63% Revenue Potential : $4,210 Median Home Price $ 499,900 Airbnb CoC Return : 3.76% Annual Earning Potential : $60,016.95
Currently, Joshua Tree is a buyer's market, meaning that there are more homes for sale than there are buyers.
No of Neighborhoods - 5 Most Popular - Joshua Tree City, 29 Palms, Yucca Valley, Palm Springs, and Palm Desert are the five main neighborhoods close to the park Most Expensive - Rancho Mirage with a median listing home price of $925K Most Affordable - 29 Palms, with a median listing home price of $310K
This city in the southern Californian Sonoran Desert is known for its hot springs, stylish hotels, golf courses, and spas. The population of Palm Springs is around 45,000, making it a smaller city.
Palm Springs hosts about 1.6 million tourists annually. Palm Springs offers mid-century modern architecture, arts and culture, and recreational activities. Palm Canyon Drive is popular for its restaurants and vintage boutiques. In Coachella Valley, tourists can hike, bike, and horseback ride. A golf cart parade takes place in Palm Springs each year, which is a unique feature of the city.
Palm Springs has a number of green spaces, including Ruth Hardy Park, Palm Springs Dog Park, or Demuth Park. Performing arts venues in the area include Palm Canyon Theatre and Annenberg Theatre. A total of 14 museums can be found, including the Palm Springs Art Museum Architecture and Design Centre.
Business Insider ranked the city the best city to live in California in 2016, and the 5th best city to live in the United States by Trulia. It is notable that Palm Springs is the hub for tourism in the Coachella Valley and is a great place for short-term rentals. It is estimated that over 100,000 people attend Coachella Festival and Stagecoach Festival each year, resulting in a spike in rental rates.
Since the city of Palm Springs is a resort town, throughout the year, Palm Springs attracts a large number of tourists. Palm Springs is one of California's fastest-growing cities and according to Niche, the city was ranked 2nd best suburb to live in 2022. The city is becoming more popular among retirees and entrepreneurs, which makes short-term rentals a good investment.
According to Redfin, the Palm Springs housing market is somewhat competitive. The average home sells in 36 days.
Average Daily Rate $ 507 Occupancy Rate 65% Revenue Potential : $6,348 Median Home Price $799,500 Airbnb CoC Return : 3.19% Annual Earning Potential : $ 125,834
No of Neighborhoods - 40 Most Popular - Indian Wells, Palm Desert, Bermuda Dunes, La Quinta, Rancho Mirage, and Cathedral City Most Expensive - Indian Canyons with a median listing home price of $2M Most Affordable - Racquet Club West, with a median listing home price of $220K
The city of Los Angeles lies in Southern California and is adjacent to the Pacific Ocean, extending into the San Fernando Valley and the Santa Monica Mountains. United States' most populous city, Los Angeles, has an estimated 9.86 million residents.
Its abundance of wealth and warm climate also make Los Angeles, CA, a popular destination.
Hollywood Walk of Fame, live concerts and Lakers games are some of the highlights of Los Angeles' tourist attractions. Los Angeles, is home to 359 museums, including the Los Angeles County Museum of Art (LACMA), Griffith Observatory, and Natural History Museum of Los Angeles County. TCL Chinese Theatre, Walt Disney Concert Hall, and Pantages Theatre are just a few examples of great arts and culture venues in Los Angeles. Additionally, you can enjoy the views of the city or nearby mountain ranges from Griffith Park, Vista Hermosa Natural Park, and Runyon Canyon Park.
Los Angeles, welcomed over 50 million tourists in 2019, According to Skift, __“Demand for travel to Los Angeles is coming back strong, with 2022 projected to hit 91% of 2019 visitation levels and a return to pre-pandemic total visitation by 2023” __
Los Angeles ranks 4th nationwide in Airbnb earnings for new hosts, according to the Daily News. Both investors and homeowners consider the Los Angeles real estate market to be one of the best in the country. It is also said to be the most expensive housing market in the country. In the last three years, the price of homes in Los Angeles has risen by 30%. Considering LA's high home prices, apartment buildings are a good investment for investors. Los Angeles' rental market gets an 8.8 out of 10 from Zillow and is forecast to grow by 9.3%.
Investing in downtown Los Angeles is an excellent choice due to its high rental yields and potential capital appreciation. According to recent statistics, California has the 5th largest economy in the world. The city's dynamic real estate market contributed greatly to its economy's growth, and real estate investments are popular year-round thanks to the city's warm climate.
As per Redfin, the Los Angeles housing market is somewhat competitive. The average home sells in 37 days.
