Dreaming of a place by the ocean where you can recharge, host friends, and build long‑term value? Malibu delivers that magic, but buying a second home here is more complex than most markets. You need a clear plan for financing, permits, insurance, and environmental risks that are unique to the coast. This guide walks you through what to know, what to verify, and how to move from idea to keys in hand with confidence. Let’s dive in.
Malibu at a glance
Malibu is a high‑value coastal market with limited inventory and strong long‑term appeal. Beachfront and blufftop properties sit in the spotlight, while inland canyon homes and smaller condos offer different risk and cost profiles. Location scarcity supports values, though liquidity can be seasonal and influenced by broader luxury cycles. As a second‑home buyer, you benefit from planning early and moving decisively when the right property appears.
Set your budget and financing
Buying a second home is financed differently than a primary residence. Lenders often require a larger down payment, stronger credit, and more cash reserves. In Malibu, prices frequently exceed conforming limits, so jumbo financing is common. Get preapproved early with a lender experienced in second‑home and jumbo underwriting to understand your range and timeline.
Second‑home loan basics
- Expect higher down payments and stricter debt‑to‑income limits than for a primary home.
- Lenders may require several months of mortgage payments in reserve after closing.
- You must document your primary residence and your intent to use the Malibu home for personal occupancy.
- If you plan any rental use, know that lenders often treat rental projections conservatively and may restrict certain short‑term rental models.
Taxes to plan for
- Property tax in California is generally about 1% of assessed value plus local assessments, and reassessment typically occurs at purchase.
- Mortgage interest on a second home can be deductible within federal limits. If you rent the home, the IRS “vacation home” rules affect how income and expenses are treated. Review the IRS guidance on vacation homes and rental deductions with your tax advisor.
- If you rent and have net income, California taxes that income. Nonresidents should review California filing rules with the Franchise Tax Board.
Local rules that shape what you can do
Malibu’s coastline adds beauty and complexity. Coastal oversight, local zoning, and rental rules can affect how you renovate and use your home. Verify these items early, especially if you plan to remodel or rent.
Coastal permits and setbacks
Many beachfront and bluff properties fall under the California Coastal Act. Depending on the location and scope of work, permits can be required for major alterations, shoreline protection, or rebuilding. Setbacks and erosion standards may restrict future work. Start by confirming status with the California Coastal Commission and coordinating with the City of Malibu on its Local Coastal Program and permitting process.
Short‑term rental rules
Malibu has adopted rules that can materially limit short‑term rentals. Requirements can include registration, occupancy limits, and transient occupancy tax collection. Enforcement changes over time, so confirm current ordinances with the City of Malibu before you factor rental income into your plan.
HOA and disclosures
If the property belongs to a homeowners association, review CC&Rs for rental restrictions and financial health. In California, expect a Transfer Disclosure Statement and Natural Hazard Disclosure, along with local hazard zone information. Confirm that all required disclosures are complete and accurate.
Insurance and natural hazards
Wildfire exposure, coastal erosion, storms, and earthquakes can affect both safety and long‑term costs. Insurance availability and premiums vary by location and property type, so get quotes at the start of your search.
Wildfire readiness and coverage
Malibu and the Santa Monica Mountains have elevated wildfire risk. Some owners rely on the California FAIR Plan as a last resort for fire coverage, often paired with supplemental policies. Review marketplace conditions and mitigation requirements with the California Department of Insurance. For defensible space and home‑hardening guidance, consult Cal Fire and the Los Angeles County Fire Department.
Flooding and coastal risk
Beachfront and low‑lying properties may face coastal flooding or tsunami risk. Check the FEMA flood zone and whether the home is in a Special Flood Hazard Area, which can affect insurance and rebuilding options. Use the FEMA Flood Map Service Center to review maps and elevations.
Earthquake coverage
Standard homeowners policies typically do not include earthquake coverage. Earthquake insurance is a separate policy with its own premium and deductible. Factor this into your annual budget and compare options before removing contingencies.
