Short term rental location which one to choose?
Rental Property Investor · Huntington Beach · Member since 2021 · 116 posts · 40 votes
Short term rental location which one to choose?
Most Popular Reply
Peter MckernanBusiness Member
Residential Real Estate Agent · Irvine, CA · Member since 2013 · 2k+ posts · 1k+ votes@Sean Starkey I do not know much about the smokey mountains; however, I have a good friend that does a lot of rentals in that area I could link you up with if you want me to. For the JT, Yucca Valley, and 29 Palms area it really depends on what you are looking for right now. The County of San Bernardino keeps toying with the idea of putting a cap for STRs over the whole county (for JT it would be a percentage). This came out within the last 3 weeks, and they have not made a full move on it, so be careful. Yucca Valley had/has a moratorium till April in the Yucca Valley Proper area. That being said there are some great options in these areas, JT is the highest priced $450K on up for something you could turn around and rent right away, 29 palms is about $250K+ to turn around and rent right away, and landers is about $400K+ to turn around and rent right away (this are all finished products, so if you want to buy a fixer to get in cheaper those numbers will be different).
The best plan if you go JT or anywhere out there is day one of close of escrow submit for your permit (90 days it takes to get one in 29 Palms, 60 days in County Areas, same for Yucca Valley).
The McKernan Group4.958 Reviews
33 Replies
- 4yCollin HaysBusiness MemberProperty Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
Do you have $180K cash at your disposal? If so, plan on using $120K for a down payment on a $600K STR, and have the rest on hand to help with the ramp-up process. If I lived in Orange County, I would be finding something in my own backyard before looking for something 2000 miles away. You are fortunate to live in a high-tourism area that you can get to know intimately, and quickly. Good deals are made when you know a specific area intimately. I happen to know the Smoky Mountains (TN side) intimately, but would be completely worthless in finding a "good" deal in Cape Cod, the Florida Keys, and southern California.
Stay in CA and find your niche there.
- Hermosa Beach · Member since 2021 · 40 posts · 9 votes4y
following your journey :)
- Lender · Asheville NC · Member since 2016 · 470 posts · 317 votes4y
For me, it's all about coc return. The returns in both are solid. The Smokies have become red hot, but the more you're able to put down, and offer for appraisal gap, the less competitive it might be. 180k is plenty. I haven't bought in a little while so just make sure you can still get the coc you want. Tony Robinson is offering an all day ride along to their Joshua Tree properties, I believe.
- 4yPeter MckernanBusiness MemberResidential Real Estate Agent · Irvine, CA · Member since 2013 · 2k+ posts · 1k+ votes
@Sean Starkey I do not know much about the smokey mountains; however, I have a good friend that does a lot of rentals in that area I could link you up with if you want me to. For the JT, Yucca Valley, and 29 Palms area it really depends on what you are looking for right now. The County of San Bernardino keeps toying with the idea of putting a cap for STRs over the whole county (for JT it would be a percentage). This came out within the last 3 weeks, and they have not made a full move on it, so be careful. Yucca Valley had/has a moratorium till April in the Yucca Valley Proper area. That being said there are some great options in these areas, JT is the highest priced $450K on up for something you could turn around and rent right away, 29 palms is about $250K+ to turn around and rent right away, and landers is about $400K+ to turn around and rent right away (this are all finished products, so if you want to buy a fixer to get in cheaper those numbers will be different).
The best plan if you go JT or anywhere out there is day one of close of escrow submit for your permit (90 days it takes to get one in 29 Palms, 60 days in County Areas, same for Yucca Valley).
The McKernan Group4.958 Reviews - Real Estate Agent · Pasadena, CA · Member since 2017 · 276 posts · 255 votes4y
Just want to say that the town of Yucca Valley's moratorium is over. It expired and they decided not to renew. They are having a town council meeting tonight at 6PM to discuss proposed changes to their town limits STR ordinance.
San Bernardino County is having a planning commission meeting on Feb 17th to continue discussing their ordinance review.
- Hermosa Beach · Member since 2021 · 40 posts · 9 votes4yI thought Yucca Valley was cool with STRs? That market is hot hot hot. The dust is too much for me. Really keen on hearing was SB will have to say 👀
Quote from @Jason Kudo:
Just want to say that the town of Yucca Valley's moratorium is over. It expired and they decided not to renew. They are having a town council meeting tonight at 6PM to discuss proposed changes to their town limits STR ordinance.
San Bernardino County is having a planning
commission meeting on Feb 17th to continue discussing their ordinance review.
