"We'll rent it out when we're not using it!"

Famous last words before financial reality hits.

I hear this quite often: "We're thinking about buying a cabin in the mountains. We'll use it some weekends, and rent it out the rest of the time to cover the mortgage!"

And every time, I take a deep breath and prepare to be the fun-killer in the room.

Look, I LOVE the idea of a second home. A place in the mountains, at the coast, somewhere you can escape to? That sounds amazing. But the math on "we'll rent it out to pay for itself" rarely works the way people think it will.

So let's talk about what actually happens when you try to turn your dream getaway into an income property.

Vacation Rental Math 

Let's use real numbers. Say you buy an $800K mountain cabin in the Santa Cruz Mountains. Here's what your monthly costs could look like:

• Mortgage: ~$4,800/month (assuming 20% down)
• Property taxes: ~$800/month
• Insurance: ~$500/month (vacation rentals cost more)
• Utilities: ~$250/month (you pay these even when it's empty)
• HOA/Road association (if applicable): $100-600/month, varies range greatly

Total: ~$6,400/month before you even get to the rental expenses.

Now, you're thinking you'll rent it out for $400/night. Sounds great! Except...

Welcome to Santa Cruz County Vacation Rental Reality

First problem: Short-term rental regulations in Santa Cruz County are getting stricter, not easier. Many areas have:

• Limited permits
• Neighborhood restrictions
• Required owner residency provisions
• Occupancy caps

And enforcement is ramping up. That cute Airbnb you're imagining? Make sure it's actually legal first.

Even if you CAN get permitted, let's look at realistic occupancy in the mountains:

• Peak season (summer, some weekends): Maybe 60-70% occupancy
• Shoulder season: 30-40%
• Off-season (rainy winters): 20% if you're lucky

Average it out, and you're looking at maybe 40-45% annual occupancy if you're doing well.

The Personal Use Trap

Here's where the math gets really fun (by which I mean painful).

You want to actually USE your cabin, right? That's kind of the whole point?

But here's the tax reality: If you personally use the property for more than 14 days OR 10% of the rental days (whichever is greater), the IRS limits your deductions significantly. You can't deduct expenses that exceed your rental income.

Translation: Use it too much, lose the tax benefits. Don't use it enough, and... why do you own it again?

Let's Run the Real Numbers

Okay, so you've got your $800K cabin. Let's say you achieve 40% occupancy at $400/night average:

Potential gross rental income: ~$58,400/year

Sounds promising! Until we subtract:

• Property management: 25-30% ($14,600-17,500)
• Cleaning between guests: $150/turnover (~$9,000/year)
• Supplies, toiletries, etc.: $2,400/year
• Maintenance reserve: 3% of rental income minimum ($1,750)
• Higher insurance: Extra $100/month ($1,200)
• Surprise repairs: Hot tub broke? Deck needs replacing? ($3,000-5,000+)

Total expenses: ~$32,000-35,000

Net rental income: ~$23,000-26,000

Your annual carrying costs: ~$76,800

Shortfall: ~$50,000-53,000 per year

And that's in a GOOD year, assuming nothing major breaks and you maintain solid occupancy.

But Wait, There's More! 

The calendar battle is real. Want to use it for 4th of July weekend? That's also when you could rent it for $600/night. Thanksgiving? Prime rental time. Every time you block the calendar for personal use, you're choosing to lose money.

Maintenance costs can be brutal. Vacation rentals get destroyed at 2-3x the rate of regular homes. Guests treat places differently than they treat their own homes. Weird stains, broken appliances, mystery damages.

The emotional cost. Strangers in your space. Reading reviews where someone complains about your décor. Neighbor complaints. The hot tub incident you don't want to think about. I have an investor friend that shares her "scareBnb" stories with me on the regular. 

HOA and neighbor issues. Many mountain communities are getting increasingly hostile to short-term rentals. Your neighbors didn't buy their mountain retreat to live next to a house that turns over every weekend.

The Appreciation Argument

"But Bailey, what about appreciation? This is an investment!"

Sure, Santa Cruz County property does tend to appreciate over time. But you're losing $50K+ per year in carrying costs. Even with 4% annual appreciation on an $800K property ($32K/year), you're still bleeding money.

And appreciation is never guaranteed - especially in resort markets that can be sensitive to economic downturns.

What About Just... Renting When You Want to Visit?

Here's some math that might hurt:

If you rented a comparable cabin 20 nights per year at $400/night, you'd spend $8,000 annually.

Your carrying cost shortfall on ownership: $50,000+

Difference: $42,000 per year you could be investing, saving, or spending on actual vacations to different places.

Over 10 years, that's $420,000+ (not including investment returns if you'd invested it instead).

When Second Homes Actually Make Sense

I'm not saying never buy a second home. I'm saying be honest about what it is:

A second home makes sense when:

• You can afford the full carrying costs without rental income
• You'll use it enough to justify the expense (think: few times a month minimum)
• You're buying for lifestyle and family legacy, not investment returns
• You're okay with it being a possible money pit in exchange for memories and convenience
• You're in it for 10+ years to ride out market cycles

A second home is sketchy when:

• You're counting on rental income to make it "affordable"
• You're justifying it as an investment
• You can't comfortably handle 6 months of expenses without rental income
• You're hoping it'll pay for itself

The Bottom Line

That mountain cabin? The beach house? The wine country retreat? They can absolutely be worth it - for the right reasons.

But "we'll rent it out to cover costs" is almost never the right reason, because the math rarely works without significant additional cash flow from you.

If you love the idea of having your own place to escape to, can afford the real costs, and want to build family memories (and generational wealth) over decades - go for it!

Just don't lie to yourself about the rental income fantasy. Treat it like what it probably is: an expensive luxury that you're choosing because it enhances your life, not because it's a savvy investment move.

And if you DO want to move forward? Let's at least run the real numbers first, look at actual comparable rental data, and make sure you know what you're signing up for.

I'd rather have that honest conversation now than watch you struggle with reality later.

Thinking about a second home in Santa Cruz County? Let's talk real numbers - not fantasy math.