Are you thinking about buying a Palm Springs short-term vacation rental condo? There are a handful of condominium HOA’s in Palm Springs and the Coachella Valley that allow short-term vacation rentals less than 30 days, ranging from no minimum rental days to two weeks. Most HOA’s only allow rentals 30 days or longer.
If your goal is to short-term vacation rent your Palm Springs condo to off-set some of the ownership expenses, there are several factors to consider.
Are you paying cash or planning on financing your Palm Springs short-term vacation rental condo? If you are financing, be sure to get pre-approved before you start your search for your Palm Springs vacation rental condo. It is important to discuss your objectives with both your realtor and lender.
Some Palm Springs condos that allow short-term vacation rentals less than 30 days do not qualify for traditional financing per Fannie Mae and Freddie Mac’s underwriting guidelines. You would need a non-qualifying (Non-QM) mortgage or non-conventional mortgage with a higher down payment and a higher interest rate. Be sure to ask your lender for an updated list.
Whether paying cash or getting a mortgage for your Palm Springs short-term vacation rental, be sure to research your budget carefully to determine your rental income and expenses. You should also consult a tax professional to review business tax deductions. Here are some of the budget items to consider:
$500,000 Condo Purchase Price
$100,000 20% deposit
30-year fixed at 4% interest
$22,920/year mortgage or $1,910 monthly payment
$6,250/year or $521/month for real estate taxes
$1,750/year or $147/month for homeowner’s insurance
$6,000/year or $500/month HOA fee
$3,000/year or $250/month land lease fee is applicable
$900/year or $75/month internet/cable
Be sure to also budget for utilities for gas, electricity, water (if separately metered), repairs such as HVAC, improvements, local hotel occupancy taxes (usually paid to you by the tenant then you pay the city), housekeeping fees (typically paid by the tenant) rental and property management fees and future HOA increases.
As part of your research, be sure to do your due diligence on the rental rates for your Palm Springs short-term vacation rental condo. A good place to start is looking at VRBO and AirBnb to see what other Palm Springs condominium vacation rental units are charging in the HOA you are interested in.
The peak Palm Springs short-term vacation rental condo market months are January, February and March with April (Coachella and Stage Coach music festivals), November and December as bonus months. There are also opportunities to rent during the summer but usually at a discounted rate.
During the off-season months, you might also want to consider monthly rentals for traveling medical professionals who rent for 30-60-90 days on sites liked FurnishedFinder.
Be sure to do your due diligence after opening escrow on the your Palm Springs short-term vacation rental condo. You will want to:
Questions about finding and buying your Palm Springs short-term vacation rental condo? Contact Kevin.
As as investor evaluates a potential location, it is important to review and understand the local laws, required permits, taxes and amenities of a city for a short-term vacation rental investment property in the Coachella Valley (Palm Springs area) and Joshua Tree, Pioneertown and Yucca Valley or up in the mountains in Idyllwild.
Some areas such as Bermuda Dunes, Joshua Tree and Pioneertown area in the High Desert and Idyllwild in the mountains are governed by the local county governments, Riverside County and San Bernardino.
If an investor is buying in an HOA community, it is very important to review the CCR’s and Rules & Regulations for potential restrictions.
|City||Short-Term Rentals Permitted?||Other Info|
|Palm Springs||Yes||12/7/2022 The City of Palm Springs is supposed to release an official summary but in the meantime, here are the three changes most relevant if you are considering buying a home to short-term vacation rent: (1) Reduction in maximum allowed short term rental contracts (reservations of less than 28 nights) from 36 to 26 per year; (2) Introduction of a 20% (of total residences) cap on number of permits in any neighborhood (using the 51 organized neighborhoods); (3) Introduction of the "Junior Permit": with a maximum allowed number of short term rental contracts per year of six, and not subject to neighborhood caps. This will likely have a reduced permit fee accordingly. (The current permit fee is $1,009 annually.)|
|Cathedral City||No, except a few select HOAs.||2/2/2022 Cathedral City will no longer issue permits for short-term vacation rentals in single-family and multi-family residential zones. The city is phasing out short-term vacation rentals by 2023, due to an ordinance that was approved in 2020 and went into effect on March 18, 2021, after a referendum. Short-term rentals are still allowed at a select few HOA's.|
|Rancho Mirage||No||On October 21, 2021, the Rancho Mirage City Council adopted Short-Term Rental (“STR”) Ordinance 1189 which prohibits short-term rental activity in all zones of the City, and on November 20, 2021 the Ordinance went into effect.|
|Palm Desert||No except certain zoned areas.||STRs are prohibited within the R1 and R2 zones, excluding On-Site Owner STR Permits.|
|La Quinta||Moratorium on new permits.||In November 2022, La Quinta residents will vote to eliminate short-term vacation rentals in residential neighborhoods by Dec. 31, 2024, allowing them only in home shares – where the property owner remains on site throughout the rental – and in designated areas, such as those zoned tourist commercial.|
|Indian Wells||No except limited exceptions.||Around the PNB Paribas tennis tournament in March, certain permitted/ licensed STRs are allowed a 7-night minimum.|
|Indio||Yes||Indio Short-Term Rental Ordinance Code|
|City of Coachella||Yes||City of Coachella Short-Term Rental Ordinance Code|
|Bermuda Dunes||Yes||Unincorporated Bermuda Dunes is regulated by the County of Riverside. The Bermuda Dunes Country Club HOA does not allow short-term rentals.|
|Desert Hot Springs||Yes||7/5/2022 Owners of short-term vacation rentals in Desert Hot Springs will have to follow new rules, including noise limits, under an ordinance tentatively approved Tuesday by the city council.|
|Joshua Tree & Pioneertown Area||Yes|
|Yucca Valley||Yes||The Town of Yucca Valley currently regulates short-term vacation rentals and it has a density cap for short-term rentals too.|
|Idyllwild||Yes||Idyllwild is regulated by the County of Riverside.|
Information updated as of January 2023 and is subject to change.
For additional information, please click on each city above to review the specific short-term vacation rental requirements including:
*Subject to verification of the the HOA’s CC&Rs and Rules & Regulations that allow short-term vacation rentals less than 30 days.