STR La Quinta good move?

26 Replies

Seeking input on whether a short term rental in the la Quinta area, specifically PGA West is a good move. While I know the rental would rent I am unsure with the high homeowners association fees and other expenses if the purchase would be profitable with a mortgage with 20% down. I would appreciate any advice, recommendations, or input you have with purchasing 3 beds and 2 bath property in the la Quinta area. Thank you in advance. David

Look at VRBO and Airbnb and see what similar properties in the area rent for and look at how full their calendars are. This should give you and idea on what you can do.

Then put this info in a spreadsheet along with all expenses of running a vacation rental and see if it looks profitable.

You can also look at the parking lots of the nice hotels and try to determine their occupancy.  Nobody does Airbnb in my town.  This town is not a tourist destination by any means.  It's listed by Google as the worst place to live in Kansas.  But people come here to work at a refinery.  Refinery contractors are who I rent my 23 STRs to.  My competition is the hotels/motels.  I look at their parking lots, and that gives me a good idea of the number of contractors in the plant.  I don't count minivans or sedans.  Just jacked up 4x4s with company logos on the side or a big toolbox/genset in the bed.

I would avoid gated communities and HOA's. Often they do not allow STR's in the governing documents - even when the City does allow them. That means you cannot have an STR in those communities, which disallow them. Also, HOA dues are often problematic / prohibitive on cash flow.

There are homeowners that do well in PGA West, and homeowners that lose money month-over-month in PGA West, the type of property, price, quality, furnishings, and management all matter and there's no rule of thumb there.  Plenty of opportunity to make or lose month over month.  Approx. 1/3rd of the 1200+ registered La Quinta vacation rentals are in PGA West according to the last City Council meeting / study session.

I should also mention there appears to be a lot of new inventory in La Quinta, investors have been buying a lot of homes for short-term rentals in the last year or so as La Quinta has gotten a reputation for being short-term rental friendly.  Be prepared to really be on your game, and put out a beautifully remodeled/furnished product, and super competent management team, to compete.  Not as easy as it was a couple of years ago.

Thanks, everyone for responding.  John D - do you know of surrounding areas that are not so saturated and have lower home prices?  I could not get over the high property values in Joshua Tree.

Thanks in advance.

Be really cognizant of the regulations surrounding STR in that area. It sounds like there are some good areas that are STR friendly so be sure to stick with them. Do some research to find out what the expenses will be including mortgage, taxes, HOA fees, lawn care, pool care, STR insurance, cable/internet, utilities, furnishings and replacement costs, etc. Then you can do some research to find out on VRBO or Airbnb what similar properties are bringing in each night and how booked up their calendar is. That should give you a 10,000 ft view of the numbers.

Joshua Tree has been flooded with new vacation rentals at a much faster rate then the La Quinta area!  I mean FLOODED over the last couple years.  Demand has also been rapidly increasing, but the locals are not happy. San Bernardino County has made some changes to the ordinance, and many more are coming, buyer be warned!

@Daniela Sangello

As you described, there are changes to the STR program here in La Quinta coming. What those will be remain to be seen but we should have a better idea what those look like in the next 2 months. A couple changes that are being proposed are density, occupancy changes, increase fines etc. With that said, there is a demand for seasonal, month to month rentals. Due to covid, monthly stays and longer term stays are in demand and we've incorporated that demand in our rental strategy approach. I would think that once things get back to normal, that demand would increase, as La Quinta has become a year round destination.

@Mark Futalan

I saw this thread way too late. Would love to connect with you on your experience operating in La Quinta.  With the council meeting yesterday being a huge disappointment to our community, I'd like to connect with others and see what backup plans we may have.  Thank you!

Jeff, can you give me a summary of the outcome of the council meeting yesterday? Is there an online recording that we can have access to? I've been researching LaQuinta for a while and waiting to see what direction the City was taking. Very interested in knowing more and ear the view of more experienced investors in the area

Hi Daniella, the recording can be found here, and is already posted:

Essentially, they have voted to indefinitely put a stay (essentially a ban) on new short term rental permits for most of the city.  It's tough for many of us who didn't have any proper guidance as we were going through and vetting our purchases.

Hope that helps!

@Daniela Sangello

Hi Daniella. I own 2 STR's in the area and follow what's going on in the city. What Jeff W mentioned is true. The city is considering a permanent "stay" moratorium on any new short term rental permits. I joined a group called VRON-LQ which was founded by STR operators in the area to have a voice within the city. They tried very hard to come up with sensible changes and regulations to the STR program but this decision was more to appease the residents in the area as complaints and demand caused by covid led to all these changes. For now, existing permits are unaffected.

According to the meeting notes, there is already a moratorium on processing new STVR permits in place since August 2020 which lasts until June 2021. Current permits are eligible for renewal but new permits are not being issued and the new motion would put a permanent ban on new STVR permits and this permanent ban would be periodically revisited and reviewed.

Thanks Jason for clarifying as well.  The hard part is the manner of ambiguity they've approached this entire fiasco, so "periodically" is a tough term for a lot of us to digest.

Indeed as Pablo mentioned, it seemed likely this was going to happen.  If anyone needs a good realtor that has a finger on the pulse of each of the cities/counties let me know.

Thanks @John D. and @Pablo Flores .  You guys are probably right.  I may have just completely missed that they were going to go this direction.  Unfortunately I don't think they made it abundantly clear either way.  I feel if anything the city, using the verbiage that they were using, led people on to believe that it was a temporary moratorium to be lifted.

I am planning to buy a home in La Quinta and current home owner has the STR permit. Is the STR transferrable with the home sale? or has to be re-applied? If it has to be reapplied, With the new moratorium in place does that mean that I cannot get it?