Property types and tradeoffs
- Beachfront and blufftop: stunning access and views, but higher exposure to coastal erosion, salt air, and permitting complexity. Maintenance for metal components and exterior finishes tends to be more frequent.
- Central coastal neighborhoods: good access to the shoreline and services, with varying exposure to salt air and local rules depending on the micro‑location.
- Canyon and inland: often more privacy and land, but typically higher wildfire exposure and potential for septic systems. Confirm road access and utility reliability.
Each micro‑area differs in insurability, maintenance needs, and permitting. Align your lifestyle goals with the property type that fits your risk tolerance and budget.
Due diligence checklist
Use this list to structure your offer timeline and contingencies:
- Engage a local real estate agent experienced with Malibu second homes.
- Secure mortgage preapproval with a lender versed in jumbo and second‑home loans.
- Obtain insurance quotes early for homeowners, wildfire, earthquake, and flood. Ask about renewal history and percentage deductibles for wildfire.
- Review statutory disclosures, including the Natural Hazard Disclosure report.
- Order a title report. Check recorded easements, covenants, and CC&Rs.
- For waterfront, bluff, or hillside sites, schedule geotechnical and structural inspections and verify any shoreline protection permits with the California Coastal Commission.
- Request a wildfire risk assessment and plan defensible space improvements.
- Verify sewer vs septic and obtain septic inspections where applicable.
- For HOAs, review governing documents, budgets, and recent meeting minutes for special assessments.
- Confirm City of Malibu rules on permits and short‑term rentals with the Planning Department.
- Consult a CPA on rental versus personal use, depreciation, and California filing obligations.
- Set aside cash reserves for closing costs, property taxes, higher first‑year insurance, and catch‑up maintenance.
Timeline to closing
- 1 to 3 months before you shop: speak with a lender, start insurance prequalification, and narrow target micro‑areas.
- Offer to escrow: typical escrow is 30 to 45 days, with more time for complex coastal or structural due diligence.
- Contingency period: schedule inspections and finalize insurance quotes before contingencies expire.
- Post‑closing: plan wildfire mitigation, coastal or structural work, and any required upgrades early, since insurance carriers may require improvements for full coverage or better rates.
If you plan to rent
Short‑term rentals are heavily regulated. Confirm Malibu’s current rules, permit requirements, and transient occupancy tax obligations with the City of Malibu before relying on rental income. Some lenders restrict certain STR uses for second‑home loans. For tax planning, review the IRS vacation home rules and speak with a CPA about depreciation, passive activity rules, and personal use limits.
How The Kohl Team helps
Buying in Malibu benefits from hands‑on guidance and trusted local relationships. Based in Pacific Palisades, we pair decades of Westside expertise with a concierge process that makes complex transactions feel simple. We coordinate the right inspectors, connect you with lenders and insurance pros familiar with coastal and wildfire exposures, and help you evaluate each property’s design, maintenance, and long‑term risk profile. When you are ready to explore Malibu second homes, reach out to The Kohl Team for tailored, white‑glove support.
FAQs
Can I rent my Malibu second home short‑term?
- Possibly, but Malibu has specific rules and permitting. Confirm requirements and taxes with the City of Malibu before assuming rental income.
Is homeowners insurance hard to get in Malibu?
- Availability and cost vary by location and wildfire history. Start quotes early and review options, including the FAIR Plan, with the California Department of Insurance.
Are blufftop homes safe to buy in Malibu?
- They can carry elevated erosion risk and strict coastal permitting. Obtain independent geotechnical and structural evaluations and verify all shoreline protection permits.
How much down payment do I need for a second home?
- Second‑home and jumbo loans often require higher down payments and larger reserves than primary homes. Speak with a lender early to confirm requirements.
How are taxes handled if I rent the property?
- Rental income is taxable, and deductions depend on personal use. Review IRS vacation home rules and California filing obligations with a CPA.