Hi BP Community!
It's been a while and hope everyone is staying safe and healthy during this time.
My wife and I are contemplating getting into STRs and are looking at the Palm Springs/Indio, CA markets. Perhaps even Joshua Tree. With the hot real estate market, we're wondering what your experience has been like in purchasing SFHs and still making the numbers work. I understand that what works for some may not work for others, but just want to get a general state of the market out there.
We also understand that STRs are not like LTRs and require more work, which we are more than willing to do. As long as we get the systems and processes in place, things will be a lot more automated and "less involved" down the road. How have you been handling bookings (AirBnB, VRBO, both/other)? Also what apps do you find most helpful?
Also what range of expenses are we typically looking at in these markets? 30-60% depending on how you furnish/decorate and what amenities you offer?
Would appreciate any feedback at all and thank you in advance!
The competition to buy in Palm Springs is brutal, prices are WAY up and inventory is super tight. Indio you may still find something that will some elbow grease does well among some more modest neighborhoods. Not sure what you meant by "30%-60%".
Updated 18 days ago
*apologies for the mis-sentencing, hope you get the gist. I own two properties in Indio and others in greater Palm Springs area.
@William Kim , here's my perspective as an agent who sells in Joshua Tree CDP and the surrounding high desert to clients exclusively looking to get into the STR game. Let me preface this by saying the type of property you're looking for will depend on what kind of return you want. Do you want to net out even, get a little cash flow, or a big return?
In the high desert, higher-end properties do better than lower and middle tier properties with the higher end being in the $500k+ range which is a friendlier entry point than Indio and Palm Springs. Location is important. The most desired properties are within walking distance to a park entrance so neighborhoods like Monument Manor, Upper Friendly Hills, Panorama Heights, Indian Cove (Twentynine Palms), etc. The indoor experience and outdoor experience on the property must be equally present. Joshua Tree shops/restaurants shut down pretty early so a good majority of the time will be spent on the property. Fire pits, cowboy tubs, hot tubs, horse shoes, a nice telescope, pool, etc. Indoor-wise, you want to have board games, puzzles, a pool table, shuffle board, etc. The high desert has a couple excellent full-service property management companies that will take care of everything from bookings, cleanings, and general maintenance including materials and labor but the PMCs I'm thinking of are also very selective about which properties they will take on. In San Bernardino County, in order to operate an STR, the owner or representative of the owner must be no farther than a one hour away from the property.
Regarding the market, the high desert is severely impacted inventory-wise and the lure of "cheap" properties with high ROIs is attractive so the competition is high. I have seen the fever die down a little bit but good, well-priced properties are still be flocked to and commanding over-list prices. In the long run, the properties that will survive after the "pandemic fever bookings" level out will most likely be the higher end properties. These days, the success of a vacation is determined by instagram likes and the higher end properties are generally more photogenic than the average and lower tier ones.
In Palm Springs, I am less versed but I've researched enough for my own investment knowledge and I think you really want to spend no less than $700-800k if you want to stand out and get consistent bookings and you're going to want to look for bed/bath counts of 4/3 and above or a knockout 2/2 or 2/3. 3/2s do the worst, statistically. Aesthetics are important. Well dressed Midcentury, Spanish, and Art Deco homes are the most desired. Amenities are important. You are competing with hotels in Palm Springs and Indio that offer pools, bars, and outdoor activities like croquette so you need to give people a reason to book your place and you're going to be hard-pressed in the lower price ranges. A pool is an absolute must in Palm Springs and I'd extend that to Indio too. Stay away from North Palm Springs where the winds are high and unpleasant AF and concentrate on neighborhoods south of Vista Chino at the very least.
Jason kudo I agree also Joshua tree makes stingy for allowing air bnb as many of my real estate investors are experiencing right now . The high desert location and amenities are so important .
Look into STR regulations first; Palm Springs is not friendly towards it.
@John D. Thanks John! What I meant by the % is the expense ratio from monthly revenues. I know it’s harder to predict than LTRs, but wondering if there is a typical range in this market.
@Jason Kudo thanks so much for the i detailed feedback on your experience in the area. We are open to Joshua Tree and the surrounding areas, but are wondering what a typical $500+k home will look like esp in this market. How are the STR regulations in those markets compared to PS? Indio seems to be a little more favorable at least compared to PS.