STR Out of State Opps
Hello BP Community!
I was hoping to get some perspective on the STR market in Fox Lake, IL and the surrounding Lake front cities and the viability of managing a property there from across the country. I live in LA but grew up in a suburb of Chicago. I'm currently analyzing multiple different markets and have landed back in my home state. I understand that the midwest has inclement weather during the seasons comparatively to the sunshine states. I have a few questions...
1. Is anyone investing in Fox Lake, IL for STR purposes? What is the application/permitting process like?
2. Is anyone investing in the Midwest and managing the property from out of state? Or would it make more sense to hire a PM?
3. What are average Capital Expenditures to plan and account for in the Midwest?
4. Anything else to consider when investing in IL?
Thank for at least spending the time to read this and anyone's insight would be extremely helpful!
Have a great weekend,
Alex Persons
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#3 Short-Term & Vacation Rental Discussions Contributor
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Short term rental long term wealth. Read that book and it’ll all make sense.
Fox Lake requires a special use permit to operate a short term rental plus a registration. Make sure you check the details of that process.
@Alex Persons I haven’t looked in the mid-west, but living in Los Angeles have you thought about finding something closer to LA? Might be good for your first rental to be closer to home so that you can check in on it and visit it when it’s not booked.
I just got back from Joshua Tree and their still some good buys out there.
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Real Estate Agent California (#02166235)
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@Luke Carl Thanks you for the rec! I started the book, but now I'm going to finish it. Thanks!
@Kenneth Garrett That's so helpful Kenneth- thank you! Do you have any experience with that process? I don't mind if it's difficult but I want to make sure it's not impossible before buying a property there.
@Robert Reynolds Hey Robert, I've been looking in the Joshua Tree area for rentals but the market has been tough. I also saw there is a 45 halt on issuing STR permits on properties in the San Bernardino County. Do you know the future of STR's in San Bernardino County?
The 45 day halt is just for them to catch up and change some of the rules. They will still take applications during that time period and you can still transfer permits from Seller to Buyer in Joshua Tree during this time, according to my buyers who are buying 2 in JT right now. Yucca Valley is also still allowing short term rentals and 29 Palms just capped theirs at 500. Desert Hot Springs, Indio and Palm Springs are other locations you could also look to STR.
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Real Estate Agent California (#02166235)
- The David Greene Team
- 310-720-1057
- [email protected]
I am familiar with the special use permit process in general, but not necessarily Fox Lakes. They are all pretty similar. I would contact the Village of Fox Lake when you have a property selected. The process is about 60 days. You’ll need to make any offers contingent on that approval process.
@Robert Reynolds that's great news! We're still looking in Joshua Tree. We jumped out of yucca after talking to the less than pleased to talk about STR City Hall, and learning more about the ordinances. I guess the cap is 10% and if you ever wanted to sell the permit is non transferable. So we got out of Yucca because of that
Quote from @Alex Persons:
@Robert Reynolds that's great news! We're still looking in Joshua Tree. We jumped out of yucca after talking to the less than pleased to talk about STR City Hall, and learning more about the ordinances. I guess the cap is 10% and if you ever wanted to sell the permit is non transferable. So we got out of Yucca because of that
Hey Alex. The 45 day moratorium, although temporary, has the possibility of being extended for up to two years in 45 day increments. More than likely, the 45 day won't be extended just like the town of Yucca Valley when they implemented their 45 day moratorium but you need to know that the possibility does exist. The new ordinance additions will include the removal of the ability to transfer an STR permit with the sale of the property to the new owner just like the town of Yucca Valley and town of 29 Palms. The new ordinance will also include a 2 STR permit per entity rule but it does retain the ability to have 2 STR permits on a parcel that is 2 acres and larger. The mandatory 2-night minimum stay was shot down so that's good news too.
I have a client who purchased a property with me in the SoCal high desert (Joshua Tree) and also purchased lakefront in Fox Lakes with a local agent out there and they are doing well in Fox Lakes.
@Kenneth Garrett Hey Kenneth, thank you! I’ll contact Fox Lake and and try to learn more about the special use permit process
@Jason Kudo Hey Jason, that so helpful. I didn't know that about the future of STR in Joshua Tree. I see you're in Pasadena and that's where I work! Do you have the contact of the local agent in Fox Lake and would I be able to reach out?
Quote from @Alex Persons:
@Jason Kudo Hey Jason, that so helpful. I didn't know that about the future of STR in Joshua Tree. I see you're in Pasadena and that's where I work! Do you have the contact of the local agent in Fox Lake and would I be able to reach out?
Hey Alex, yes, my office is in Pasadena and I do work with clients in the San Gabriel Valley; more for primary residence and long-term rental buyers and I have a healthy client base in the high and low deserts too. I'll reach out to my clients and find out who they used in Fox Lake. Reading the above about STRs in Joshua Tree, what are your thoughts on its future?
Hey @Alex Persons! So Fox Lake is a pretty small market. I believe there is something like 30 or so rentals in that market. Doesn't mean its bad or good by any means but it may be riskier for that very reason. Seems like total revenue could be anywhere from 40k to 80k on average depending on the property. Seems like a very seasonal market with the high times during summer of course vs a slow down during the winter.
- I am not investing there but I see some people who are from there being rentals
- I'd recommend try managing it yourself if it's your first one. You'll learn a lot if you do
- I'd say that is too much of a general question. They don't differ much from other areas besides accounting for snow removal and weather considerations that come with weather changes
- Things I'd consider when investing in IL is really just being more clear on what your goals are. and work from your goals instead. After that, talk to the city planning and zoning. You get a lot of information from there. Ask yourself the question of what kind of landlord and tenant laws they have so you know the risk before going into it.
Hope that was helpful Alex
@Jason Kudo Hey Jason, that’s great. Nice to meet someone local! We were still looking for properties in the desert there but couldn’t find one we like or make the numbers work at the moment. Did your client in Fox Lake get back to you? Thank you
@Michael Porche Hey Michael, thanks for your insight! I wasn't sure if the fact that the number of rentals are below triple digits that this is an issue. Good to know it may not be good or bad but may be riskier. And we're comfortable with the seasonality. I heard of investors from the Midwest having a higher CapEx than the sunshine states so glad this isn't an issue! This is very helpful. Thank you!