Average Daily Rate $223 Occupancy Rate 73% Revenue Potential : $2,994 Median Home Price $1,000,000 Airbnb CoC Return : 2.43% Annual Earning Potential : $ 59,418
No of Neighborhoods - 108 Most Popular - Hollywood Hills West, Brentwood, and Westwood Most Expensive - Bel Air with a median listing home price of $8M Most Affordable - Downtown Los Angeles, with a median listing home price of $690K.
South Lake Tahoe is a California resort city on Lake Tahoe, in the Sierra Nevada mountains. It’s known for nearby ski resorts and beaches, like El Dorado Beach. South Lake Tahoe, is known for its year-round weather and outdoor activities plus the scenic lakefront views. With a population of around 23,000, South Lake Tahoe offers the benefits of living in a small city.
There are about 15 million visitors to Lake Tahoe every year. Located in the Sierra Nevada mountains, South Lake Tahoe is a California resort city on Lake Tahoe. The Lake Tahoe Historical Society is one of the many museums in South Lake Tahoe that tourists and locals alike enjoy exploring. A popular performing arts venue in the local area is SnowGlobe Music Festival. South Lake Tahoe offers numerous hikes, mountain views, and lakefront activities. Many parks, including Emerald Bay State Park, Bijou Dog Park, and Van Sickle Bi-State Park are popular for trekking and hiking.
Known for its pristine lake views and ski resorts, Lake Tahoe is a popular tourist destination. There's plenty of space for all residents to feel comfortable and private, while still having all the social aspects and amenities close at hand. AirDNA has ranked South Lake Tahoe as one of the top 10 largest US vacation rental cities and was named Zillow's most popular destination in the entire U.S. in 2021.
The South Lake Tahoe area is known for its high-income potential. Homes in the Tahoe Keys and near the ski resorts bring in more income than homes far from the lake and ski resorts. The ideal vacation rental profile includes homes with four or more bedrooms and a hot tub. Lake Tahoe real estate has also experienced a strong real estate appreciation growth for almost two consecutive years.
Average Daily Rate $424 Occupancy Rate 65% Revenue Potential : $5,572 Median Home Price $769,500 Airbnb CoC Return : 1.38% Annual Earning Potential : $ 100,594
In South Lake Tahoe, the housing market is balanced, which means that supply and demand are similar.
No of Zipcodes - 31 No of constituent neighbourhoods - 13 Most Popular - Mont Estates, Tahoe Keys, Lake Tahoe, Tahoe Sierra, and Tamarack Most Expensive - Zephyr Cove with a median listing home price of $2.3M Most Affordable - Zip code 95666 with a median listing home price of $395K.
The Tahoe Keys is the number one income-generating neighbourhood in South Lake Tahoe.
Located along the coastline, Long Beach has eight distinct neighbourhoods and is centrally located between Los Angeles and Orange County. Located on the coast, Long Beach offers the feel of a big city with the charm of a small town. In spite of being California's sixth largest city, Long Beach has a provincial vibe, with bike-friendly streets, active neighbourhood associations, and artist collectives. Known for its waterfront attractions, this city is home to 81 miles of beaches and 64 miles of walking trails and bikeways.
Tourism is one of Long Beach's most important industries, with approximately six million visitors annually. A variety of attractions and activities make this a top outdoor destination, including its beaches, fine dining, and local art. In addition, the Museum of Latin American Art, Long Beach Museum of Art, and American Museum of Straw Art serve as popular tourist attractions. Popular parks in the city include Shoreline Aquatic Park, El Dorado Park, and Bluff Park.
The tourism industry in Long Beach is booming, making it a perfect vacation destination year-round. Long Beach's property market offers some quite attractive investment opportunities. Located between Los Angeles County and Orange County, Long Beach and the surrounding area offer some of the best real estate opportunities in the country. Investors have plenty of opportunities to grow, so now is a great time to consider investing in Long Beach properties - ideally to be used for short-term rentals.
Domestic travel is likely to increase in the next few years and according to Airbnb's survey taken in 2021, 62% of respondents said that they would be interested in taking a vacation within a short drive of their home. It is predicted that beach towns, in particular, will become more popular in the coming years.
Average Daily Rate $ 214 Occupancy Rate 80% Revenue Potential : $3,739 Median Home Price $ 499,000 Airbnb CoC Return : 3.01% Annual Earning Potential : $ 62,488
Investors are seeking properties in Long Beach, CA in greater numbers than there are available for purchase, making it a popular area for vacation rentals and long-term investments.
No of Neighborhoods - 64 Most Popular - Downtown Long Beach, Bixby Park, and Bixby Knolls Most Expensive - Naples with a median listing home price of $1.6M Most Affordable - Franklin , with a median listing home price of $484.5K
Fresno is a city in California's San Joaquin Valley. It has approximately 542,000 residents and is a place full of character and culture making it the 5th city in the state and coming as the 34th largest city in the United States. Fresno's close proximity to other large cities, such as San Francisco, Los Angeles, and San Diego, adds to its appeal as a vacation destination for locals.
