With summer soon coming to a close, and folks going back to work or school, an opportunity has arisen that many people looking to buy a second home may want to consider.
In the summertime, when the mountain areas are full of vacationers, realtors are at their busiest. Homes are renovated in April and May and set out to market for the busy summer season. As a resident of our local mountain area, I see it every year. Early spring brings trucks, workers and equipment up, streets are blocked while major and minor makeovers take place on the homes in the area. They descend the mountain around the end of May, while realtors beef up their marketing plans and shine their nametags in anticipation of the harried buying season. According to the California Regional Multiple Listing Service, just this last month alone, a total of $154,500,000 in sales volume was realized by the local mountain area real estate industry spanning between Crestline and Big Bear, and including Lake Arrowhead. By the end of September, all will subside and the mountain area’s population will go back to about 45,000 people.
So, what does this mean to you? On average, home prices increase about 1% in the summer months. That isn’t significant enough to sway anyone from buying in the summer months, but it does affect the availability of homes and the chances of getting the home you want. There is more competition, and this could drive up the price a bit. Conversely, in the winter months, there are fewer buyers to compete with, and this could mean a larger inventory for you to consider!
Many vacation-home-buyers contemplate using their new second home as a vacation rental to offset the cost of purchase and maintenance. This is a great option, but there are a few things you’ll want to take into consideration.
As companies such as Airbnb have become more popular, municipalities have responded with regulations regarding these arrangements. Last August, it was reported by the Alpenhorn that in Lake Arrowhead, there were between 2,000 and 4,000 rentals operating without a permit. According to the Alphenhorn “For the past four years, Lake Arrowhead residents complained, at the Lake Arrowhead Municipal Advisory Council (LAMAC) meetings, that they were being physically threatened at their own homes or subjected to loud all night parties or witnessed carelessness with fires or had their road blocked by cars from renters of short-term rentals.”
To help you decide whether becoming an entrepreneur with a vacation rental is really up your alley, I’ve summarized some of these regulations and rules to help you.
If you are buying in the unincorporated area of the County of San Bernardino, then you’ll want to refer to the County of San Bernardino Code Enforcement. If you are within the city limits of one of the mountain communities, then you would consult the City. However, most of the regulations are similar, and this article will provide you with some basic information.
The first thing you’ll want to do is obtain a permit from the municipality which has jurisdiction over the area where your vacation home is located. I’m going to give you the information from the County, as the cities have a similar version. According to the County of San Bernardino “Short-Term private home rental permits are required for private homes, located in the mountain area, that are rented for periods of thirty days or less. Permits are required to ensure specific standards are met”. Short-term rental means that the terms are 30-days or less in length.
Once you apply for your permit, you will be required to schedule an inspection. The purpose of the inspection is to determine the maximum occupancy and the vehicle capacity of the property. At each renewal period, you may be required to have another inspection completed. Permits are transferrable, should you decide to sell your vacation home.
If you are found in violation (in other words, rented out your vacation home without a permit), the County will notify the neighboring property owners of your intent to rent your vacation home and you may be charged the additional cost for the County to do this. Once you submit your permit application, you can begin renting as long as the County has done its physical inspection. The property must be compliant with the California Fire Code, California Building Code, the National Fire Protection Association Standards or regulations and any other applicable uniform codes.
The occupancy limit will be determined by taking the square footage of all areas excluding the kitchen, bathroom, hallways and closets and dividing by 50. However, rooms that are smaller than 70 square feet will be only enough room for one person. For example, if there are three rooms, and two rooms are 200 square feet and the third is 60 square feet, then the occupancy limit would be 8, because the 60-square foot room is not enough space for one person. The occupancy limit for any one residence is 16, no matter how big it is. For day use, the limit is 20. For vehicles, the allowable occupancy is 4 persons per parking space.
The County prohibits signs on the property offering it for rent as a short-term rental and any advertisement in media must conform to County standards. The contact phone number you use for the rental must be available 24/7. And, records of all guests must be kept by the owner.
So, how much does all of this cost? Through the County of San Bernardino, the permit application fee is $599. Once you have the permit, then you’ll be taxed at 7% of your gross receipts minus any refundable money you’ve collected from your guests. You can find the application at this link:
If you want to rent out your vacation home within a city limit, you will contact the city where your rental is located. Occupancy tax rates vary from city to city, but are usually between 7% and 12% of the gross receipts minus any refundable money collected.
If you abide by the regulations, then you can enjoy renting your vacation home out and offsetting some of the costs associated with buying and maintenance. It’s fun to decorate your home with all of the mountain décor and get it set up to start receiving guests. List it on a site like Airbnb and have fun!
I hope this information is useful to you as you go on the search for the perfect vacation home. Now is the time to start looking around, just in time for ski season!