With a year-round temperate climate and iconic beaches stretched along the entire coast, it’s no surprise the California coast is a popular market for short-term vacation rental homes. While the California short-term vacation rental industry has nuanced regulations and rules, homeowners will be able to reap the benefits of managing a property in sunny California communities, like Napa, Sonoma, Santa Barbara, Ventura/Oxnard, Santa Cruz, Monterey, and Malibu, when they invest wisely and stay in tune with local laws.
Check out our guide to managing a vacation rental property on the California Coast.
Get familiar with your West Coast options
Starting north of San Francisco in Sonoma and down to Malibu, vacation rental owners have no shortage of coastal cities and inviting communities from which to choose. Each West Coast locale has something unique to offer; whether it be the best surfing, iconic wineries, perfect weather year-round, or the most relaxing beaches. Learn what each region offers to both pick the perfect place to plant your business and to know what exactly to advertise in your listings online.
Sonoma is home to a world of wine, incredible gastronomy, and leisure retreats from the nonstop pace of the Bay Area. Wine enthusiasts should look to the Russian River Valley and Dry Creek Valley in north Sonoma County, where you can buy country estates. The on-demand ride hailing services have created more opportunities for guests to rent in the region. Coastal Sonoma County provides wonderful options like Monte Rio and Bodega Bay, where prices are relatively affordable and offer seasonal tourism. Sonoma County should not be confused or lumped in with the more commercialized Napa Valley, which does not allow short-term vacation rentals.
The California Central Coast runs 100 miles long and is home to 8 distinct communities—including Santa Barbara, Ventura/Oxnard, Santa Cruz, and Monterey Bay. Unlike major metropolitan areas like Los Angeles or San Francisco, the Central Coast is more rural, less populated, and a big agricultural area. Along the coast, expect to find beach communities, colder water, cooler temperatures, and more rain. It’s also more affordable for the traveler demographic. Highway 1 lines the entirety of the coast.
Santa Cruz is a hot destination for families, outdoor adventurers, surfers, and like Sonoma, those escaping the fast pace of the Bay Area. Santa Cruz is enjoyed by travelers looking for a beach vacation filled with surf lessons and outdoor activities. For a high touch vacation experience, look to Pebble Beach and Carmel. This destination is known for world-renowned golf, extended stays, and affluent travelers from around the globe.
Santa Barbara—known as the “American Riviera” due to its similarities with the French Riviera—brings visitors from all over the world with its temperate 60 degree temperatures year-round, locally-owned wineries, and small community feel. While most folks might look to Napa Valley as California’s wine capital, insiders know they can find gems by visiting farmers and local winemakers in Santa Barbara. In fact, it has the biggest fly market draw along the California coast, and the travel and convention bureau is pretty powerful.
Located between Santa Barbara and Malibu, Ventura/Oxnard is both a local spot and hidden gem that’s a destination for Californians who live further inland. Because out-of-towners haven’t yet discovered the area, Ventura/Oxnard offers some of the most affordable beach communities and more value when purchasing.
In Southern California, Los Angeles locals and celebrities flock to Malibu to escape the city and Hollywood. It’s a tight-knit community that’s geographically isolated and known for its gorgeous beaches and great surfing. Vacation rental owners in Malibu should expect a lot of LA visitors seeking a weekend getaway and not a whole lot of long-term vacation renters.
Know where you can and can’t rent
The industry landscape for short-term vacation rentals is complicated throughout California, so vacation rental owners should do their research before purchasing any property along the California Coast.
Near the City of Sonoma, vacation rental owners should buy on the outskirts to legally operate as the town of Sonoma does not allow short-term vacation rentals within the city limits. To rent in Sonoma, look in the Sonoma Valley, Russian River, and surrounding communities. Short-term vacation rentals are not permitted in Napa.
Santa Cruz County is another area with significant short-term rental regulations. Vacation rentalsare not allowed within the city of Santa Cruz. Instead, plan to buy in the Live Oak Designated Area—where Pleasure Point is located—and Seacliff Aptos Designated Area—where Rio Del Mar is as these areas are vacation rental friendly. South of Seacliff, La Selva Beach is another vacation rental friendly area.
In Santa Barbara, short-term vacation rentals are highly regulated and banned in residential neighborhoods, agriculture, industrial, mixed-use, resource protection and certain special-purpose zones, making it fairly difficult to find a home to rent. The city only allows vacation rentals in commercial zones and residential areas in unincorporated areas
While Malibu does not have a ban on short-term vacation rentals, its planning commissioner is an advocate to enact one. Before purchasing anything in Malibu, be sure to follow along with new developments first.
