Del Mar, California is known for its scenic views and upscale beachside villages, so it’s safe to say that having a rental property in the area can be very lucrative. The question is, would you rather have long-term tenants or short-term guests?
While both require property management, each comes with benefits and disadvantages. From location to your involvement in daily operations, here are the factors you need to consider before finalizing an investment decision between short-term rentals (STRs) and long-term rentals (LTRs).
Key Highlights:
- Short-term rentals in Del Mar can generate higher nightly rates, especially during peak tourist seasons. However, income can fluctuate during off-peak months. Long-term rentals, on the other hand, provide consistent and predictable income throughout the year, making them ideal for investors who prefer financial stability.
- STRs require more active management due to frequent guest turnovers, marketing, and cleaning between stays. LTRs demand less daily oversight once a reliable tenant is secured, allowing landlords to focus more on maintenance and rent collection rather than constant guest coordination.
- STRs often experience more wear and tear because of high guest turnover and may require specialized insurance policies for short-term stays. LTRs generally face less property damage over time and are covered under standard landlord insurance, which tends to be more affordable and comprehensive.
- STRs thrive in tourist-heavy areas like Del Mar’s beaches and entertainment spots where short stays are in demand. LTRs, however, perform better in neighborhoods that attract long-term residents such as families and working professionals who seek convenience and stability.
Income Potential
STRs are popular in Del Mar, considering the coastside location. That means you can generate a high income per night in tourist-heavy areas or peak seasons. However, the highs can also be lows. You can earn less or experience a complete vacancy outside of peak seasons.
LTRs can provide you with more stability since occupancy is almost constant. People will always need a home, so you can have a wider pool of renters. You won’t have to worry about your income potential during peak seasons or market volatility.
Management Needs
STRs won’t demand too much from property owners outside of peak season, and can sometimes provide long breaks in between. However, busy months in vacation spots may require you to work exponentially more as a landlord, since you will constantly market and screen guests per stay.
LTRs are typically rented for months at a time, and since the marketing, screening, and move-in aspects of property management are arguably the hardest, it will be easier once you successfully find a tenant. Barring any property issues or tenant concerns, all you have to do is collect rent and conduct maintenance.
Wear and Tear
STRs will experience more turnover due to short-term stays, and while that doesn’t include moving furniture into the rental unit, some guests don’t necessarily take good care of the properties they intend to leave soon.
LTRs are relatively low maintenance since tenants intend to keep their homes tidy. You might encounter higher repair costs when a tenant moves out, since you’ll have to cover scratched floors or faded paint due to moving furniture and other normal wear and tear brought by daily occupancy.
Insurance Policies
STRs typically need a specialized type of insurance policy due to the nature of their business, which means that a standard landlord or homeowners’ insurance will not cut it. Even basic coverage from short-term rental platforms like Airbnb or Vrbo may not be enough for your rental’s needs.
LTRs are usually covered under traditional landlord insurance policies, and they might even be cheaper. You will also have several options that you can tailor to your needs. Just make sure that the policy is comprehensive enough to cover all your bases.
Location
STRs are highly dependent on location, considering that guests or tourists will prefer renting a place that’s closer to attractions and other entertainment scenes. The Del Mar rental property you invest in should ideally be near the beach or other tourist-heavy locations to be profitable.
LTRs may not need specific locations to maximize your rental income, but it does matter when it comes to your target market. Families, for instance, may prefer the suburbs, while young professionals will choose a rental unit that’s within the city center.
Personal Use
STRs give you more flexibility when it comes to personal use, given that guests don’t typically stay for more than a week. This is the best choice for you when you intend to live in the property every now and then, and don’t want to deal with long-term lease agreements.
LTRs, predictably, are the complete opposite. Your tenants will stay for long periods of time, leaving you with little to no choice when it comes to personal use. Long-term rental properties suit you better when you have a different primary residence and intend to use the real estate solely for income.
Choose Short-Term Rentals If:
- You want a higher income potential. They can generate more profit in a shorter period of time, although the market for it is a lot more volatile.
- Daily property management is too time-consuming for you. You can easily stop renting your property out since stays are typically short.
- Your property is located in a tourist-heavy spot. You can capitalize on your location by marketing your property right, stating that it is close to attractions guests might want to visit.
- You intend to use the property for personal stays. Whether it’s for a short period of time or long-term, vacation rentals are more flexible when it comes to vacancy.
Choose Long-Term Rentals If:
- You prefer a stable income over a high income. You will be giving up higher potential rental income for consistent occupancy, especially if your rental is your main source of income.
- You intend to be a full-time landlord. Long-term rental properties require a lot of effort and attention, since you will attend to daily operations every single day.
- You want more reliable tenants. Since long-term renters plan to stay long-term, they are more inclined to take care of the property and follow lease rules.
- The location demands it. If your rental property is not near tourist attractions, you might be better off renting it long-term, as it provides more stability and consistency.
Short-Term vs. Long-Term Rentals FAQs
Which type of rental generates more income in Del Mar?
- STRs typically offer higher income potential due to premium nightly rates during peak tourist seasons, but they can be inconsistent. LTRs provide more stable monthly income with fewer market fluctuations.
Do short-term rentals experience more wear and tear?
- Yes. Frequent guest turnover often leads to increased cleaning and maintenance needs compared to long-term rentals, where tenants generally take better care of the property.
How important is location when choosing between STRs and LTRs?
- Extremely important. STRs perform best near beaches, attractions, and downtown areas, while LTRs are ideal in neighborhoods with schools, offices, and long-term community amenities.
Which option is better for first-time real estate investors?
- LTRs are often recommended for beginners because they provide steady income, simpler management, and fewer regulatory hurdles compared to STRs.
Which type of rental is better for long-term wealth building?
- LTRs generally support long-term wealth growth through consistent income and property appreciation, whereas STRs are better for quick, higher profits.
Whatever You Choose, We’re Here To Help
One aspect that both options share is property management, which is something not all property owners particularly enjoy or know how to do efficiently. Seasoned real estate investors know well enough how crucial property management is, which is why many opt for professional help.
Under Harcourts Avanti, your rental property can stand out among other listings and thrive. Will will market it based on your investment plans, and ensure that your guest or tenants are satisfied.
Want to know more about professional property management? Give us a call!