- Real Estate Agent · Pasadena, CA · Member since 2017 · 276 posts · 255 votes4y
Quote from @Laura Kastner:
I thought Yucca Valley was cool with STRs? That market is hot hot hot. The dust is too much for me. Really keen on hearing was SB will have to say 👀Quote from @Jason Kudo:
Just want to say that the town of Yucca Valley's moratorium is over. It expired and they decided not to renew. They are having a town council meeting tonight at 6PM to discuss proposed changes to their town limits STR ordinance.
San Bernardino County is having a planning
commission meeting on Feb 17th to continue discussing their ordinance review.
Yucca Valley is cool with STRs and that market is hot hot. They are reviewing their ordinance to make sure that the tourism boom doesn't negatively affect the full-time residents quality of living too much.
Quote from @Collin Hays:
Do you have $180K cash at your disposal? If so, plan on using $120K for a down payment on a $600K STR, and have the rest on hand to help with the ramp-up process. If I lived in Orange County, I would be finding something in my own backyard before looking for something 2000 miles away.
That's the thing... there's not a lot in the back yard of OC/ So Cal that can be bought up for 600k. You could snag a condo, but you would be at the mercy of the association if they decided to ban/ limit STRs. I know prices are up everywhere, but coastal California is a different beast.
Regardless, I totally agree with your sentiment about staying close to home. Perhaps Nevada or AZ (Yuma?) might not be a bad idea. Although there are some cheaper places in Joshua Tree.
- Hermosa Beach · Member since 2021 · 40 posts · 9 votes4y
JT Just keeps getting hotter by the day. just so we all have a laugh, this is the description of a turn key property that will probably go for $650k+ It is completely ready to go. my wonderful desert realtor sent it to me. please enjoy the JT vibe:
Ever thought about just dropping all your responsibilities, packing a bag and heading out to Joshua Tree just to escape from the endless monotony of over-working, paying bills, being nice to your boss, etc? Me, too. Other people would advise you to take some gentle hallucinogens or a similar form of paraphernalia to heighten the experience of what Joshua tree has to offer; however, that is none of our business. We’re in the business of perfect getaways, like this sensational bohemian city escape, remodeled head-to-toe with ever-inviting finishes. With 3 beds and 2 baths, this caters to the masses: either a trendy & cozy full time home, desert getaway for the weekends, or a staggeringly high income-earning property on the likes of Airbnb. You have nearly half an acre to joyfully dance around, eyes glued to the shooting stars at night. The mountain views help you doze into a daydream of achieving life goals, or provide clarity on what's for dinner. Close to downtown bars and restaurants, a short journey awaits either to the calmness of the park or a social gathering. So, drop all your responsibilities, pack a bag and head out to Joshua Tree to view this home
- Hermosa Beach · Member since 2021 · 40 posts · 9 votes4y
and the descriptions for yucca are kindaclike that too. turnkey in yucca clocking in near the 600’s. some may alreafy have str permit or filed. thats a plus.
- Member since 2022 · 2 posts · 0 votes4y
Quote from @Jason Kudo:
Quote from @Laura Kastner:
I thought Yucca Valley was cool with STRs? That market is hot hot hot. The dust is too much for me. Really keen on hearing was SB will have to say 👀Quote from @Jason Kudo:
Just want to say that the town of Yucca Valley's moratorium is over. It expired and they decided not to renew. They are having a town council meeting tonight at 6PM to discuss proposed changes to their town limits STR ordinance.
San Bernardino County is having a planning
commission meeting on Feb 17th to continue discussing their ordinance review.
Yucca Valley is cool with STRs and that market is hot hot. They are reviewing their ordinance to make sure that the tourism boom doesn't negatively affect the full-time residents quality of living too much.
Did Yucca make any decisions in their last meeting (2.15)? Or are they still just discussing regulations?
- Investor · Fontana, CA · Member since 2017 · 95 posts · 59 votes4y
@Sean Starkey hey Sean, I live in the Inland Empire and invest in the Smokies. I started 1.5 years ago and I thought it was the top of the market and over saturated at the time. I got my 2nd one under contract 3 months later and thought the same thing. Another month later I got another pool cabin under contract and felt the same way again. Long story short, we have 2 Cabins and 2 more being built. Smokies is best pound for pound STR market in the US. Being that it's a great market, it's EXTREMELY competitive. Focus on creating an amazing relationship with an amazing realtor. My realtor is Avery Carl. I wish you nothing but the best of luck.
- Investor · Fontana, CA · Member since 2017 · 95 posts · 59 votes4y
@Greg R. I disagree, I live in SoCal and would love to have STRs here, but it’s nowhere near as friendly of an environment as Smokies. It’s so easy to self manage from a distance, if I can do it anyone can do it.