Often blending sunny weather with an abundance of tourist attractions, the city offers a unique mix of urban and outdoor activities that keep thousands of tourists returning.
Fresno, with its thriving arts community, is home to 20 museums, including the Art Museum, Discovery Centre, and African American Museum. Furthermore, the city is known for its parks such as Woodward Park, Selma Layne Park, and Oso De Oro Park.
In addition to the beautiful gardens in Fresno, its Forestiere Underground Gardens and Blossom trails are noteworthy attractions. Fresno Chaffee Zoo, waterslides, and shopping centres are also popular activities. The Tower District is the best place in Fresno to experience the modern lifestyle and is a major tourist attraction.
Home prices in Fresno have been trending upward year over year, making investing in Fresno real estate a good long-term investment. Fresno's real estate market appears to be booming. It is particularly affordable to live in Fresno compared to coastal cities in the US.
According to neighbourhoodscout, Fresno real estate has appreciated by 156.09% over the last ten years, an average annual rate of 9.86%, placing Fresno in the top ten percent of all cities for real estate appreciation. Fresno Metro home values have gone up 20.4% over the past year and Zillow predicts they will rise 10% by May 2023. The Fresno housing market is a bargain by California’s standards and a great market to venture into for short-term rentals.
Average Daily Rate $ 167 Occupancy Rate 67% Revenue Potential : $2,177 Median Home Price $380,000 Airbnb CoC Return : 3.29% Annual Earning Potential : $ 40,839
The housing market in Fresno is a buyer's market, which means that there is more supply than demand.
No of Neighborhoods - 24 Most Popular - Fig Garden Loop, Tower District, and Van Ness Extensio Most Expensive - Copper River Ranch, with a median listing price of $895K Most Affordable - Downtown Fresno - median listing price of $157K
California's second largest city is San Diego, which is the eighth largest in the United States. The city is located on the Pacific coast of California, renowned for 70 miles of coastline, parks, and warm climatic conditions. With its world-class waterfront and award-winning international airport, San Diego has been dubbed a "vacationer's paradise" and "the closest thing to perfect weather in America."
An estimated 35 million tourists visit San Diego each year. Tourism is an integral part of the city's economy, and its arts and culture scene is thriving, making it a top 10 meeting and visitor destination in the U.S. The city is Home to 96 museums, noteworthy are the USS Midway Museum, San Diego Padres Hall of Fame, and Maritime Museum of San Diego. Performing arts venues like the Old Globe Theatre and Horton Grand Theatre are just a few to name. Among its parks and green spaces are Balboa Park, Sunset Cliffs Natural Park, and Waterfront Park.
As reported by AlltheRooms, San Diego is one of the 10 largest U.S. Airbnb markets, with hosts on average earning $77,990 in 2021 on Airbnb, an increase of more than 50% from $36,340 in 2020. The demand for Airbnb-type properties is increasing, and occupancy rates are high. Despite San Diego's high median housing price ($828,000), investing in San Diego can produce high rental incomes both for single-family homes and vacation rental properties. Vacation rental properties offer a 2.5% cash-on-cash return and a cap rate of 5.1%.
Due to the high demand for vacation rental properties, investors are able to charge higher rents, resulting in positive cash flows and growing returns.
Average Daily Rate $ 269 Occupancy Rate 81% Revenue Potential : $ 4,596 Median Home Price $ 900,00 Airbnb CoC Return : 2.81 % Annual Earning Potential : $ 79,529
The San Diego real estate market is a seller's market, which means that there are more buyers than houses available
No of Neighborhoods - 102 Most Popular - Rancho Bernardo, Carmel Valley, and Pacific Beach Most Expensive - La Jolla with a median listing home price of $2.9M Most Affordable - East Village with a median listing home price of $599K.
Almost every city has property fit for a fine neighbourhood. It takes a lot of footwork and research to line them all up. When you end up finding your ideal rental property, keep your expectations realistic, and make sure your own finances are healthy enough that you can wait for the property to start generating cash.
When evaluating specific neighbourhoods, consider both today's conditions and their potential in the future. A good investment strategy is based on research, local knowledge, and smart investments. A real opportunity exists when you spot an up-and-coming neighbourhood and participate in its turnaround. Returns on investment are higher than average when using this method.
Choosing a property type, setting a price range, and assessing the current market are all aspects to learn when it comes to navigating the real estate market. New investors may feel intimidated by all of this. Our hope is that this article provided some insight into California's short-term rental market.
For assistance listing your property on Airbnb and property management software solutions, contact Hostaway today. Reach out to us for a demo to learn how we can help you achieve success in scaling your business. Our team of experts will guide you through the process.