Palm Springs Vacation Rental Management

Short-Term & Vacation Rental Discussions

Palm Springs Vacation Rental Management

Member since 2020 · 6 posts · 5 votes

I am closing this week on my first property, which I will use for short term rentals in Palm Springs. I have done pretty extensive research on what to expect with city regulations and have used a lot of online tools to project returns. But I haven't been able to find much conversation in forums about owners' experience with property management companies. Does anyone have any advice on which property management company to use in Palm Springs?

- The property already has a housekeeper, pool maintenance guy, gardener and handyman who know the home. Is it really worth paying a 25%+ fee for things like marketing, guest checkins and noise control? I live in NY and want the property to run on autopilot as much as possible, so peace of mind is important to me.

- It's a large 4 bed/4bath home on a golf course with a pool in one of the best neighborhoods, so I also want to protect my investment and make sure that it isn't being used for huge parties. Will a smaller boutique management company offer more value, or will I end just up dealing with more issues remotely?

Thank you in advance for any insights.

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Ken Latchers

Hatfield, PA · Member since 2012 · 1k+ posts · 629 votes

It only sounds valuable because you do not understand the reality of good self management. Property managers are little more than leeches on your Revenue. You sound impressive because you do not understand what you need to do to succeed. Which is:

1) read this forum thoroughly
2) Get on ALL the real booking sites: booking.dom, airbnb, FlipKey, vrbo.
3) subscribe to a good pms like smoobu or ownerreservations.com to manage those
4) use a dynamic pricer like pricelabs or beyond pricing. 3) can work that in also
5) use the website feature in 3) to easily make your own website to capture direct bookings.
6) do automation like smartlocks
7) get good cleaners and handyman

Originally posted by @Mike G.:

@John Underwood The real benefit of the property management companies (as far as I can tell) is marketing across a wide network of different vacation rental hosting sites in addition to VRBO and AirBNB. One company that I'm interviewing gets 40% of their booking directly from repeat travelers. So I'm willing to pay the management fee if a company were to bring in an extra $30-40K in rentals per year. Just hard to know if the marketing really brings in more renters.

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Justin Kofron
Specialist · Member since 2019 · 7 posts · 0 votes
6y
Mike, will you be visiting the property at all to close? My suggestion would be to try and talk to the neighbors and ask them if they recommend PMCs. Does the property have a Facebook group or NextDoor page? These would also be great resources to ask questions about PMCs. Regarding your question about whether you need a property manager. My advice would be to try it on your own for a few months and see how it goes. If things are going slow you can always hire a PMC then and hopefully, they can provide a nice boost. A benefit of a PMC is you are also paying for their experience and knowledge of the area.
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John UnderwoodPro Member
Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
6y
You already have a support staff, why give up 25% or more of your GROSS income?
The cleaners and other support staff are doing all the work. You can easily remotely manage the property using the Vrbo / Airbnb tools.
3 Reply
Paul Sandhu
Investor · The worst town to live in, KS · Member since 2016 · 4k+ posts · 4k+ votes
6y
I know this Radio Personality that remotely manages his STRs with an iPhone from a yacht while hanging out with hair bands. It's the King of Jack and Cola, Rev @Luke Carl. He should be along shortly.
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Mike G.
OP
Member since 2020 · 6 posts · 5 votes
6y
@Justin Kofron thanks for the reply. I've been in Palm Springs for the last few weeks talking to as many people as possible about the STR industry here. A lot of the other owners use concierge companies that do smaller individual tasks, rather than 100% management.Good advice to try it myself, and then move to a management company if need be.
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Mike G.
OP
Member since 2020 · 6 posts · 5 votes
6y
@John Underwood The real benefit of the property management companies (as far as I can tell) is marketing across a wide network of different vacation rental hosting sites in addition to VRBO and AirBNB. One company that I'm interviewing gets 40% of their booking directly from repeat travelers. So I'm willing to pay the management fee if a company were to bring in an extra $30-40K in rentals per year. Just hard to know if the marketing really brings in more renters.
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Mark Miles
Rental Property Investor · Philadelphia, PA · Member since 2016 · 542 posts · 715 votes
6y
Originally posted by @Mike G.:
I am closing this week on my first property, which I will use for short term rentals in Palm Springs. I have done pretty extensive research on what to expect with city regulations and have used a lot of online tools to project returns. But I haven't been able to find much conversation in forums about owners' experience with property management companies. Does anyone have any advice on which property management company to use in Palm Springs?
- The property already has a housekeeper, pool maintenance guy, gardener and handyman who know the home. Is it really worth paying a 25%+ fee for things like marketing, guest checkins and noise control? I live in NY and want the property to run on autopilot as much as possible, so peace of mind is important to me.
- It's a large 4 bed/4bath home on a golf course with a pool in one of the best neighborhoods, so I also want to protect my investment and make sure that it isn't being used for huge parties. Will a smaller boutique management company offer more value, or will I end just up dealing with more issues remotely?
Thank you in advance for any insights.
STR Property managers are simply schedulers. Don't let a scheduler take your profits. Either self-manage like many on here do, or hire an inexpensive offshore PM who works US hours & speaks eloquent English (that's what I do). Mine can set door codes, message (or call) guests, schedule cleaners, adjust the thermostat, monitor my cameras, & call a plumber just as easily as a local PM can, for 1% of the cost

Hire good cleaners, a solid handyman & befriend some helpful neighbors. Save your money on PMs & pay these people well instead. Call me crazy, but I prefer to spend my money on people who will actually see the inside of my houses, not a scheduler
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Mike G.
OP
Member since 2020 · 6 posts · 5 votes
6y
@Mark Miles the property management companies here do 2 inspections of the property. The city requires a representative to be present to check in guests and take drivers licenses. And there's and multi-point inspection list once the guests have checked out.

Palm Springs is heavily regulated, but also has the potential for big returns. So I'm really curious if anyone has self-managed for Palm Springs.
1 Reply
Mark Miles
Rental Property Investor · Philadelphia, PA · Member since 2016 · 542 posts · 715 votes
6y
Originally posted by @Mike G.:
@Mark Miles the property management companies here do 2 inspections of the property. The city requires a representative to be present to check in guests and take drivers licenses. And there's and multi-point inspection list once the guests have checked out.

Palm Springs is heavily regulated, but also has the potential for big returns. So I'm really curious if anyone has self-managed for Palm Springs.

I have people who handle check in and check out in-person at some of my properties as well. I throw them a few bucks here and there, definitely nowhere near 25% of gross income
0 Reply
Andrew Geisler
Rental Property Investor · Kissimmee Fl · Member since 2015 · 11 posts · 2 votes
6y
I have a place in La Quinta (close to Palm Springs). There is no way a private PM company is adding 30-40% additional bookings. I think that is just untrue. You will get repeat renters on your own (I have several times). In fact the personal attention YOU pay to your property by self-managing the bookings imo will generate many more bookings than what a PM company can deliver. Answer your messages on the AirBnB app promptly, get back to people and sometimes negotiate a bit and your place will fill up and out-compete the houses run by large PM companies. Also fyi I use an independent cleaner and local contact that can check on the property for a flat fee.
1 Reply
Ken Latchers
Hatfield, PA · Member since 2012 · 1k+ posts · 629 votes
6y
It only sounds valuable because you do not understand the reality of good self management. Property managers are little more than leeches on your Revenue. You sound impressive because you do not understand what you need to do to succeed. Which is:
1) read this forum thoroughly
2) Get on ALL the real booking sites: booking.dom, airbnb, FlipKey, vrbo.
3) subscribe to a good pms like smoobu or ownerreservations.com to manage those
4) use a dynamic pricer like pricelabs or beyond pricing. 3) can work that in also
5) use the website feature in 3) to easily make your own website to capture direct bookings.
6) do automation like smartlocks
7) get good cleaners and handyman

Originally posted by @Mike G.:
@John Underwood The real benefit of the property management companies (as far as I can tell) is marketing across a wide network of different vacation rental hosting sites in addition to VRBO and AirBNB. One company that I'm interviewing gets 40% of their booking directly from repeat travelers. So I'm willing to pay the management fee if a company were to bring in an extra $30-40K in rentals per year. Just hard to know if the marketing really brings in more renters.