Hey @Alex Sabio, in regard to So Cal are you referring to home prices, regulations, or something else? Mine in San Diego is knocking it out of the park. Barrier to entry is certainly tough in this market.
I have one long distance STR and it's undoubtedly more difficult to manage than my local one. I'd disagree with the statement that STR management from a distance is "so easy." Definitely not impossible, but there is a clear advantage in being local. I'm not discouraging long distance STR management, as I plan to do more. But for someone starting out, I would strongly recommend learning the ropes with something easily accessible.
we have 3 local STRs and had 2 OOS STRs. OOS STRs can be fine with the right PM when things are going right, but when things go wrong, they are a long way away. The reality is eventually something will go wrong. One of our local STRs is out of commission right now because something has gone wrong. I am glad I am local to deal with the issues.
Our OOS STRs were in an awesome location. They were on the beach, literally on the sand in Gulf Shores AL. The type of property that if it were in So Cal would be over $10M. The taxes were going up faster than the rents which was limiting our return and then they got hit by hurricanes in back-to-back years. We had to go there both times to get the units worked as we were getting nothing but promises when we were 1000s of miles away.
Good luck
Quote from @Greg R.:
@Dan H. thanks for sharing your experience about the trials you experienced. Not at all fun having to rely on other people's eyeballs and vain promises. However, sounds like you have some amazing beachfront properties.
We sold the OOS beach front property (duplex) quite a few years ago (maybe a dozen years ago, shortly after it was hit vby the 2nd hurricane whatever year that was). The closest we have now is ~100' from the board walk. This property 100' from the boardwalk in San Diego was far outperforming our beach front in Gulf Shores. However, the Gulf shores property was way cooler and I have had seller's remorse about selling it more than once. Same property in So Cal would be over $10M easily if you could even find a similar property (a duplex on the sand).
The San Diego properties have all been outstanding. Prop 13 is a hidden gem for long term California property investors. The cash flow for long term hold is outstanding (way better than the zero appreciation markets that have better initial cash flow). I suspect there is not a single zero appreciation market that has better average rent to purchase ratio for a property purchased in either 2000 (for the century) or 2012 (last decade) than San Diego. Anyone want to try to find a market that has appreciated less than inflation that has averaged better ratio for property purchased in 2000 or 2012 than the average for San Diego? Note the cash flow gets the Prop 13 bonus on top of the outstanding rent to purchase ratio making the San Diego cash flow better than would be implied by the rent to price ratio alone.
Good luck
- Real Estate Agent · Pasadena, CA · Member since 2017 · 276 posts · 255 votes4y
@Edgar Romero
Town of Yucca Valley, yes they did. 10% cap on total number of strs compared to total housing inventory. Currently, the inventory is at 5% so still a lot of room for growth.
Response times for operators/pms to calls is now 15 minutes and 30 minutes to be on-site.
I don't know why people keep saying the high desert of California is not STR friendly. This couldn't be further from the truth. Regulations are put into place to protect investors just as much as full-time residents by carving out a legal standing for STRs to operate in. A lack of regulation is much higher risk than enforced regulations.
- Member since 2022 · 2 posts · 0 votes4yThanks for the update, I just discovered these forums and always appreciate your insights. Agree with regulations, only part that scares me a little is when they keep moving the goal post on us. I have a place in Big Bear Lake and there is a group there constantly trying to change everything. I just started looking in Yucca and JT seems like competition is pretty stiff for initial purchase, we lost a house last week to an all cash offer and are suppose to get a decision on another offer tomorrow (I get the feeling we were not aggressive enough) - still trying to evaluate if Yucca (city) or JT (county) is better for the near future. We’ve also put back on our plate the idea of a new build, but are afraid of what regulation might be 12-18 months from now when we finally finish the house and are ready to host.
Quote from @Jason Kudo:
@Edgar Romero
Town of Yucca Valley, yes they did. 10% cap on total number of strs compared to total housing inventory. Currently, the inventory is at 5% so still a lot of room for growth.
Response times for operators/pms to calls is now 15 minutes and 30 minutes to be on-site.
I don't know why people keep saying the high desert of California is not STR friendly. This couldn't be further from the truth. Regulations are put into place to protect investors just as much as full-time residents by carving out a legal standing for STRs to operate in. A lack of regulation is much higher risk than enforced regulations.
