Is Hermosa Beach, California Good for Airbnb Investment?

To start an Airbnb in Hermosa Beach, California, begin by researching the city's strict short-term rental regulations, as Hermosa Beach requires a Conditional Use Permit (CUP) and limits rentals to a maximum of 30 days per year with no rentals shorter than 3 nights, making it one of the most restrictive markets in California. Apply for the CUP through the Hermosa Beach Community Development Department, which costs approximately $3,000-5,000 and requires neighbor notification, planning commission approval, and compliance with parking requirements (typically 2 spaces per unit). Find a suitable property within the designated zones where short-term rentals are permitted, focusing on areas away from the beach and residential neighborhoods where restrictions are heaviest. Once approved, obtain a business license ($100-200 annually), register for transient occupancy tax collection (14% in Hermosa Beach), and secure appropriate insurance coverage including commercial liability. Furnish the property with beach-appropriate amenities, high-quality linens, and safety equipment including smoke detectors, carbon monoxide detectors, and fire extinguishers as required by city code. List your property on Airbnb and other platforms, emphasizing proximity to The Strand, beach volleyball courts, and nightlife while clearly stating the minimum 3-night stay requirement. Manage the property by implementing strict noise policies to comply with the city's party house ordinances, maintain detailed guest records as required by law, collect and remit the 14% TOT monthly, and ensure compliance with the annual 30-day rental limit through careful booking management, as violations can result in permit revocation and fines up to $1,000 per day.

To identify profitable short-term rental properties in Hermosa Beach, California, focus on locations within 2-3 blocks of The Strand beachfront or near the Pier Plaza entertainment district, as these areas command premium nightly rates of $300-600 during peak summer months. Target 2-4 bedroom properties with ocean views, parking spaces, outdoor patios or balconies, and modern amenities like updated kitchens and air conditioning, as these features can increase occupancy rates by 15-25% compared to basic units. Conduct pricing analysis using AirDNA and Mashvisor to identify properties where potential STR revenue exceeds long-term rental income by at least 40-60%, accounting for Hermosa Beach's seasonal fluctuations with peak demand from May through September. Research competition by analyzing similar properties within a 0.5-mile radius on Airbnb and VRBO, noting their occupancy rates, pricing strategies, and guest reviews to identify market gaps. Utilize tools like Rabbu, STR Helper, and local MLS data combined with the city's specific STR regulations requiring permits and limiting rentals to properties zoned for multi-family use, while monitoring the approximately 400-500 existing STR licenses to gauge market saturation and identify emerging opportunities in less saturated micro-neighborhoods like the Greenbelt area or south of Pier Avenue.

To obtain an Airbnb/STR permit in Hermosa Beach, California, you must first apply through the City of Hermosa Beach Planning Department located at 1315 Valley Drive, as the city requires a Conditional Use Permit (CUP) for short-term rentals. Required documents include a completed CUP application, property deed or lease agreement, floor plans, parking plan showing compliance with city requirements, contact information for a local property manager within 30 minutes of the property, and proof of liability insurance of at least $1 million. The application fee is approximately $2,500-$3,500 plus additional fees for environmental review and public hearing costs. The timeline typically takes 4-6 months due to the required public hearing process and Planning Commission review. Specific Hermosa Beach requirements include maintaining a minimum 3-night stay, providing adequate parking (typically 2 spaces per unit), ensuring the property manager is available 24/7 for noise complaints, limiting occupancy to 2 guests per bedroom plus 2 additional guests, and compliance with all building and fire safety codes. The property must also be the owner's primary residence or meet specific zoning requirements, and operators must collect and remit transient occupancy tax of 14% to the city.

Short-term rentals (STRs) are currently prohibited in Hermosa Beach, California. The city implemented a complete ban on STRs in 2018 following concerns about noise, parking, and neighborhood disruption in this densely populated beach community. The prohibition applies to all residential zones throughout the city, including single-family homes, condominiums, and multi-family properties. Property owners cannot legally operate vacation rentals, Airbnb, or similar short-term accommodations for stays less than 30 days. The city actively enforces this ban through code enforcement officers and has established significant fines for violations, which can reach thousands of dollars per incident. Unlike some neighboring beach cities that have implemented permit systems or limited STR operations to specific zones, Hermosa Beach maintains a zero-tolerance policy. The ban was upheld after legal challenges from property owners and remains in effect as of 2024, with no indication from city officials of plans to modify or lift the prohibition.

The most lucrative Airbnb investment areas in Hermosa Beach, California are The Strand beachfront district, which commands premium rates due to direct beach access and attracts year-round tourists and weekend visitors from Los Angeles seeking luxury oceanfront accommodations. The Pier Avenue entertainment district offers strong rental potential from visitors drawn to the nightlife, restaurants, and beach volleyball tournaments, particularly popular with young professionals and groups celebrating events. The Hermosa Valley residential area provides excellent investment opportunities for larger properties targeting families and extended stays, benefiting from proximity to both beach activities and local amenities while offering more competitive pricing than beachfront units. The Greenbelt area near Valley Drive attracts business travelers and longer-term visitors due to its quieter atmosphere while maintaining easy beach access, making it ideal for remote workers and corporate housing. Properties near the Hermosa Beach Volleyball Courts see consistent demand during tournament seasons and summer months, capitalizing on the city's reputation as a premier beach volleyball destination that draws athletes and spectators from across Southern California.

