Do Joshua Tree Short Term Rentals Actually Make Money?
Investor · San Francisco, CA · Member since 2019 · 58 posts · 35 votes
From afar, It's been wild seeing the price of homes in Joshua Tree absolutely skyrocket in the last few months. Homes are selling for 2-3X their prices in 2019. I started monitoring the area at the end of 2020 and it feels like the prices have doubled since then in about a quarter.
I'm curious for folks with properties there if it's a great market or if it's super competitive and hard to cashflow at today's prices? I remember pre-pandemic people mentioning it was pretty crowded already and hard to standout. That said, the prices still seem reasonable if the market has decent occupancy and pricing year round.
Also, is there any risk of the regulatory hammer coming down on the market from the county or locals? Almost every California city eventually makes running STRs pretty challenging if local residents or second home owners complain about them. La Quinta, Cathedral City, Palm Springs etc have made STRs pretty challenging to varying degrees.
@Rohin Dhar, Joshua Tree and the high desert in general is a hot market. Good, well priced properties are flying off the shelves within a week and most if not all are selling anywhere between 10-25% above list price. Keep in mind that the listed price is just the suggested retail price and is more of a starting place for negotiation than anything else, especially in this market where almost all properties are selling above list price. You have areas like the Western Hills Estates neighborhood of Yucca Valley where there is a lot of new construction going up in the $500k range and most if not all of these are being built to cater to the STR investor and these are being gobbled up.
Are there a lot of STRs in the high desert? Yes. Is there a lot of competition? Absolutely. Have stricter STR regulations been put in place in San Bernardino County recently? Definitely, but I think this has more to do with safety reasons than anything else. Before these regulations, you could buy a 5 acre parcel of land, plop a trailer on it, and call it an STR. No safety inspection of the trailer, no nothing. You can see why some regulations are needed. In general though, Joshua Tree has very few motels/hotels so aside from the camping sites, JT needs STRs to survive the festival seasons, the 3M+ visitors the park sees every year, and the LA hipsters who like JT as a staycation destination. So much so that there is a new glamping site being built near the JT park entrance. Yucca Valley and Twentynine Palms have more hotel/motel options but still the point remains and those looking for the high desert experience are not going to book a hotel/motel aside from maybe the Joshua Tree Inn. Is it possible that SB County will bring the hammer down on STRs in the high desert? Yes of course, but these are risks we have to be willing to take and this possibility holds true no matter where you look.
Aside from the competitive aspect, I think an STRs success is mostly predicated on the owner's ability to establish a niche and cater the marketing and advertising to that niche. The experience is important. The little details are important. Basically, the success of the STR will depend on how the business is run.
@Rohin Dhar, Joshua Tree and the high desert in general is a hot market. Good, well priced properties are flying off the shelves within a week and most if not all are selling anywhere between 10-25% above list price. Keep in mind that the listed price is just the suggested retail price and is more of a starting place for negotiation than anything else, especially in this market where almost all properties are selling above list price. You have areas like the Western Hills Estates neighborhood of Yucca Valley where there is a lot of new construction going up in the $500k range and most if not all of these are being built to cater to the STR investor and these are being gobbled up.
Are there a lot of STRs in the high desert? Yes. Is there a lot of competition? Absolutely. Have stricter STR regulations been put in place in San Bernardino County recently? Definitely, but I think this has more to do with safety reasons than anything else. Before these regulations, you could buy a 5 acre parcel of land, plop a trailer on it, and call it an STR. No safety inspection of the trailer, no nothing. You can see why some regulations are needed. In general though, Joshua Tree has very few motels/hotels so aside from the camping sites, JT needs STRs to survive the festival seasons, the 3M+ visitors the park sees every year, and the LA hipsters who like JT as a staycation destination. So much so that there is a new glamping site being built near the JT park entrance. Yucca Valley and Twentynine Palms have more hotel/motel options but still the point remains and those looking for the high desert experience are not going to book a hotel/motel aside from maybe the Joshua Tree Inn. Is it possible that SB County will bring the hammer down on STRs in the high desert? Yes of course, but these are risks we have to be willing to take and this possibility holds true no matter where you look.
Aside from the competitive aspect, I think an STRs success is mostly predicated on the owner's ability to establish a niche and cater the marketing and advertising to that niche. The experience is important. The little details are important. Basically, the success of the STR will depend on how the business is run.
Thanks for chiming in @Bryant Brislin and @Jason Kudo! I'm curious if this is the kind of market where a well run 1-bedroom cottage can hit 90% occupancy (in non-covid times) or if that's a pipe dream given the shoulder seasons and market dynamics?
If i remember pre-covid when i ran the numbers it looked like most places in JT were 60% occupied, but this year looks more like 80%+ on average because of staycations from LA!