3 Reply
Jean Taveras
Property Manager · Palm Beach Gardens, FL · Member since 2015 · 111 posts · 27 votes
6y
@Mike G. Hey Mike, you should check us out. Ayvio.com we also have a calculator you can use on your property to give you an estimate on how much you can earn with our approach. Congrats on the acquisition! It will be awesome.
0 Reply
David M Trapani
Rental Property Investor · Franklin, TN · Member since 2019 · 160 posts · 125 votes
6y
Hi Mike,

Have a successful Palm Springs sfh str last 2 years or so.

As mentioned, among other rules, PS requires you (or your representative) meet each guest to review rules, etc.

As you are remote (as am I), you’ll need someone to handle that for you.

Luckily, I “inherited” the folks providing this service from my sellers. My folks also do the cleaning, maintenance, etc.

It’s not 25% but maybe around 10%-15% depending on the season. Pass this cost along to your guests -so it’s a wash.

STR demand is tremendous (and growing) in PS. So far it's well worth it. Plus, Properties tend to appreciate nicely & it's not a bad place to visit / vacation.

Happy to refer my folks if you like. They’re quite busy, but depending on your property location and if you match up it could work. Alternately, they may know someone who can handle it for you.

Cheers & good luck.

David

2 Reply
Mike G.
OP
Member since 2020 · 6 posts · 5 votes
6y
@David M Trapani Thank you for the reply, and good to hear from someone familiar with the quirks of Palm Springs. I am able to inherit a lot of the maintenance team, but will need someone do do the in-person guest checkins and respond to any noise complaints. I'll reach out to you directly to hear who you use. Much appreciated!
1 Reply
Tom Kastorff
Rental Property Investor · Las Vegas, NV · Member since 2014 · 137 posts · 118 votes
6y
Great thread @Mike G., would love to chat with you offline sometime to exchange research. I've also spent the last month heavily investing in this market. Taken a couple swings, and heading up this weekend to look at another prop.

I think it would be real tough, especially remote 3000mi, to fully automate and manage a big SFH STR without a full service PM, but for the cost, it might be worth trying to go without. My math has found it tough to be profitable with 30% fees, but @John D. makes it work with much larger properties and I assume a fully built out team that costs him much less. If you can find the right balance, there is definitely opportunity here.

I've had several conversations with the City Ordinance guy and he admits "Palm Springs vacation rental ordinance is the strictest in the nation. The current ordinance requires in person contact." So, every investor has to understand that coming into PS.

The rules state: "Someone must meet your guests within 24 hours upon the guests arrival in person. There is a Rules & Regulations form all guests must sign and only a copy of the primary responsible party renting the property is to supply a government issued ID and these items must be available if a Code Enforcement official is called via Hotline call to the property. Any properties for long term rentals (29+ consecutive days) does not fall under the short term vacation rental ordinance. There have been a handful of $5,000.00 citations for condo owners operating without a registration." They police Airbnb and try to make fake reservations to catch people.

More:"for rentals that are 28 consecutive days or less they are considered short term rentals, which require a Vacation Rental Registration Certificate and TOT permit. Short term rentals are only for single family residences or condos."

The Cert is $944 per year, every year. Eats into profit. The TOT taxes are like 12% and if you don't properly add that to your listings and have the customer pay, will eat big time into your revenues.

