Hi Tracey,
Congrats on your successful sale. That's a nice equity & a good problem to have!. Sounds like you're well poised working in the medical field. You have job security, plus a very high credit score.
Unclear where you are based or what areas / types of properties you may be interested in. You mention possible STR play in Palm Springs. Happy to put in my 2 cents on that...first a few questions:
1. What is your long-term plan for real estate investment?
2. What other properties do you own?
3. How are your cash reserves?
4. Are you open to out of state investment or different types of r/e investment?
Currently have an STR in Palm Springs. As John D. mentions the rules have been in place for some time. In fact, a few years back, shortly before closing, the City had a referendum / initiative to ban STR;s entirely. Fortunately, that was defeated.
Palm Springs and area cities have become heavily reliant on the TOT's generated from STR's to the tune of tens of millions of dollars, in some instances 40% +/- of City's budgetary income.
These can be and are excellent investments, most of the time.
We are under a moratorium currently in PS (also all of Riverside County to June 19, also La Quinta). We've lost significant income March, April May due to Covid-19 and shelter in place orders. Airbnb breached its policy and refunded monies to guests which was illegal - that for another story.(VRBO and Turn-Key upheld correct policy sending the rents to hosts). Fortunately, mine are low LTV. It's OK to be vacant for awhile.
A task force was just formed in PS to work on re-opening tourism in PS. Coachella Valley is heavily reliant on tourism. It is one of the most popular vacation destinations. The airport (up until the outbreak) had record traffic. The area is booming.
https://www.desertsun.com/stor...
Wagering tourism and STR business will ramp back up in the area soon.
That said, STR's can be a risky business model, as rules can and often do change. Not for everyone. Must have alternate plans, such as LTR, moving in, refi cash out, lease with option to buy, cash to equity, assume mortgage, etc. Also, low LTV and good reserves are key to weather any economic storms, such as the present one.
Currently pretty heavy in STR's 3 cities, 2 states. Likely will thin those out. Original plan was to 1031 equity on some of those to more NNN QSR's. Although we've had to make some (minor) temporary rent concessions there while only drive-thru, pick-up and food app delivery is allowed. Those concessions are deferred to be repaid in monthly installments over 12-24 mos going forward.
May just cash out 1-2 of the equities in the STR;s pay the cap gains (which in normal times I'm loath to do!) and stash for additional cash reserves.
Concerned in the current politicized and medical climate there may be a mutation or relapse (or MSM-fueled rumors of them) which could chill the market again in the Fall or Winter.
We're re-opening in Tennessee and in other Southern states around April 27. The 7 counties in the SF Bay Area look like their stay at home expires May 3 (also San Benito and Santa Cruz Counties) although who knows, could be extended.
If cities / states refuse to open we should see extensive litigation supported by the US Attorney General and DOJ. At the extreme end, possible unprecedented Presidential emergency powers the likes of which have not been seen since 1960's school desegregation cases or actions as extreme as those taken by the Lincoln administration during the Civil War (blockading ports, destroying or taking over newspapers and mass media, arresting governors and even congressmen, etc) and later during Reconstruction in the South; Wilson during WWWI, FDR during WWII, Bush and Obama post 9/11.
Despite what MSM would have us believe (they all think they're lawyers - they're not - plus they have an agenda) the 10th Amendment does not carry the day - The President has unlimited Commander in Chief (plenary) emergency powers. See 10 USC Sections 252, 253. Congress already gave this power to the President by federal law. Congress cannot interfere. After 9/11 the Bush and Obama Admins vastly enhanced the powers of the President. Numerous cases uphold the powers of the President - (Prize cases, Reynolds, Korematsu, Quirin, Luther v. Borden, Hirabyashi, with some exceptions (Youngstown Sheet) - In Youngstown, the President did not have federal statutory authority - here he clearly does. Do not believe the MSM! If you really want an eye-opener on Presidential power look at the John Yoo memo and the case of Al-Alaquai v. Obama. As US Supreme Court Justice Alito has stated, referring to plenary or unitary executed powers of the President: "The president has not just some executive powers, but the executive power — the whole thing." Our history is replete with Presidents who override even the Supreme Court, if they purport to override executive emergency powers - Andrew Jackson, Abraham Lincoln, George Bush, Obama and others. The bottom line is the President has the power. He is the Commander in Chief backed by the US military.
That's were the rubber hits the road!
For these reasons, feeling confident our economy will re-open with reasonably narrowly tailored protections - not the currently imposed Draconian house-arrest-style means employed by too many governors and mayors. The US economy is a matter of National Security. I'm hopeful the Mayors and Governors will read the law and not follow the MSM propagandized-agenda-driven mantra. Would prefer not to see extreme Presidential powers instituted and rebel Mayors and Governors taken by the military to Guantanamo Bay. Because many of the courts are closed due to Covid 19, we'd be talking no habeaus corpus, no hearing, no trial...just hold them as long as the President sees fit. Lincoln,FDR, Bush, Obama and others have done it. I hope those seeking to destroy the US economy will not force the President's hand.
Either way the President will get us back to work.
Getting back to work should bode well for real estate.
Please forgive the long (legal) diatribe. This stuff is all tied together. We will re-open and do well!
As for your decision - Depends on what you want to achieve, your cash reserves and risk tolerance.
You're in a great position. I'm sure you'll make a good choice.
