Financing a Carmel-by-the-Sea Rental When the Data Disagrees

Jacob Mishalanie
5 days ago
10 min read

Carmel River State Beach sand, lagoon, and coastal hills, Carmel-by-the-Sea photograph

Crest & Cove Creative does not underwrite or sell DSCR loans, and this post isn't trying to. What it does is give a host or buyer a host-read version of what a lender is likely to look at when evaluating a Carmel-by-the-Sea property — specifically because this market's own revenue data disagrees by roughly a third, and a seasonal, small, zoning-restricted market like this one raises questions a lender in a more conventional market might not ask.

The goal here is to help a host walk into their own lender conversation with a clearer sense of what's actually being asked, and why the answer isn't as simple as quoting a single aggregator figure. It is not a substitute for that conversation, and it isn't legal or financial advice.

Everything below assumes a host is bringing their own numbers, their own documentation, and their own relationship with a lender to the table. This post's job is context, not paperwork. This is not legal advice.

Why This Market's Data Gap Matters in a Financing Conversation

AirROI shows $91,583 typical annual revenue at 45.9% occupancy; AirDNA shows $122.7K at 66% occupancy. That's a roughly 34% spread on the top-line figure, and a lender comparing a specific property's projected income against these two aggregators is going to notice the disagreement too. A host who can explain why the two sources differ — different listing pools, slightly different date windows — is in a stronger position than one who's only aware of whichever number they happened to find first.

This is exactly the kind of situation where a property's own operating history, once it exists, becomes more valuable than either public estimate. A specific property's actual trailing twelve months of payouts is a much more concrete data point for a lender than a market-wide aggregator figure with a third-wide range of disagreement built into it.

It's also worth understanding, in general terms, why a small, highly zoning-restricted market like this one produces this kind of data gap in the first place. With roughly 300 to 400 active listings depending on the source, a relatively modest difference in which properties each provider's crawl actually captures can swing the resulting average meaningfully — a dynamic that's less pronounced in a much larger market with thousands of listings smoothing out sample differences.

Export Your Own Twelve Months, Not Someone Else's

For a host with existing operating history, exporting a clean twelve-month record of payouts, occupancy, and expenses directly from the booking platform is generally more useful in a lender conversation than any published market report. This is the host's own number, specific to this property, and it removes the ambiguity built into the AirROI-versus-AirDNA gap entirely.

For a host without operating history yet — someone financing a purchase before ever listing the property — the honest starting point is the market range itself, presented conservatively, along with a clear explanation of the zoning and permit status that confirms the property can legally operate as a short-term rental at all. A lender is going to want that legal confirmation as much as any revenue projection.

A conservative approach here tends to hold up better over time than an optimistic one. Presenting a figure toward the lower end of the AirROI-to-AirDNA range, and being pleasantly surprised if the property outperforms it, is a more defensible position than presenting the higher figure and having the property underperform against expectations a lender or a host's own budget was built around.

Keep Carmel Point Comps Off This Property's Underwrite

Carmel Point's separate AirROI figure of $157,376 at 53.4% occupancy describes a different, adjacent, unincorporated geography — not the incorporated City of Carmel-by-the-Sea. A projection built for a village property that leans on Carmel Point numbers is building on the wrong comp, and a careful lender or appraiser reviewing the file may catch that discrepancy, which can slow down or complicate the financing process unnecessarily.

Keep the comp set specific to properties actually inside Carmel-by-the-Sea's city limits, and be prepared to explain the distinction clearly if a Carmel Point figure comes up in a broader Peninsula-area comparison during the process.

This same discipline extends to Monterey, Pebble Beach, and 17-Mile Drive comparisons more broadly — each of these nearby areas has its own zoning framework, its own permit desk, and often a meaningfully different revenue and occupancy profile from Carmel-by-the-Sea itself. A comp set drifting toward 'the Peninsula generally' rather than the specific incorporated city is a comp set a careful reviewer is likely to flag.