@Rohin Dhar, so the community of Joshua Tree has had a massive uptick in interest in the last five years. During COVID, one of the high end property management companies in town is seeing an average of 92% occupancy and prior to COVID, an average of 76%. Location plays an important part as well as properties that are on acreage with boulders on the land and hiking trails nearby. Aside from location, design is going to play an important factor.
Before COVID, 60% of the occupants were LA-area based. The 40% came from Oregon, Washington, Canada, New York, and London of all places. During COVID with the travel restrictions, 90% are coming from the LA area.
Once the "covid fever" dies down in the high desert, the properties that will most likely take the smallest hit in occupancy rate will be the exceptional properties on the higher end that stand out from the crowd.
If you're looking for 90% occupancy which is exceptional, you're going to have to make an investment in an exceptional property and the price range for these properties is no less than $500k because you are either going to need a property that is close to the park entrance (Monument Manor, Upper Friendly Hills, and Panorama Heights which has hiking trails that head straight into the park) or a large parcel of land with interesting landscaping (boulders being the most popular) and these properties are generally priced in the $500k+ range.
@Jason Kudo thanks for the insight! I just started monitoring the market so I'm thinking about it.
@Rohin Dhar, there are a lot of nuances to be aware of in the high desert so feel free to reach out if you have further questions, concerns, etc.
@Jason Kudo do you mind if I reach out with some questions related to JT? Thinking about getting into the market there as well.
@Jason Kudo do you mind if I reach out with some questions related to JT? Thinking about getting into the market there as well.
Please feel free!
There is lots of great info here on BP, and I'm happy to provide any advice I can as well - I'm deep into the process of finding the answer to this question myself, as I've just opened escrow on a property in the unincorporated (county) area of northern Yucca Valley after searching since last October. In my opinion, and echoing the sentiments expressed here, this is an area with solid, predictable, consistent tourist traffic and limited "traditional" lodging opportunities, which is a good environment for STRs - but the market is quite competitive, and a top-notch experience and some sort of hook or "niche" will be necessary to keep your property at higher occupancy.
Judging from metrics provided by AirDNA (do not rely on AirDNA or Mashvisor alone) combined with talking with STR owners, realtors, the county, and watching trends myself over the past nine months, it is clear that - at least right now - occupancy can easily reach the 90s for the right property, but that is by no means guaranteed. In October, I will reach 12 months of experience with my Lake Arrowhead property as well, and there have definitely been highs and lows (in terms of occupancy and in terms of "the experience"). @Brad Clarke and anybody else looking for info - I'm happy to share anything I've learned on both of these journeys so we can all make the most informed gambles possible.
@Jason Kudo - I could definitely use some recommendations of reputable cleaning and handyman resources in the area, if you happen to have any? I've learned the same on the mountain - good help can be hard (borderline impossible) to find.
There is lots of great info here on BP, and I'm happy to provide any advice I can as well - I'm deep into the process of finding the answer to this question myself, as I've just opened escrow on a property in the unincorporated (county) area of northern Yucca Valley after searching since last October. In my opinion, and echoing the sentiments expressed here, this is an area with solid, predictable, consistent tourist traffic and limited "traditional" lodging opportunities, which is a good environment for STRs - but the market is quite competitive, and a top-notch experience and some sort of hook or "niche" will be necessary to keep your property at higher occupancy.
Judging from metrics provided by AirDNA (do not rely on AirDNA or Mashvisor alone) combined with talking with STR owners, realtors, the county, and watching trends myself over the past nine months, it is clear that - at least right now - occupancy can easily reach the 90s for the right property, but that is by no means guaranteed. In October, I will reach 12 months of experience with my Lake Arrowhead property as well, and there have definitely been highs and lows (in terms of occupancy and in terms of "the experience"). @Brad Clarke and anybody else looking for info - I'm happy to share anything I've learned on both of these journeys so we can all make the most informed gambles possible.
@Jason Kudo - I could definitely use some recommendations of reputable cleaning and handyman resources in the area, if you happen to have any? I've learned the same on the mountain - good help can be hard (borderline impossible) to find.
Hey David, I'd love to learn about your experience with STRs in Lake Arrowhead. Is your property in The Woods? If so, how has your occupancy rate been affected by not being allowed to let guests enjoy the lake? My partners and I are in escrow on a cute little desert cabin on 5 acres in Yucca Valley town limits that we will use as an STR and yes, the numbers pan out and we will make money even after the occupancy rate settles back down to pre-pandemic levels. The overall STR market is trending upwards and there has more demand for STRs in general year over year and I do not see this trend going away anytime soon. The share economy is still a novel idea and only gaining momentum.
@Jason Kudo I'm not in the Woods, and I went into the endeavor recognizing that we wouldn't have lake rights (partially due to knowing ahead of time that the lake rights likely wouldn't be available to guests anyway). Winter and spring was booked solid every weekend from October through March, but I've had very low occupancy this summer (as I expected), and don't really expect it to pick up until September at the earliest; I've done virtually no marketing yet, though (I've been focused on getting another property in motion somewhere while I can!), and hope that I can goose the numbers a bit next summer with a bit of elbow grease. I expect year one to show a small profit, and some management efficiencies and marketing should boost that next year. Hopefully.
@Jason Kudo I'm not in the Woods, and I went into the endeavor recognizing that we wouldn't have lake rights (partially due to knowing ahead of time that the lake rights likely wouldn't be available to guests anyway). Winter and spring was booked solid every weekend from October through March, but I've had very low occupancy this summer (as I expected), and don't really expect it to pick up until September at the earliest; I've done virtually no marketing yet, though (I've been focused on getting another property in motion somewhere while I can!), and hope that I can goose the numbers a bit next summer with a bit of elbow grease. I expect year one to show a small profit, and some management efficiencies and marketing should boost that next year. Hopefully.
That's good to know. Thank you. I wonder if STR properties with lake rights will be allowed to extend lake access privileges to guests. I think eventually yes, but only once the backlash from the pandemic parties die down.
Thanks for all of the wonderful insight @Jason Kudo and @David Brooks! My wife and I bought a property in Yucca and are looking in 29 palms but everything is either getting snatched up very quickly or not worth it in our opinions (No easy access & bad conditions). Have you guys had any experience with areas further out? Landers, flamingo heights, etc?
Thanks for all of the wonderful insight @Jason Kudo and @David Brooks! My wife and I bought a property in Yucca and are looking in 29 palms but everything is either getting snatched up very quickly or not worth it in our opinions (No easy access & bad conditions). Have you guys had any experience with areas further out? Landers, flamingo heights, etc?
Hi Peter, properties in Landers and Flamingo Heights do well too. You'll probably attract guests looking for that feeling of complete isolation where you can hear for miles rather than guests looking to be close to where all the action is and the price points, in general, have lower barriers of entry than in Yucca Valley and JT.
Hi guys,
First of all, thanks a lot for the information - this is super helpful. I'm also monitoring the market, and I was curious to hear your opinion regarding what could be a conservative occupancy rate for an above average (but not exceptional) property in Joshua Tree. For example, a nicely designed single family home with 3 bed / 2 bath in Twentynine Palms with some desirable amenities (e.g. hot tub). Is it reasonable to expect a 50% average occupancy rate? Or would you say it could be higher?
Thanks so much,
Romain
Hi guys,
First of all, thanks a lot for the information - this is super helpful. I'm also monitoring the market, and I was curious to hear your opinion regarding what could be a conservative occupancy rate for an above average (but not exceptional) property in Joshua Tree. For example, a nicely designed single family home with 3 bed / 2 bath in Twentynine Palms with some desirable amenities (e.g. hot tub). Is it reasonable to expect a 50% average occupancy rate? Or would you say it could be higher?
Thanks so much,
Romain
Hi Romaine, the average occupancy of all properties in Twentynine Palms on AirBnb is currently 61% so 50% would be a conservative occupancy rate.
@Eric SyCip can you elaborate on what you found on the STR market in Vegas. Currently looking into that and appreciate any insight and advice you may have.
Thank you
@Eric SyCip there are guests who like being walkable or a short drive to the downtown/heart of the village, and that usually goes hand-in-hand with a more affordable rate per night. And there are guests who really want to be in the middle of nowhere, and that usually goes hand-in-hand with a more expense rate per night. There is a water district there. All of the houses in town are connected to the water main. Even some of the houses in the more farther out neighborhoods are connected to the water main. Some of them have their own wells. Some, I believe, have water hauled to their on-site tank, although I've heard the county isn't allowing that for new houses. If you were looking at a parcel to buy, to build a new home, that doesn't have a water meter, then you can contact the water district to find out how far aware the nearest connection is and then assess the cost of running water to your site. We had one that is about 1,500 feet away and we estimated about 100k to do that. If you are building a house that may be worth 500k+ and you only paid 25-50k approx for your land parcel, then that could be worth it. Also, you could maybe see if any neighboring land parcel owners would chip in for the cost of water being brought to their street.
Hi everyone! I'm new to the Joshua Tree market and wanted to know if anyone thinks the market is too saturated for STRs, primarily in twentynine palms area. The year lease income doesn't justify the housing market but the STR potential definitely does. I've spoken to a couple of people, realtors mostly, who say it would be difficult to break into now considering the housing prices.
Is anyone seeing a decrease in their occupancy or their nightly rate outside of seasonal changes or anticipate it within the next 12 months? Feeling frustrated but also thinking deep down that the influx of travelers and weekenders to JT won't slow down anytime soon. I plan on reaching out to a couple property management companies as well so if anyone has any recommendations please let me know!