More: "Long term rentals are rentals that are 29 consecutive days or longer and they require no registration with the City. There are no rental requirements or regulations for long term rentals. For long term rentals you can use single family residences, condos and multi family dwellings."

This is the likely route I am going, self-manage an LTR, albeit tougher for 29+ days rentals than nightly, but has none of the hassles with permits, TOT taxes, no requirement to meet every guest every time, etc. If I found a SFH I really liked, I would consider it for STR, but the math really has to work given all the requirements PS has put in place.

Would love to hear your ongoing thoughts on whether you go with a PM, and how your current relationships with housekeeper, pool, gardener, and handyman work out. I am going to start amassing my own list of these contacts very soon. I have one PM referral I can send your way, they are 25% boutique level. I would call at least a half dozen if I were you, and ask them to send you statements from properties that are in like kind to yours, they should easily be able to do that. Let me know.
3 Reply
Justin Kofron
Specialist · Member since 2019 · 7 posts · 0 votes
6y
Originally posted by @Tom Kastorff:
Great thread @Mike G., would love to chat with you offline sometime to exchange research. I've also spent the last month heavily investing in this market. Taken a couple swings, and heading up this weekend to look at another prop.

I think it would be real tough, especially remote 3000mi, to fully automate and manage a big SFH STR without a full service PM, but for the cost, it might be worth trying to go without. My math has found it tough to be profitable with 30% fees, but @John D. makes it work with much larger properties and I assume a fully built out team that costs him much less. If you can find the right balance, there is definitely opportunity here.

I've had several conversations with the City Ordinance guy and he admits "Palm Springs vacation rental ordinance is the strictest in the nation. The current ordinance requires in person contact." So, every investor has to understand that coming into PS.

The rules state: "Someone must meet your guests within 24 hours upon the guests arrival in person. There is a Rules & Regulations form all guests must sign and only a copy of the primary responsible party renting the property is to supply a government issued ID and these items must be available if a Code Enforcement official is called via Hotline call to the property. Any properties for long term rentals (29+ consecutive days) does not fall under the short term vacation rental ordinance. There have been a handful of $5,000.00 citations for condo owners operating without a registration." They police Airbnb and try to make fake reservations to catch people.

More:"for rentals that are 28 consecutive days or less they are considered short term rentals, which require a Vacation Rental Registration Certificate and TOT permit. Short term rentals are only for single family residences or condos."

The Cert is $944 per year, every year. Eats into profit. The TOT taxes are like 12% and if you don't properly add that to your listings and have the customer pay, will eat big time into your revenues.

More: "Long term rentals are rentals that are 29 consecutive days or longer and they require no registration with the City. There are no rental requirements or regulations for long term rentals. For long term rentals you can use single family residences, condos and multi family dwellings."

This is the likely route I am going, self-manage an LTR, albeit tougher for 29+ days rentals than nightly, but has none of the hassles with permits, TOT taxes, no requirement to meet every guest every time, etc. If I found a SFH I really liked, I would consider it for STR, but the math really has to work given all the requirements PS has put in place.

Would love to hear your ongoing thoughts on whether you go with a PM, and how your current relationships with housekeeper, pool, gardener, and handyman work out. I am going to start amassing my own list of these contacts very soon. I have one PM referral I can send your way, they are 25% boutique level. I would call at least a half dozen if I were you, and ask them to send you statements from properties that are in like kind to yours, they should easily be able to do that. Let me know.

Those are some strict rules. Thank you for the good info TJ.

