Short term rental investments are all the rage these days, and if you live in the tri-state area then you know the Jersey Shore is one of the hottest vacation destinations and a great place for a seasonal rental investment! No matter where you’re considering setting up a seasonal rental investment, it’s important to understand the numbers and the market before purchasing a property to use as a vacation rental or turning your home into a summer rental. One of our favorite and best performing markets in Ocean County is Point Pleasant Beach.
What does the seasonal market look like?
Summer rentals in Point Pleasant Beach and surrounding areas have a Prime Season lasting the 10-to-11 starting from when school gets out in the end of June through Labor Day when school starts back up again.
Then there are the two Shoulder Seasons: one in the Spring and one in the Fall. The Spring Shoulder Season includes Memorial Day Weekend through the third week of June. The Fall Shoulder Season encompasses Labor Day Weekend through the end of September.
With access to some of the best schools in the county, there is a high demand for Winter Rentals in Point Pleasant Beach to get children into the desired school district. The Winter Rental period typically runs in the 9-to-10 months from September to the end of June.
If you are conscious about your returns, the safest thing is to make your Winter Rental available for Labor Day and not take advantage of the Shoulder Seasons, otherwise you may miss out on tenants looking to move into their rental before the start of the school year.
What do the numbers look like for a seasonal rental?
Rental amounts really depend on the features of each home – the number of bedrooms, if it has a pool, how close it is to the beach, local laws and regulations on minimum stays, etc. — can all affect the pricing on Seasonal Rentals.
If your home is priced appropriately, you should expect around a 90% occupancy rate during the Prime Season.
During the Shoulder Seasons, a 40-50% occupancy rate should be expected, with an appropriately adjusted rate compared to your peak rates.
For example, let’s say your rental is $10,000 per week in the Prime Season.
With a 10-week season at $10,000/week and a 90% occupancy you could earn:
10 weeks x $10,000 x 90% = $90,000
In the Shoulder Seasons (4 weeks each) your rates should be about 60% of what you charge during the Prime Season:
$10,000 x 60% = $6,000
8 weeks x $6,000 x 50% = $24,000
In the Winter Season, your monthly rate should be what you would charge weekly during the Prime Season.
At the time of this writing, a home in Point Pleasant Beach worth $1 million will earn about $6,500 -$7,000 per week in peak weeks.
If you have a pool or are within a short walk from the beach you can charge higher rates, by about $1,000 or more per week.
More bedrooms also equals higher rent per week. However, the downside to having more bedrooms is more vacancies because it’s harder to get last-minute bookings. Have you ever tried to coordinate with a large group for a vacation? It isn’t easy! Rentals with only 1 or 2 bedrooms tend to perform better for spontaneous trips to the beach for the weekend.
Keep in mind the local laws and regulations!
Towns across the Jersey Shore vary in their requirements for short term rentals.
Does the town require a CO for each new tenant? Do they have restrictions on the minimum stay (30 days, 7 days, etc.)? If so, it is important to follow the laws because getting caught could mean paying hefty fines that can harm your returns — and owners do get caught!
At KeyVest, we can handle both the bookings and the management. We are locally owned and operated, and make sure to stay up to date on the laws and regulations of each town so our clients stay in compliance, giving investors one less thing they need to worry about so they can enjoy their summer.
Interested in learning more about STR on the Jersey Shore or how we can help with management?
