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Thursday, Dec 7, 2023

Homeowners Wager Rentals Will Pay Off

Coastal North County homeowners have a surefire way of paying for a pricey summer cruise or European trek , rent out their high-toned houses to horse-racing aficionados during the fabled seven-week meet at Del Mar.

The recently concluded 66th season of the Del Mar Thoroughbred Club proved to be a lucrative way for local property owners to cash in on both tourists ready to play and the horse owners, trainers and jockeys ready to work.

One group of visitors anted up $50,000 for seven weeks and, “both they and the home & #173;owner were very happy with the arrangement,” according to Ryan Milligan, a sales associate in Coldwell Banker’s Rancho Santa Fe office.

On average, homeowners renting a nicely appointed three-bedroom house for $24,000 during the 43-day meet that ended Sept. 7 can net about $17,000, after paying a 30 percent commission, according to Brett Combs, broker-president of Pacific Shore Platinum, a full-service broker based in Del Mar.

One of his regular clients has been renting out her 2,800-square-foot, three bedroom, three-bath Del Mar home during the racing season for three years. This season, it rented for $14,000 a month, or $4,000 a week, and has turned out to be more than enough to cover upscale vacations with her husband.

“If you don’t need to or want to, fine,” said Mary, who declined to use her last name due to privacy concerns. “But if you want to go on some great trips, and have somebody else pay for it, this is a good way to do it.”

John Barker, a racehorse owner himself and branch manager of Coldwell Banker in Del Mar, agreed. One of his agents, who has a condo across from the track he was referring to the Del Mar track, moves back home with parents while collecting the rent , $8,000 for the meet, he said.

“For a place renting for $2,500 a month, you can get three times that,” Barker observed. “Some people do that. They only rent during the racing season, because there is such a huge demand. It makes sense financially.”

Of course, when you spend a small fortune , and in some cases, a large fortune , on a house, renting it out can be an act of faith.

“If you have to worry about your house, why would you want to do it?” said Mary. “I think the key is who you have manage it. It could be a disaster.”

Her renters tend to stay for about a month each, and usually want to return.

“If you maintain it, and they love it here, they will come back,” said Mary, who has been “debating about doing a remodel.”

“You can’t have anything junky in there,” she said, musing, “Maybe it’s time to get new linens.”

Expectations are rising for both renters and the homeowners who open their houses to visitors during the season. The time when renters were more than happy to stay in a frills-free weatherworn cottage on the beach are waning, said Combs.

“Most of those places are shabby,” he said. “The ones we manage, we keep up. People want plasma TVs, faxes, Internet access. We have the owner add them. We are demanding higher weekly rents, and we have clients demanding a higher level of services.”

Consider the competition, said Combs.

“Five-star hotels come equipped with everything you can imagine,” he observed.

Combs, who only deals in high-end properties, said that some clients are willing to pay as much as $18,000 for a single week. But the renters can expect such perks as airport pickups, private chefs, groceries stocked and champagne waiting upon arrival, VIP tickets to events and baby-sitting services, among others.

“It’s easy to leave the management in our hands,” said Combs. “We take care of anything that goes wrong.”

Overall, the traditional racing business is changing, faced with such competition as off-track and Internet gambling, which is expected to whittle away the live bodies at the meets. But some Del Mar denizens see it differently.

Barker has owned horses over the years, including Our Freebee, a “nice little filly,” who was a winner at the track this season.

“Off-track betting has affected other tracks , Santa Anita, Hollywood Park,” he said. “The Southern California circuit has seen a decline in attendance , food sales, revenues. But with Del Mar, if you go opening day, it’s totally nuts, wall-to-wall people, an event. People could care less about horses. This is the place to be socially. They have after-race concerts. Off-track has hurt attendance somewhat, but we still continue to see a solid market. Anyone who has been here and doesn’t want to live here is nuts.”

Barker has some perspective on the subject , he once lived in Arcadia, home of the Santa Anita racetrack.

“In Santa Anita, racing doesn’t have the impact on real estate that it does in Del Mar,” he said. “I tend to think Saratoga would have a big impact, too.

Some people have places in New York for Saratoga.”

Del Mar and Saratoga work their magic, he said.

“Those are the two meets that are very popular with horsemen,” he said. “I love Del Mar. The purses are great. We had one of the best seasons ever, and for horsemen, that’s good. With the season here, the whole city changes. It’s all focused on horse racing, which is kind of fun.”

