What Makes The Best Palm Springs Vacation Rental?

Thinking About Buying A Vacation Rental?

IMPORTANT SHORT-TERM VACATION UPDATE: Cathedral City is eliminating all non-HOA vacation rentals by January 1, 2023.

La Quinta has extended is moratorium for new short-term vacation rental permits.

On November 19, 2020, the Palm Desert City Council approved amendments to the existing STR Ordinance essentially eliminating most short-term vacation rentals.

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 Springs maybe the only resort city in the Coachella Valley that allows short-term vacation rentals.

Thinking about buying a home and renting it as a Palm Springs vacation rental? It is a great way to earn extra income while you are not using it.

It is important to align yourself with a good business team: your realtor, accountant for tax questions and a vacation management property manager. You will want the best advice on the income potential and due diligence required for a home you are considering purchasing and renting a Palm Springs vacation rental.

What is the best city in the Coachella Valley to own a Short-Term Vacation Rental?

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 and realize that these rules can change too.

Short-Term Vacation Rental Guidelines by City

City	Short-Term Rentals Permitted?	Other Info
Palm Springs	Yes	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.
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 and a few select HOAs.	STRs are prohibited within the R1 and R2 zones, excluding On-Site Owner STR Permits. Some HOA’s do allow short-term rentals in Palm Desert, including Palm Valley Country Club, Desert Falls and Monterey Country Club.
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 July 2024 and is subject to change.

For additional information, please click on each city above to review the specific short-term vacation rental requirements including:

Permit fees and Transient Occupancy Tax rates (TOT)
Landlord to keep records of all stays for taxes, business licenses and safety purposes.
Tenants must receive a copy of the “good neighbor” brochure from the Landlord that outlines the rules for renters.
If the rental is located in a community’s homeowner association (HOA), some cities may require an approval letter from the HOA.

Finding The Best Vacation Rental?

Location, Location & Location makes the best vacation rental. Most vacationers are looking for recognizable Palm Springs vacation rental locations like Old Las Palmas, Vista Las Palmas, Movie Colony, Indian Canyons, Deepwell, Twin Palms, Tennis Club etc.

Other good neighborhoods can also rent well too but should rely more on the individual property being distinctive and impressive with effective marketing.

Homes and condos can both do well at different price points. It is important that the property is well laid out for guests to share. En-suite bedrooms that are as equally sized with matching amenities perform the best.

Vacation Rental Amenities & Services

Completely furnished, including plates, linens & towels, pool lounges, coffee maker etc.
King beds are preferred or Queen at minimum in each bedroom or perhaps one bedroom with 2 Twins. No Full or Double beds.
Flat screen TV’s, one in LR with movie channels and one in each BR with basic cable.
High-speed WIFI with a strong signal for all rooms and outside by the pool.
To maximize your vacation rental income potential, all bedrooms should be utilized as sleeping rooms and as equally equipped as possible.
Offices and desks are not generally needed in a vacation home.
Houses must have a pool with working heater and a spa is highly preferred.
Ensure there are enough dining chairs and pool lounge chairs to accommodate as many guests as the property sleeps.
Lots of great looking professional pictures sell it online.
Good looking furnishings don’t need to be expensive.
Renters tend to avoid homes with outdated appliances and finishes, old tube TV’s and small beds.
Outdoor kitchens and fire pits are a big bonus!

Buying In An HOA?

If buying a condo or home in an HOA or gated community, carefully review the CC&R’s or ask HOA about rules regarding rental and minimum night stay. Most have month-long minimum for rentals, which often limits vacation rentals to January through April. However, many owners make enough money in 3 or 4 months to meet their annual goal.

Condo units are more desirable if the unit is ground level, near the pool, with south facing views and patios and the community is gated. Condos must also have in-unit washer/ dryer. Community laundry is acceptable but not ideal.

How much rental revenue can an owner expect?

Have you found your dream home that you want to buy and vacation rent when you are not enjoying it? Be sure to have a vacation management company review the home during the escrow inspection process. This will help you in determining your maximum net investment return and expenses.

Sample Rental Rates (before the management company commission fee and expenses):

1 BR condos: range from $95/night or $1400/month to $200/night or $3400/month
2 BR condos: range from $120/night or $2000/month to $250/night or $4600/month
3 BR houses: range from $265/night or $4300/month to $800/night or $12,500/month
4 BR houses: range from $325/night or $5300/month to $900/night or $14,000/month

Operating Expenses

Review your annual and monthly operating budgets carefully with your vacation management company and accountant. Some of the expenses to consider but not limited to are: