Do you own a STR in Joshua Tree, Palm Springs or Big Bear Lake?

18 Replies

BPers,

Do you currently own a vacation rental in Joshua Tree, Palm Springs or Big Bear Lake?

If so, I'd love to have you answer the below questions:

1. What are the 3 best things about having your rental property(s) there?

2. What are the 3 worst things about having your rental  property(s) there?

3. If you could start over, would you still invest in this area?

4. If you were me, someone who is looking into these areas what would you suggest as I begin looking the buying process?

Thanks so much!!!

Shawn

       I have a few large homes south of Palm Springs, and we have done extremely well.  With that said, there is a constant threat of a change in regulation, and my Palm Desert property will have it's short term license taken away at the end of 2019 (along with all R1 licenses) if the laws stay as they stand.  My first purchase in the area a 6-plex in Palm Springs they outlawed rentals on a few weeks after I bought it.  Definitely an area where you need an ear to the ground with regards to each cities, and not for the faint of heart!

@John D. thanks so much! REALLY appreciate this info. 

Hope they change the 2019 plans and allow you to continue. 

Onward!

sjw

I own 4 of them now in Big Bear Lake

Best 3 things:

They make a ton of money and are booked at almost 100% occupancy all year.

The real estate isn't that expensive although that is quickly changing

The city ordinances aren't as strict as Palm Springs

Worst 3 things:

Very difficult to find reliable vendors, mainly cleaning service

Local crime is very high

11% transient rental tax on gross income

If I could start over I'd still invest there, it has made a great investment so far, but it has been very stressful. I'd be happy to get you in touch with the right people in Big Bear Lake if you message me directly.

      I can weigh in a bit on Joshua Tree as well.  There has been a HUGE influx of vacation rental homes in the J-Tree area, which has pushed prices and occupancy down over the last year or two.  It went from a market I was very interested in, to one I'm not looking at any more, as a result.  There are however a shortage of event spaces in the area, so a large home on acreage where you created an event space might still get you some solid numbers. 

Thanks so much @Kevin Kelsey ! This info is golden. I'm DMing  you now. 

Appreciate it!

sjw

I have a small condo in Palm Springs that I offer as a vacation rental.

Best:

-It was affordable to purchase relative to the rates I can charge.

-It's an area that I love, and it's easy to sell/market something that you love. I enjoy going there to work on it.

-I bought in a complex with a tight community where I had existing friends/contacts. This gives me vetted, word-of-mouth referrals, and a support network when I am not in town.

Worst:

-The city vacation rental rules and regulations are strict and contentious. My HOA requires a month minimum for rentals, so I am technically a "short term" rental and not a vacation rental: I don't have to follow them. If my HOA relaxes their rules, it would be a lot of work and expense for me to get started as a vacation rental. Due to the overall regulation-happy climate, I worry about future scope creep impacting me. Overall, it influences my investment plans in this area.

-The challenges I have had with guests and contactors happen to everyone, everywhere.

-The closest IKEA is Covina? I can't come up with another negative which I guess is a good thing.

I would definitely still invest in this area. I wish I had done it sooner, but I still think there is room for growth. Palm Springs continues to develop and increase in popularity.

My suggestions:

-Have a plan for the off-season. Tourists do come year round, but it helps to have a couple of other sources for renters.

-Don't totally ignore Craigslist. Posting an ad plus cruising the housing wanted section (and carefully vetting people) has gotten me several good guests. There are a lot of senior tourists/snowbirds in this area who get confused/annoyed with Airbnb - they just want to talk to you and mail you a check.  

-Redecorating your home is basically a competitive sport in Palm Springs: There is a lot of affordable, stylish stuff to be found at the thrift and resale stores.

-Don't be afraid of lease land if the numbers work. A good RE agent will be able to advise you on the rules and caliber of the leases in the area.

 Message me if you want to chat more or some local contact referrals.

THANKS SO MUCH FOR THE DETAIL @Allison V. ! Really appreciate it. 

Have a great day!

sjw

@John D. How much has the market increased in the last 2 years? Do you have any numbers on this?   In regards to your comments on event space.  It seems a wedding venue would be popular, no?

Are there any solid wholesalers in either Joshua Tree or Big Bear; there are a lot of run-down houses in both areas. 

I have a relatively new STR in the coachella valley.

1. What are the 3 best things about having your rental property(s) there

  • High daily rate during peak season
  • Good quality guests w/ few issues: High-net worth families, lots of snowbird, Tennis/Golf enthusiasts, Families 
  • Good knowledgeble cleaning crews with STR turnover experience

2. What are the 3 worst things about having your rental property(s) there?

  • Summer & low seasons means big peaks/valleys on P&L
  • Ever looming concerns around bylaw changes (but that's likely in most markets, right?)

3. If you could start over, would you still invest in this area?

  • Yes

4. If you were me, someone who is looking into these areas what would you suggest as I begin looking the buying process?

  • Run your numbers, Use Airdna as a directional tool for returns potential, but back it up with comps of your own. Look at supply/demand (We opted against JT as @John D mentioned it's highly saturated which pulls down your returns and also costs are skyrocketing making the returns lower - good luck finding the mythical $100k home that isn't a shed any longer)

Best of luck Shawn

@StevieAnn Nance I didn't write down the numbers, so I can't give you exact historicals unfortunately.  I'm not sure if any of the data services out there track inventory or demand over time for a particular city.

Yes I believe a wedding type event space for estate style weddings would do well, and I've been considering a project along those lines.

@John D. No worries.  I can see past values on Zillow & Realtor which show 250% increases over the last 2 years.    

I agree that a desert estate wedding venue would do amazing .

@StevieAnn Nance ah I thought you meant the increase in rentals, not the increase in median price or similar.  Yes prices have definitely shot up, as has short term rental supply.  While demand is definitely increasing the few owners I know up there have said supply is increasing faster.

Shawn

While we no longer own any Vacation Rentals in Big Bear (we used to have 4) I have been selling to investors for the last 12 years here as a Realtor.

1.  Our crime rate is about as low as it gets. With 70% of the homes up here sitting empty during the week there are very few break-ins.

2. We are a 3 1/2 season resort so that you have rentals almost all year long with the right property and amenities.

3.  BB is way ahead of most cities with the city ordinance so as long as you play by their rules and collect the taxes there are no surprises such as the case with PS

Our prices have risen in the last 3 years so great deals are more difficult to find.

@Jim Gordon thanks for the info!

Can you DM me your email address? Would love to get a trip to meet up in B.B. and chat more about STRs there.

Thx!

Shawn

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