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Collin HaysBusiness Member
Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
6y
Whether you want to use a PM is really about whether you want a part time job. If you are going to manage your own STR, it's a part time job.
I own a PM, yet I encourage folks to self manage for maximum returns. On the other hand, most of our clients have previously self-managed. We usually far outperform their results, simply because we have the time to respond to inquiries, questions, and calls for repairs within an hour.
If you are not quick to respond as a self manager, then you are likely giving up far more in lost rents than what you are keeping in saved management fees.
And if a PM is charging 25%, you aren’t saving all of that 25% to self manage. You are going to give up at least 3 points for Airbnb commission. If you advertise on VRBO you’ll be giving up a minimum of $599 a year for that. And the CC fees charged by Airbnb and VRBO are atrocious.
So your savings is probably more like 18-20 percent to self manage. If that amount is worth your extra time and you are committed to being available for fast responses, you should go that route.
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John D.
Rental Property Investor · La Quinta, CA · Member since 2014 · 1k+ posts · 779 votes
6y
Definitely no "rule of thumb" as to whether one should or should not hire property management. If you have a $500k a year job, and one small vacation rental, management is something you should probably outsource. If your time isn't worth quite as much, you have a potentially high earning property, and your time and personality lend themselves well to the tasks required (always on call and responsive, comfortable interacting with people and building a network of service providers, able to handle the basics of marketing) definitely consider self-managing.

Be aware though that your time is worth money, and running a property management service for yourself isn't for everyone!

I don't have anything in PS proper so won't speculate as to how much harder it may be to manage in Palm Springs, versus the areas I operate in.

If anyone ever has specific questions, I'm just a PM or phone call away!
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Collin HaysBusiness Member
Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
6y
Originally posted by @John D.:
  Definitely no "rule of thumb" as to whether one should or should not hire property management. If you have a $500k a year job, and one small vacation rental, management is something you should probably outsource. If your time isn't worth quite as much, you have a potentially high earning property, and your time and personality lend themselves well to the tasks required (always on call and responsive, comfortable interacting with people and building a network of service providers, able to handle the basics of marketing) definitely consider self-managing.

Be aware though that your time is worth money, and running a property management service for yourself isn't for everyone!

I don't have anything in PS proper so won't speculate as to how much harder it may be to manage in Palm Springs, versus the areas I operate in.

If anyone ever has specific questions, I'm just a PM or phone call away!

I agree. It all depends on what your time is worth.  I used to change my own oil and mow my lawn, as well as iron my own dress shirts. There is certainly extra yield in self-managing, although I think it is overstated.
Today, I spoke on the phone with a gentleman from Miami FL about his cabin in Gatlinburg. It's 2700 square feet and sleeps 8, and quite luxurious. He has been self-managing for several years and he said he didn't want to give up 25% of his proceeds. But as it turns out, his cabin is only yielding about $31,000 a year, about half of what it should. He said he had zero nights rented in January or February. I said "tell you what, would you rather pay me $15,000 to manage it and put $45,000 in your bank account, or would you prefer to keep making your $31K on your own?
Easy decision for him. I have no idea why his cabin is under-performing - he may have it priced too high, he may be slow in responding, the name may be a poor one - any number of things. But he's not managing it as it should. Every now and then, we have a homeowner client calling in to express concern over "how cheap" or "how expensive" their rental rate is online, or some other operational concern. I tell them "Look...this is all that we do. We've rented cabins for 10 years now and know what works and what doesn't. Relax and let us do our job."
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Josh Quinn
Member since 2019 · 11 posts · 10 votes
6y
@Mike G. or anyone else that would be willing to share your Palm Springs knowledge I would be really appreciative. Actually typing this from the rental we've been in the last two weeks. I was actively searching for single family rentals and possibly a vacation rental in a nearby resort town in Columbus, OH but I feel like the cashflow and appreciation potential is way higher here. Plus it would be something my family would actually use a couple of times per year. I am curious how many blind spots there are in my projections based on not really knowing what services and taxes will cost in this market vs. my own. Hope everything is going well for you so far!
1 Reply
Remington LymanBusiness Member
Real Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
6y
Originally posted by @Josh Quinn:
@Mike G. or anyone else that would be willing to share your Palm Springs knowledge I would be really appreciative. Actually typing this from the rental we've been in the last two weeks. I was actively searching for single family rentals and possibly a vacation rental in a nearby resort town in Columbus, OH but I feel like the cashflow and appreciation potential is way higher here. Plus it would be something my family would actually use a couple of times per year. I am curious how many blind spots there are in my projections based on not really knowing what services and taxes will cost in this market vs. my own. Hope everything is going well for you so far!

