California’s Hidden Gems: Unique Vacation Home Destinations for 2025

Marcus Andersley Properties 0

Are you dreaming of owning a getaway spot in sunny California, where the ocean kisses the shore and there’s always a demand for rentals?

While buying a vacation rental might seem like just another bill to pay, it can actually turn out to be a fantastic investment if you handle it right. Vacation homes are one of the smartest ways for real estate investors to boost their earnings.

The upcoming year is shaping up to be perfect for snagging that dream property! We’ve got the inside scoop on the top 10 hot spots in California for purchasing your vacation home. Check out this list of must-visit locations that short-term rental investors should definitely consider!

Buying a Vacation Home in California: Pros and Cons

There are numerous compelling reasons for buying a vacation rental property. However, like with any significant financial choice, there is a great deal you should know before you invest.

For instance, did you know that mortgages for vacation houses and other non-primary houses fall under a separate category? Or that property maintenance fees for vacation rentals can be three times as high as those for long-term rentals?

With that in mind, here are the advantages and disadvantages of purchasing a vacation home, as well as what you should know regarding taxes, finance, and other considerations before you begin looking for houses.

👍 You Might End up Saving Money in the Long Term

When buying a vacation home in California, if you spend two months every summer at the seaside, your yearly mortgage payments on a vacation house may be similar to the cost of two months’ rent. Additionally, you’ll be creating capital over time rather than just handing up your income to someone else.

👍 Generate Income When You Are Not There

You can rent out your vacation property when you are not there. That might turn the residence into a big moneymaker in prominent vacation areas. We’ll discuss the California housing market in further detail later.

👍 Real Estate Values

Real estate values, particularly in popular tourist destinations, have a tendency to rise over time. So, even if you don’t want to rent out your vacation property, it may assist you in making money in real estate. In addition, you may be eligible for mortgage interest and property tax deductions if you do not employ your vacation house primarily as a rental property.

👍 Customize a Vacation House

Buying a vacation home in California comes with additional perks, like tailoring the house to your specific needs and desires and storing personal goods there. For instance, if you own a beachfront home, you do not need to carry your beach chairs and children’s water toys on every trip.

👍 Transform It Into Your Primary Home

A vacation home could someday become a permanent residence for real estate investors or anybody else. Purchasing a vacation house while still in your twenties or thirties may provide you with an attractive location to retire in the future.

Of course, there are other reasons to own a vacation property, such as providing a place for your family members to get away together. However, everybody desires a vacation home for a variety of reasons.

Nevertheless, here are some of the drawbacks to buying a vacation home. Therefore, it is crucial to evaluate these factors before making a purchase.

👎 Vacation Homes Can Be Expensive

Investing in real estate–especially rental properties–can be costly, even more so in popular destinations. For example, my friend discussed the possibility of purchasing a two-bedroom apartment in one of his favorite beach towns. Then he noticed that the median price of the houses was nearly twice what he paid for his primary residence.

Apart from the mortgage, you’ll also be responsible for property taxes, insurance, utility, and other fees associated with two residences.

👎 It Can Be Difficult to Finance

Financing vacation properties can be challenging when buying a vacation home in California. Lenders charge higher mortgage rates and require larger down payments on second homes than they do on primary residences. In addition, you are responsible for maintenance. You’ll need to take care of maintenance issues yourself or hire someone to do so.

👎 Real Estate Is Not a Liquid Asset

A liquid asset is one that can be turned into cash fast and readily while retaining its market worth. A real estate investment, on the other hand, is not a liquid asset. It might be challenging to sell the property quickly without accepting considerably less than the house is worth. Therefore, numerous investment managers advise against purchasing a vacation home – or any type of real estate – unless you intend to keep it for at least five years.

California Real Estate Market: Best Places to Buy a Vacation Home in 2025

Buying a vacation house in California that can be converted into a vacation rental while not in use is an excellent approach to accomplishing your goals while also establishing an Airbnb income foundation for future success. In addition, the ability to use it as both a vacation property and a short-term rental can generate a significant income stream.

1. Twentynine Palms

Median Property Price: $431,090
Average Price per Square Foot: $353
Days on Market: 99
Number of Vacation Rental Comps: 413
Monthly Vacation Rental Income: $4,068
Vacation Rental Cash on Cash Returns: 7.64%
Vacation Rental Cap Rate: 7.76%
Vacation Rental Daily Rate: $192
Vacation Rental Occupancy Rate: 71%
Walk Score: 56

2. Yucca Valley

Median Property Price: $556,417
Average Price per Square Foot: $331
Days on Market: 144
Number of Vacation Rental Comps: 660
Monthly Vacation Rental Income: $5,270
Vacation Rental Cash on Cash Returns: 7.21%
Vacation Rental Cap Rate: 7.29%
Vacation Rental Daily Rate: $256
Vacation Rental Occupancy Rate: 72%
Walk Score: 25