Rae Jean Hoyos, a sales associate at the Del Mar office of Coldwell Banker, has been catering to the track crowd since 1988, renting to agents, trainers, horse owners, jockeys, valets and even the dirt-track foreman, who ended up buying several properties at one time or another.

“The last three years have been really, really good,” she said. “This year, it slowed a bit and things are staying on the market a little longer. But oceanfront will stay good, because there is only so much ocean. People from the desert want to get out of the heat in the summer.”

Hoyos doesn’t expect gaming competition to keep people from visiting the venerable track.

“This is a different situation than Hollywood Park and Santa Anita,” she said. “Who can stand at a TV set and watch horses running around a track, with the ocean in the background? It’s a different feeling here.”

But she has spotted some trends over the years in Del Mar, including rising business among young people with expendable incomes.

“They love to go to the Turf Club,” she said of the private enclave for members and guests. “These are young entrepreneurs who are doing well. These are kids who spend money.”

Bob Bone, who owns Sacramento-based Bob Bone Racing, had 25 horses at Del Mar this season.

“I won 12 races,” he said. “It was a good meet. I gear up for Del Mar. I like to run as much as I can there.”

As for his accommodations, Bone said he looked at a lot of houses in the $12,000- to $15,000-a-week range.

“The one we stayed in was very nice,” he said. “I did a month and worked a deal. I used to stay at a hotel, but my boys are 12 and 15 now, so we rented six bedrooms. They can surf and get the whole Del Mar experience. We had neighbors and family coming down.”

Ginni Field, branch manager for the Carmel Valley/Torrey Hills office of Prudential California Realty, hasn’t observed any slowdown during the racing season in Del Mar.

“It’s been very, very busy,” she said. “It’s a huge event on the West Coast. People are happy to rent for the season. And, more often than not, they are pre-renting. It’s been a good season overall.

But, Coldwell Banker’s Hoyos added, fewer people are staying for the entire season.

“Many owners and trainers slip in and out,” she said. “Many are commuting, because they have horses back at Santa Anita and Hollywood Park. They have to go back and forth.”

For industry pros who have to be here in-season, it all comes down to the cost of doing business.

“It costs jockeys and trainers a lot, but the purse is good, and they can make it up here,” said Bone. “It’s 20 to 30 percent higher, on average.”

According to the August report by the North San Diego County Housing Affordability Index, the median prices for single-family detached homes were highest in certain sections of Rancho Santa Fe at $4.3 million, with prices above $1 million in other parts of Rancho Santa Fe, Del Mar, Solana Beach, Carmel Valley, Cardiff-by-the-Sea and Encinitas, while the median prices for single-family attached homes were highest in Del Mar at $733,500, followed by Rancho Santa Fe, Carmel Valley, Cardiff, San Marcos and Solana Beach, which all exceeded $500,000.

As real estate prices rise, homeowners renting out their places during the season are demanding a bigger return, said Combs.

“You have people who buy $8 million homes, and renters think they can still pay $3,000 a week,” said Combs. For the homeowners, it’s not worth it. They want the mortgage payments to be covered. You will be seeing increases.”

While some renters eventually will become owners in Del Mar, purchasing second homes, Combs said those coming from areas where the real estate prices are more reasonable tend to remain renters here.

“Prices have gotten so out of whack, where prices in Texas and Arizona are still realistic,” he observed. “It makes more sense for them to rent.” Back home, he added, “They can buy a mansion on a golf course for a lot less.”

Despite his love for Del Mar, Bone is not in the buying mood , at least not at the moment.

“The prices have gotten crazy,” he said. “If the market softens up a bit, I might think about it. Now, it wouldn’t pay off.”

But there still are potential buyers out there.

“One of my partners said he’s coming to Del Mar and wants to see property,” said Barker. “He has horses. He comes down every season and gets rentals, and he’s thinking about getting a place and buying it for tax reasons.”

His partner wants to spend about $700,000, said Barker, noting that condos around the racetrack cost some $650,000 to $700,000 for about 1,200 square feet.

“It’s still affordable, but everything here is so high,” he said. “We did just sell on the oceanfront, a 1,500-square-foot condo for $1.7 million.”

Some potential buyers come from other areas of the country and stay for a few weeks, said Barker.

“It’s a great climate,” he said. “They just stay and don’t go back.”

From what Bone has observed over the years, Del Mar has only grown in popularity.

“Del Mar seems to be getting more popular, the place to be, with big social events. I think that’s fantastic,” said Bone. “Del Mar does a better job than any I’ve seen at marketing, bringing in people. And everyone is friendly here, compared to at other tracks. It’s more of an event, even if you’re not into racing.”


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