- Real Estate Agent · Pasadena, CA · Member since 2017 · 276 posts · 255 votes4y
Quote from @Edgar Romero:
Thanks for the update, I just discovered these forums and always appreciate your insights. Agree with regulations, only part that scares me a little is when they keep moving the goal post on us. I have a place in Big Bear Lake and there is a group there constantly trying to change everything. I just started looking in Yucca and JT seems like competition is pretty stiff for initial purchase, we lost a house last week to an all cash offer and are suppose to get a decision on another offer tomorrow (I get the feeling we were not aggressive enough) - still trying to evaluate if Yucca (city) or JT (county) is better for the near future. We’ve also put back on our plate the idea of a new build, but are afraid of what regulation might be 12-18 months from now when we finally finish the house and are ready to host.Quote from @Jason Kudo:
@Edgar Romero
Town of Yucca Valley, yes they did. 10% cap on total number of strs compared to total housing inventory. Currently, the inventory is at 5% so still a lot of room for growth.
Response times for operators/pms to calls is now 15 minutes and 30 minutes to be on-site.
I don't know why people keep saying the high desert of California is not STR friendly. This couldn't be further from the truth. Regulations are put into place to protect investors just as much as full-time residents by carving out a legal standing for STRs to operate in. A lack of regulation is much higher risk than enforced regulations.
I understand the concern of a moving goal post. The good thing is that with all the regulations that have been put in place whether it be San Bernardino County, town of Yucca Valley, or town of 29 Palms, whenever a change has been proposed to a specific section with multiple options ranging from very restrictive to least restrictive, each town council has opted for the less strict of the options. This is a clear sign that the high desert towns in California are in favor of short-term rentals, business owners, and the revenue generated from the transient occupancy taxes they collect. Regulations are necessary to protect the desirability of these locations. No one wants the high desert to turn into a traffic-laden, outdoor music blaring, night-time string lights shining disco ball town and it's these regulations that will keep the desirability of the high desert in-tact. I would operate under the assumption that the high desert is a short-term friendly location and the regulations that have been put into place were put into place to protect the investment of short-term rental property owners, the tourists, and full-time residents alike.
- Residential Real Estate Broker · Sedona, AZ · Member since 2017 · 754 posts · 504 votes4y
Quote from @Sean Starkey:
I just got approved for a 180k HELOC and I am looking to start buying STRs. I currently live in orange county CA and am looking at the Smoky mountains and Joshua tree. How do I make the most out of my 180k? Which market do I start in? I also plan on managing them myself
Thanks!
Sean,
I recommend you change your mindset a bit on the $180k. You likely have far more than $180k to work with. If you think of your $180k as down payment + renovation/closing costs, you may also be able to get investor financing, and then your $180k HELOC actually helps you purchase a $800k STR that gives you approx $36k-$40k profit per year + of course any appreciation on both properties. - Hermosa Beach · Member since 2021 · 40 posts · 9 votes4y
A little help since we are talking deserts:
Which is the better option:
A turn key Desert Hot Springs or Indio home 4/2 on 7000 sq ft lot with a gorgeous concrete pool in a residential neighborhood
or
A comestic reno in Yucca Valley home 2/2 plus bonus room on 1/2 an acre with a nice backyard & an in ground vinyl* pool in a residential neighborhood?
*converting vinyl to pebble tec is same as putting in a new pool…so, out.
Also, YV costs 50K more. - Riverside, CA · Member since 2020 · 30 posts · 11 votes4y
So, I'm a risk taker - but I like to hedge my risks. Here's the route I personally chose.
I found myself in almost the exact same place about two years ago, with 200k of HELOC to work with - and I decided to start close to home before expanding OOS. I carved out 50k as an emergency buffer, and then split the remaining 150k across purchasing and preparing two properties in the hottest local markets I could afford (which I identified as San Bernardino Mountains and Joshua Tree).
Both of my properties are in unincorporated areas of SB county, and I've found it quite friendly to STRs. The high desert is generally quite STR-friendly as well, but the Palm Springs, Palm Desert, and the other cities along the 10 are quite restrictive.
- Real Estate Agent · Pasadena, CA · Member since 2017 · 276 posts · 255 votes4y
Quote from @Laura Kastner:
A little help since we are talking deserts:
Which is the better option:
A turn key Desert Hot Springs or Indio home 4/2 on 7000 sq ft lot with a gorgeous concrete pool in a residential neighborhood
or
A comestic reno in Yucca Valley home 2/2 plus bonus room on 1/2 an acre with a nice backyard & an in ground vinyl* pool in a residential neighborhood?
*converting vinyl to pebble tec is same as putting in a new pool…so, out.
Also, YV costs 50K more.A little more clarity please? Better option for what?
- Riverside, CA · Member since 2020 · 30 posts · 11 votes4y
To your question - I looked at some properties in Desert Hot Springs, and ultimately decided against them. In my research, it appeared that DHS would be less desirable to visitors.
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