3. Borrego Springs

Median Property Price: $584,750
Average Price per Square Foot: $289
Days on Market: 58
Number of Vacation Rental Comps: 124
Monthly Vacation Rental Income: $6,043
Vacation Rental Cash on Cash Returns: 7.02%
Vacation Rental Cap Rate: 7.10%
Vacation Rental Daily Rate: $237
Vacation Rental Occupancy Rate: 72%
Walk Score: 44

4. Canoga Park

Median Property Price: $729,943
Average Price per Square Foot: $540
Days on Market: 43
Number of Vacation Rental Comps: 275
Monthly Vacation Rental Income: $6,971
Vacation Rental Cash on Cash Returns: 7.00%
Vacation Rental Cap Rate: 7.06%
Vacation Rental Daily Rate: $314
Vacation Rental Occupancy Rate: 80%
Walk Score: 81

5. Bakersfield

Median Property Price: $509,393
Average Price per Square Foot: $261
Days on Market: 59
Number of Vacation Rental Comps: 334
Monthly Vacation Rental Income: $4,672
Vacation Rental Cash on Cash Returns: 6.70%
Vacation Rental Cap Rate: 6.78%
Vacation Rental Daily Rate: $159
Vacation Rental Occupancy Rate: 81%
Walk Score: 33

6. Wilmington

Median Property Price: $767,075
Average Price per Square Foot: $506
Days on Market: 83
Number of Vacation Rental Comps: 234
Monthly Vacation Rental Income: $7,013
Vacation Rental Cash on Cash Returns: 6.61%
Vacation Rental Cap Rate: 6.65%
Vacation Rental Daily Rate: $177
Vacation Rental Occupancy Rate: 84%
Walk Score: 90

7. Atascadero

Median Property Price: $920,798
Average Price per Square Foot: $491
Days on Market: 52
Number of Vacation Rental Comps: 147
Monthly Vacation Rental Income: $8,145
Vacation Rental Cash on Cash Returns: 6.42%
Vacation Rental Cap Rate: 6.47%
Vacation Rental Daily Rate: $282
Vacation Rental Occupancy Rate: 80%
Walk Score: 78

8. Pinedale

Median Property Price: $303,980
Average Price per Square Foot: $270
Days on Market: 53
Number of Vacation Rental Comps: 229
Monthly Vacation Rental Income: $3,119
Vacation Rental Cash on Cash Returns: 6.37%
Vacation Rental Cap Rate: 6.47%
Vacation Rental Daily Rate: $169
Vacation Rental Occupancy Rate: 62%
Walk Score: 75

9. Vallejo

Median Property Price: $596,483
Average Price per Square Foot: $384
Days on Market: 85
Number of Vacation Rental Comps: 135
Monthly Vacation Rental Income: $5,738
Vacation Rental Cash on Cash Returns: 6.34%
Vacation Rental Cap Rate: 6.40%
Vacation Rental Daily Rate: $174
Vacation Rental Occupancy Rate: 72%
Walk Score: 91

10. Arcata

Median Property Price: $812,615
Average Price per Square Foot: $393
Number of Vacation Rental Comps: 190
Monthly Vacation Rental Income: $5,430
Vacation Rental Cash on Cash Returns: 5.88%
Vacation Rental Cap Rate: 5.94%
Vacation Rental Daily Rate: $157
Vacation Rental Occupancy Rate: 85%
Walk Score: 92

Buying a Vacation Home in California: Final Thoughts

Thinking about snagging a second home? Treat it with just as much seriousness—if not more—as you did when buying your first place! It’s super important to consider all the responsibilities and costs that come with it. So, don’t get swept away by excitement and rush into buying a vacation spot in California without being ready for it.

First off, think about what you want from this new home. Is it a cozy getaway for family to enjoy whenever they want? If yes, pick a location that’s easy for everyone to reach. Or maybe you’re eyeing a rental property that you plan to lease out most of the year? In that case, find a hotspot in California where people love to rent.

It’s easy to get dazzled by the stunning looks of California vacation homes and forget about the expenses involved. Some folks might think going over budget is no big deal if they can rent out their place, but remember: there’s no guarantee your home will always be filled with guests paying top dollar. Overspending could lead you into financial trouble down the line.

So, stick to what you can afford whether or not guests are staying over! Also, don’t underestimate the tax implications of owning a vacation home in California. Misunderstanding tax rules could land you in hot water with local or federal authorities. Make sure you’re clear on all financial responsibilities before signing any papers.

Living it up in sunny California sounds amazing! Owning a vacation property can be an awesome way to explore new places, hang out with loved ones, and even make some extra cash—but don’t take it lightly! As you dive into your search for real estate in this beautiful state, keep these tips in mind!