Learn HOA and county-specific regulations
Once vacation rental owners figure out where you can and can’t rent on the California coast, it’s equally important to study up on each area’s homeowner association and county regulations.
While it’s illegal to rent a short-term vacation rental in the town of Sonoma, rentals are allowed in other parts of the county. To operate in coastal communities like Bodega Bay, owners need a tax certificate but do not need a permit. Sonoma County also requires owners to have a certified property manager and meet performance standards.
In Santa Cruz County, the community is very conscious of rules and regulations. It’s a complex regulatory environment, with different rules in different in areas. In the areas where short-term vacation rentals are allowed, owners will find caps on the number of properties allowed. Owners in this area are required to have a permit and to charge a Transient Occupancy Tax.
In the commercial and unincorporated areas where short-term vacation rentals are allowed in Santa Barbara, the property owner or long-term tenant must live on the same lot whenever there’s a renter in the home—so prospective owners hoping to operate their rental remotely beware.
California Central Coast communities have heavy regulations that vary from city to city. There are a lot of asterisks and boundaries in each market, so talk to a licensed manager before you buy. Some places require permits and taxes; some don’t—be sure to check before you begin operating.
Oxnard and Ventura require rental owners to have an active Short-Term Vacation Rental permit, an active City of Ventura Business License, and to collect and remit Transient Occupancy Tax at 10% of the rents received (on stays of less than 30 days per tenant).
In Malibu, short-term vacation rentals also must pay a transient occupancy tax. If your property is rented on AirBnb, the site will automatically collect the tax for your home and submit it to the city. (At this time, no other listing site collects the tax, so homeowners are responsible for collecting and remitting taxes incurred from renters on those sites.)
Learn what to include and clarify in your online listings
Vacation rental owners should identify both the biggest draws to their regions and the biggest misconceptions when putting together their online listings.
One of the most important amenities to mention in your listing is whether or not your vacation rental has an air conditioner. On the California Coast, only 30% of properties have an AC because of the year-round cool weather. But folks traveling from other parts of the U.S.—especially the south—are accustomed to sleeping with central AC and will want to know if you have one. While ACs are not necessary to have in a unit, consider adding one during your next renovation. Also clarify if you have ceiling fans—and if you don’t have them in your bedrooms already, seriously consider adding them.
Also consider providing approximate distances to neighboring cities and attractions. In Santa Barbara, vacation rental owners should point out that Los Angeles is 1.5 hours south of the city—locals would be surprised how many vacationers wrongly believe the two cities are closer than they are.
Listings would also benefit from using specific keywords, like mentioning whether or not a Santa Barbara rental home is optimal for UCSB graduation and Siesta in August. In the fall, be sure to also mention the wine harvest and nearby wineries.
Prepare for wildfires, earthquakes, and mudslides
Short-term vacation rental owners along the entire California coast should learn how to protect themselves and their homes from wildfires, earthquakes, and mudslides
Short-term vacation rental owners in areas prone to wildfires—including Santa Barbara, Malibu, and Ventura/Oxnard—need to create a wildfire action plan and an emergency supply kit, and ensure that both are easily accessible by guests. Additionally, owners should use ember-resistant building materials and create 100 feet of defensible space around the home by working with local fire department to clear and maintain brush. Most standard home insurance covers fires, but with the California Fair Plan owners get insurance if your normal insurance won’t cover it.
In areas of Southern California, such as Montecito, residents also have to be way of mudslides. During intense storms, you and your guests should consider leaving or go to the highest level of your home. Listen for sounds that indicate moving debris, such as trees cracking or boulders knocking each other, and watch the road for collapsed pavement, mud, or fallen rocks. After a mudslide, check the foundation of your home for damage and watch out for possible flooding.
California residents are also at risk of earthquakes. Homeowners should secure items—such as televisions, and objects that hang on walls—and store heavy and breakable objects on low shelves. Be sure to practice “Drop, Cover, then Hold On”, and leave instructions for guests. Consider obtaining an earthquake insurance policy, because standard homeowner’s insurance does not cover earthquake damage. Also, short-term vacation rental owners should consider a retrofit of your building to correct structural issues that make it vulnerable to collapse during an earthquake.
Once short-term vacation rental owners familiarize themselves with all the options available along the California Coast, learn the rules and regulations in their particular market, and optimize their online listings, they will be successfully welcoming guests to their rental year-round.
Learn more about how to manage your vacation rental here.