Airbnb properties in Hermosa Beach, California are subject to multiple lodging taxes including the city's Transient Occupancy Tax (TOT) of 14% and Los Angeles County's additional transient lodging tax of 2%, for a combined rate of approximately 16% on gross rental receipts for stays under 30 days. The city requires hosts to register for a business license and TOT permit, with taxes collected from guests and remitted monthly to the City of Hermosa Beach by the 15th of the following month using their online portal or paper forms. Airbnb automatically collects and remits these taxes on behalf of hosts for bookings made through their platform as of 2018, though hosts remain responsible for ensuring compliance and may need to file additional paperwork. Properties rented for 30 days or longer are generally exempt from TOT, and some jurisdictions provide exemptions for government employees or certain medical stays, though specific exemptions vary and hosts should verify current requirements with the City of Hermosa Beach Finance Department as rates and procedures can change.

Starting an Airbnb in Hermosa Beach, California requires significant upfront investment with property purchase being the largest expense at approximately $1.8-2.2 million for a median 2-bedroom property near the beach. Furnishing costs typically range $25,000-40,000 for quality furniture, appliances, linens, and decor suitable for vacation rentals. Initial setup expenses including professional photography, listing creation, and marketing materials cost around $2,000-3,500. Permits and fees vary but expect $500-1,500 for business licenses, short-term rental permits, and city registration requirements. Insurance specifically for short-term rentals runs $2,000-4,000 annually, while utilities including electricity, gas, water, internet, and cable average $300-500 monthly. First six months operating costs encompass cleaning services ($150-250 per turnover), property management fees if outsourced (20-30% of revenue), maintenance reserves ($200-400 monthly), supplies and amenities ($100-200 monthly), and platform fees to Airbnb/VRBO (3-5% of bookings), totaling approximately $8,000-15,000 depending on occupancy rates. The total initial investment ranges from $1.85-2.28 million, making Hermosa Beach one of the more expensive markets for Airbnb investment due to premium beachfront real estate values and competitive vacation rental market dynamics.

Airbnb properties in Hermosa Beach, California demonstrate strong profitability potential with average nightly rates ranging from $150-400 depending on proximity to the beach and property size, generating annual revenues of $45,000-120,000 for well-positioned properties. Operating expenses typically include 25-30% for Airbnb fees, cleaning costs ($75-150 per turnover), property management (10-15% if outsourced), utilities ($200-400 monthly), insurance ($1,200-2,500 annually), and maintenance costs averaging $3,000-6,000 yearly. Successful properties near The Strand or Pier Avenue achieve 70-85% occupancy rates with profit margins of 35-50% after expenses, while properties further from the beach see 55-70% occupancy with 25-35% margins. Key success factors include professional photography, rapid response times, premium amenities like beach equipment, and strategic pricing during peak summer months and volleyball tournaments. A typical 2-bedroom property within 3 blocks of the beach generating $85,000 annually faces approximately $52,000 in total expenses (including mortgage, taxes, and operating costs), yielding net profits of $33,000 or roughly 39% margins, though properties purchased specifically for Airbnb investment in 2019-2022 face higher acquisition costs that may reduce overall ROI to 8-12% annually.

Airbnb investments in Hermosa Beach, California typically generate annual ROI of 12-18% based on the area's strong beach tourism market and proximity to LAX airport. Cash-on-cash returns generally range from 8-14% annually, with properties averaging $200-350 per night during peak summer months and $120-180 during off-season periods. Most investors achieve profitability within 18-24 months, assuming a 25-30% down payment on properties valued between $1.2-2.5 million. The market benefits from year-round demand due to The Strand beachfront location, volleyball tournaments, and consistent business travel, with occupancy rates typically maintaining 70-85% annually. Properties within 2-3 blocks of the beach command premium rates and faster profitability timelines of 12-18 months, while those further inland may require 24-36 months to reach full profitability due to lower nightly rates and seasonal demand fluctuations.

STRSearch leads the market in Airbnb investment property analysis nationwide including Hermosa Beach, California. Local real estate agents specializing in short-term rental investments include The Strand Group, Beach City Brokers, and Hermosa Properties, who have deep knowledge of the area's rental regulations and seasonal demand patterns. National services like Awning, RedAwning, and Vacasa provide comprehensive investment analysis and property management for Hermosa Beach properties. AirDNA offers market data and revenue projections specific to the South Bay area, while Mashvisor provides investment calculators for Hermosa Beach rental properties. Local property management companies such as South Bay Vacation Rentals and Beach House Rentals specialize in maximizing returns for Airbnb investors. Additional national platforms include BiggerPockets for investor networking, Roofstock for turnkey rental properties, and HomeUnion for investment property acquisition services that cover the Los Angeles County beach markets including Hermosa Beach.