Disclose Legality Status Clearly and Early

Carmel-by-the-Sea prohibits transient rentals in R-1 zones outright, with narrower pathways in commercial and R-4 zones through a Legal Nonconforming or Housing Incentive permit. Whatever a specific property's status is, disclosing it clearly and early in a financing conversation avoids a much more disruptive discovery later in the process. This is not legal advice — a host should confirm current zoning and permit status directly with the City of Carmel-by-the-Sea and be prepared to document it as part of any financing application.

A property without a confirmed legal short-term rental pathway isn't necessarily unfinanceable — it may simply need to be evaluated as a long-term rental or personal-use property instead, with a different income approach entirely. That's a materially different conversation than one built around confirmed short-term rental income, and it's better to have that clarity going in than to discover it partway through underwriting.

This confirmation step is worth doing well before a specific closing date is on the calendar, since it can take time to get a clear answer from the city, particularly for a property whose permit history isn't already well documented. Building that lead time into a purchase timeline avoids a last-minute scramble that puts unnecessary pressure on the rest of the transaction.

Questions a Lender Is Likely to Ask, and How to Prepare for Them

A lender or mortgage professional evaluating a seasonal, small-market short-term rental like this one is likely to probe a few areas more closely than they would for a conventional, more liquid rental market. First, expect a direct question about seasonality — how much of the projected annual revenue is concentrated in the August peak versus spread across the calendar, since a property whose income is heavily front-loaded into a few strong months carries a different risk profile than one with steadier year-round demand. Having the AirROI seasonality data on hand — August as the peak, January as the softest month for revenue — helps answer that question with specifics rather than a vague assurance.

Second, expect a question about how the two aggregator figures were reconciled, if both are referenced anywhere in the application materials. A lender who notices a citation of both $91,583 and $122.7K without explanation may reasonably ask which one the projection is actually built on and why. Having a ready, honest answer — presenting the range and explaining the source of the disagreement, rather than picking one number without comment — reads as more credible than silence on the gap.

Third, and most specific to this market, expect a question about legal operating status tied directly to the zoning question covered above. A lender underwriting against projected short-term rental income has a direct interest in whether that income is legally securable, and a host who has already confirmed and documented zoning and permit status with the city is answering that question before it's even fully asked, rather than scrambling to research it mid-application.

Why a Full Twelve Months Means Something Specific in a Seasonal Market

In a market with a pronounced seasonal curve — August as the clear peak, January as the softest month for revenue — a partial-year operating history can be misleading in either direction if presented without that context. Six months of data captured entirely within the stronger half of the calendar will overstate what a full year looks like; six months captured mostly in the softer months will understate it. A lender reviewing operating history benefits from knowing not just the total, but which months are actually represented in it.

This is a reason to be specific, not just complete, when presenting a property's own history: noting which months are covered, and where they fall relative to this market's known peak and shoulder pattern, gives a lender a clearer basis for evaluating whether a partial record is representative or skewed. A host with less than a full year of data is better served being upfront about that gap than presenting a partial number as though it already represents a typical annual pattern.

For a host who does have a full trailing twelve months, it's worth presenting the monthly breakdown alongside the annual total rather than the total alone. A lender seeing the actual month-by-month shape of a property's revenue — strong in August, soft in January, everything else in between — gets a far more credible and specific picture than a single annual figure, and that specificity tends to build more confidence than a summary number ever could on its own.

What This Post Isn't

This isn't a pitch to package documents on a host's behalf, assemble a financing file, or represent what any specific lender will require — those specifics vary by lender and by the host's own financial situation, and are outside the scope of anything Crest & Cove Creative offers. What this post offers is a clearer read of the market data itself, so a host walks into their own lender relationship with an accurate, honest picture rather than a single cherry-picked number.

The rest of a financing decision — loan terms, documentation requirements, specific underwriting criteria — belongs in a conversation with a lender or a mortgage professional who specializes in this kind of property, not in a marketing-focused blog post.

Where this post's scope does pick back up is on the other side of that financing conversation — once a property is confirmed legal to operate and financed, the listing itself still has to perform against whatever projection was used to secure the loan. A property that was financed against a conservative read of the AirROI-to-AirDNA range benefits from a listing that's actually working to hit or beat that number, not one left generic and underperforming relative to what the underwriting assumed. That's the marketing side of the same underlying decision, and it's where this cluster's other posts, and Crest & Cove Creative's own work, actually apply.

