Thinking about buying a vacation rental in Monterey County? Before you invest, get the facts on occupancy rates, short-term rental laws, and real estate pricing on the Monterey Peninsula.

If you’re a Realtor or investor exploring a vacation rental in Monterey County, you’ve probably come across glowing articles promising big returns from short-term rentals. But one recent article on Realtor.com (https://www.realtor.com/advice/hyperlocal/renting-second-home-monterey-bay/ paints an overly optimistic—and, frankly, misleading—picture of the Monterey vacation rental investment market. To protect your clients (or your own portfolio), here’s what that article got wrong—and what you really need to know before investing in a vacation rental in Monterey, Carmel, or Pacific Grove.

 Vacation Rentals in Monterey Don’t Earn 100% Occupancy

The article estimates income by multiplying the average nightly rate by 98 nights in summer—assuming 100% occupancy. That’s simply not how vacation rentals perform in the real world.  In the Monterey Bay market, even the most successful properties rarely exceed 75% summer occupancy, and average year-round rates often fall between 50% and 65%. When calculating your potential return on investment (ROI), a realistic occupancy estimate is essential.

 Short-Term Rental Laws in Monterey County Are Strict

Here’s the part many out-of-area investors miss: Monterey County has some of the toughest short-term rental laws in California.

• City of Monterey: Vacation rentals under 30 days are banned.
• Carmel-by-the-Sea: No short-term rentals allowed.
• Pacific Grove: STR licenses are capped and non-transferable.
• Unincorporated Monterey County (including Pebble Beach, Carmel Valley, and Big Sur): A new STR ordinance enforces strict licensing, and zoning restrictions.

If your client wants to do nightly rentals, they may be out of luck—or face a costly legal battle. Always confirm regulations with local planning departments before making recommendations.

 Monterey Peninsula Home Prices Are Far Above the County Median

The article estimates mortgage payments based on the median home price for Monterey County—but that includes inland farming areas, not the high-demand coastal towns investors are actually targeting.

A few examples of actual entry prices for vacation rental-suitable homes:

Using county-wide median prices creates a false impression of affordability. If you’re advising clients, make sure they understand the real cost of buying a vacation rental in Monterey County—especially in STR-eligible zones.

 Final Thoughts: Educate Before You Invest

Monterey is a beautiful, high-demand destination, and with the right property in the right location, a vacation rental can be a great long-term investment. But it’s not a passive or guaranteed income stream—especially under today’s legal and market conditions.

  Realtors: Guide your clients toward smart, compliant investments.
 Buyers: Consult a local property manager or short-term rental compliance expert before closing.

 Ready to Invest in Monterey Real Estate?

Our team at Monterey Bay Property Management has helped hundreds of owners successfully navigate the short-term rental market in Monterey County. Contact us for a customized rental income analysis, property review, or compliance consultation.  We will work with you and your Realtor to make sure you have all the information you need to make an informed decision.

Managing Broker

MontereyRentals.com

816 Wave Street
Monterey, CA  93940

831-402-1765