Which resort town?
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John D.
Rental Property Investor · La Quinta, CA · Member since 2014 · 1k+ posts · 779 votes
6y
@Josh Quinn any specific questions?

@Adam Gilbert care to add any thoughts?
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Mike G.
OP
Member since 2020 · 6 posts · 5 votes
6y
@Josh Quinn for the 4br/4 bath SFH I'm purchasing, the property management company has given me a projected range of $90-$135K gross annually for STRs. When I use rental income calculator, with the most conservative estimates and every expense I can foresee, I expect a small monthly return. I plan to hold the property, and rent for many years, so the month-to-month return is less important to me than the 20 year return. Plus the tax benefits make it worthwhile to me.

I have a high salary, high stress full time job on the opposite coast. So I ultimately decided the property management fees were worth it to me for peace of mind. This is my first rental property, so I'm positive I'm making mistakes. But I also know that I'll be able to optimize over time.
1 Reply
Adam Gilbert
Realtor · Palm Springs, CA · Member since 2012 · 4 posts · 7 votes
6y
@Josh Quinn Happy to answer any questions. Especially concerning potential blind spots regarding the market in Palm Springs/Coachella Vallye
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Josh Quinn
Member since 2019 · 11 posts · 10 votes
6y

@Adam Gilbert @Mike G. @John D.

I'd like to be down in the Twin Palms area. The wind is a bit of a concern, but more so is the impact of what one sees when they look out their front door. Taking walks around those neighborhoods and having virtually every single house be perfect is a big selling point. However I am worried it's going to be too difficult to get in there in a way that cashflows at this point. I don't think I'd go over 500k and fear I missed the boat. I see some advantages of some of the northern neighborhoods from an appreciation standpoint and being closer to stuff. For people like me traveling with the kids, it's less of an issue as we just want to be at the house around the pool but I could see younger people valuing being more in walking distance to downtown.
I'd be curious if there are any weird California tax things that might impact out of state investors. It seems like a logical instrument they would use to try and get a handle on out of reach real estate prices for residents.
If any neighborhood associations have any sort of rules on maximum number of vacation rentals, if they'd have any sort of control over that. I know I saw some signs in our area that weren't super favorable to vacation rentals so I'd be a little concerned the neighborhood associations in masse could do something. Furthermore I feel like the sheer number of vacation rentals has likely been a large part of the surge in pricing over the past five years and wonder what would happen to my property value (and theirs) if they were to succeed in any action against vacation rentals.
If anyone has an average monthly amount to throw into my spreadsheet for Gardner and pool maintenance I'd love to know that too!
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Adam Gilbert
Realtor · Palm Springs, CA · Member since 2012 · 4 posts · 7 votes
6y
@Josh Quinn Twin Palms is a great neighborhood full of awesome midcentury's and walking distance to amenities: hotels, restaurants etc. Twin Palms is South enough not to be concerned about wind but at your price point getting something in Twin Palms is going be a fixer and not VR ready. North end is where you are going to need to be at that price point and try to count on cash flow + appreciation.
I am not an accountant but California will always try and grab funds earned in the state so I would definitely talk to a local accountant about that. I can send you some referrals.
You will definitely want to avoid any HOA but the issue of VR's has been well settled in Palm Springs with a vacation rental ban being voted down in 2018 by a 70/30 margin. I can explain in more detail if need be.
Gardner and pool man is dependent on property (type of plants and lawn) and size but plug in $150 a month for each service and you should be good.
By way of background I am an attorney by trade now acting as a broker and I managed 35+ vacation rentals at any given time before selling my vacation rental management company to Turnkey in 2018 to concentrate on brokerage specifically for vacation rental and commercial properties.
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