A Second Property Changes What a Lender Sees, Too

A host returning to a lender for a second Carmel-by-the-Sea property, or a second short-term rental more broadly, is presenting a different file than a first-time applicant. An existing, documented operating history on one property — assuming it's been kept clean and specific, as described above — can meaningfully strengthen a second application, since it demonstrates a track record rather than a projection built entirely on market aggregators.

That said, the same caution about geography and comps applies with even more force to a second property. A lender reviewing a second application may reasonably compare the new property's projection against the first property's actual performance, and a host presenting an inflated projection for property two that doesn't track with property one's real trailing twelve months is inviting exactly the kind of scrutiny this post is trying to help a host avoid. Keeping each property's numbers specific to itself, rather than blending a strong first-property year into an optimistic second-property projection, holds up better under that closer look.

Frequently Asked Questions

Does Crest & Cove Creative help finance Carmel-by-the-Sea rental purchases?

No. Crest & Cove Creative does not underwrite or sell financing of any kind. This post is a host-read explanation of the market data relevant to a financing conversation, not a financing service.

What revenue figure should I bring to a lender for a Carmel-by-the-Sea property?

If the property has operating history, export your own trailing twelve months of payouts directly from the booking platform — that's more useful than any published market figure. Without operating history, present the honest AirROI-to-AirDNA range conservatively, along with confirmed zoning and permit status.

Why do AirROI and AirDNA disagree so much for Carmel-by-the-Sea?

The two providers pull from different, overlapping listing pools over slightly different date windows, producing a roughly 34% gap between $91,583 and $122.7K. Neither figure is wrong on its own terms; they're measuring somewhat different samples of the same small market.

Can I use Carmel Point's revenue figure when discussing financing for a village property?

No — Carmel Point is a separate, unincorporated Monterey County geography with its own distinct AirROI figure, and using it as a comp for an incorporated Carmel-by-the-Sea property risks a discrepancy that could slow or complicate a lender's review.

Do I need to disclose my property's zoning and permit status when seeking financing?

Yes, clearly and early. Carmel-by-the-Sea prohibits transient rentals in R-1 zones, with narrower pathways elsewhere requiring specific permits. This is not legal advice; confirm current status with the City of Carmel-by-the-Sea and be prepared to document it as part of any financing conversation.

What happens if my property can't legally operate as a short-term rental?

It may still be financeable, but likely needs to be evaluated as a long-term rental or personal-use property instead, with a different income approach than one built around confirmed short-term rental revenue. That distinction should be clarified early rather than discovered mid-process.

Is this post legal or financial advice?

No. It's context on how to read this market's public revenue data ahead of a host's own conversation with a lender or mortgage professional, not a substitute for that conversation or for professional legal or financial guidance.

Should I use the high end of the revenue range to make my financing case stronger?

That's a risk rather than a strategy — presenting the range honestly, or the property's own actual trailing twelve months if available, holds up better under scrutiny than leaning on the more optimistic aggregator figure alone.

What's the most useful number I can bring to a lender if I already operate a listing?

A clean, exported twelve-month record of payouts, occupancy, and expenses directly from your booking platform. It's specific to your property and removes the ambiguity built into any market-wide aggregator comparison.

Does this post cover loan terms or documentation requirements?

No — those vary by lender and by a host's own financial situation, and are outside what this post addresses. This is market-data context only; documentation and terms belong in a direct conversation with a lender.

Work with Crest & Cove Creative

A lender comparing Carmel-by-the-Sea's own revenue data is going to hit the same 34% gap a buyer does. Knowing why it exists changes how that conversation goes.

Crest & Cove Creative focuses on listing marketing, not financing — ask us for a marketing audit to strengthen the story your property tells once the numbers side of the conversation is settled elsewhere. Name the failure mode the guest can check on the listing.

Reach out at crestcove.co or (256) 998-7502.