Last Updated on May 22, 2023
Vacation homes have always been an excellent investment, but this year, when people weren’t able to travel the way they’re used to, vacation homes have become even more popular. Return on investment may not come as quickly as it would during normal times, when people plan getaways regularly, but on the plus side, having a vacation home now offers you a cozy hideaway when most of the world is shut for Americans.
And now that many people are working remotely, why not relocate to the coast for a while and work from a dream home near the beach? In addition to being a vacation rental, many Americans who are tied to their current home base because of their job or other reasons also plan on using their vacation home to retire in – another reason why investing in a home in a sought-after location is well worth it.
California, and Southern California in particular, is a perfect spot for a vacation home, because it is and will always be popular with travelers from far away who want to soak up that sunny California lifestyle as well as local travelers who just want to enjoy the beach for a few days. For this reason, the vacation home market in Southern California is very competitive, and it is definitely not cheap, but when you do your research and you buy smart, your investment will pay off in the long run. Remember to do thorough research before buying a property, especially if you’re planning to rent out the home you’re buying:
What’s the rental market like in the destination you’re looking to buy in? If you’re buying a vacation rental, what is the rental market for vacation homes like and how competitive is it? Run some numbers to get an idea how long it’ll take you to see a return on your investment in both the best and the worst case scenario. What are the amenities around the property you’re looking to buy? This is also a crucial factor when thinking about how to make your vacation rental stand out from the crowd.
And while you should definitely do your own research, it’s also worthwhile to get advice from local real estate professionals as well as consulting your financial advisor about your investment plans and goals.
So, what are the best places to buy a vacation home in Southern California?
1 Newport Beach
Newport Beach stands for the quintessential SoCal lifestyle with its beautiful 8-mile coastline, many healthy dining options, marine life galore, and the laid-back way of life Southern California is known for. The combination of surf vibes, luxury shopping, glamorous villas, dive-bars and historic cottages is what makes this small coastal town unique and what makes it attractive to vacationers from the U.S. and beyond.
Newport Beach real estate has always been sought after, because of the city’s excellent geographical features (right on the Pacific Coast Highway and the beach, and the city of Irvine just a short drive away) and its strong economy, which means home prices are quite steep, topping a million dollars more often than not. The city’s got the nickname “Millionaire’s Playground” for a reason! Because of the abundance of luxury homes, Newport Beach attracts many elite investors, which means you can expect high appreciation rates, i.e. a steady increase of the value of the investment property.
Commercial development in Newport Beach is strong, and in addition to wealthy retirees the city attracts young high-earning professionals who usually rent initially, which is why rental units are in demand. Newport Beach is perfect for you if you are wondering where to buy a rental property in California. Investors can expect a solid return on rental units and vacation homes alike, and thanks to the sunny SoCal climate, many investors end up using the property as their retirement home at some point.
2 North County San Diego
North County is the northern part of San Diego County, and the coastal region of this area consists of six cities along the coast: Carlsbad, Del Mar, Encinitas, Oceanside, Solana Beach and Vista. North County San Diego is just south of Orange County, and the six quaint coastal cities in particular have become extremely popular over the last few decades, which means home prices have gone up considerably. A little further south, La Jolla and Pacific Beach are two neighborhoods that are also sought after.
Home prices in the coastal town average between $800,000 and $1,000,000. But the popularity of this region also means that return on investments for vacation homes is excellent here, and the diversity of he region combined with the laid-back California lifestyle attracts people from near and far. The proximity of San Diego (Downtown San Diego is about 30 minutes by car) and the attractions along the Pacific Coast Highway make North County San Diego a desired destination for property investors from all over the U.S.
3 Joshua Tree / Twentynine Palms
If you’re not a big fan of the ocean, look at Joshua Tree instead. The National Park, about two hours east of Los Angeles, has become increasingly popular over the last few years, and tourists as well as Angelenos flock to Joshua Tree to get away from the crowds and to enjoy the incredible natural beauty of the Mojave Desert for a few days. The average home price in Joshua Tree is $300,00, which means it is considerably cheaper than a house on the coast.
If you are looking to land a real deal, look at Twentynine Palms, just fifteen minutes from Joshua Tree, but houses cost only half as much there. The National Park is only five minutes away, which means this vacation rental will be popular with hikers for sure, and tourism in the area is expected to still grow over the next few years. If your budget isn’t huge, this would be the one of the best places to buy a vacation home in Southern California.
In 2022, the New York Times published an interesting article about the number of available vacation rentals in Joshua Tree that is a read: Are 1,818 Airbnb’s too many in Joshua Tree?
