Insider Tips for Investing in Palm Springs
Palm Springs is a promising location for real estate investment in the state of California. While property in the state generally remains expensive, areas like Palm Springs are great for promising and stable investment as they show the most potential for future growth.
The California real estate market has been experiencing rapid growth in recent years and this trend is expected to continue in 2022. Most, if not all, counties in the state are projected to see double-digit growth, making it difficult for investors to find a location that is a buyer’s market. Despite the high initial investment for buyers, the California real estate market may still be a good investment due to the potential for appreciation, strong rental value, and low loan rates.
These are California’s market statistics for 2022 based on data from Mashvisor:
- Number of Listings for Sale: 22,778
- Median Property Price: $1,135,754
- Average Price per Square Foot: $916
- Days on Market: 59
- Number of Traditional Listings: 69,562
- Monthly Rental Income: $3,397
- Traditional Cash on Cash Return: 1.76%
- Traditional Cap Rate: 1.79%
- Price To Rent Ratio: 28
- Walk Score: 50
The city of Palm Springs has become a popular choice among investors and homebuyers in California, especially since the start of the pandemic when more people began working from home. The city has long been a popular tourist destination, but now more people are considering moving there permanently.
Palm Springs is not a inexpensive place to invest in real estate, but it is cheaper per square foot than the state average. This, combined with the potential for larger properties, has attracted many investors and homebuyers to the city. With an increasing demand for housing and a high rate of tourism, 2022 may be a good time to consider purchasing a home in Palm Springs.
Let’s look at the market statistics in Palm Springs for 2022 based on data from Mashvisor:
- Number of Listings for Sale: 205
- Median Property Price: $1,185,184
- Average Price per Square Foot: $509
- Days on Market: 50
- Number of Traditional Listings: 134
- Monthly Rental Income: $3,497
- Traditional Cash on Cash Return: 12.37%
- Traditional Cap Rate: 2.41%
- Price To Rent Ratio: 28
- Walk Score: 59
Palm Springs Short Term Rental Regulations
In tourist-central cities like Palm Springs, many investors opt for short-term rental strategies such as AirBnbs. These can be more profitable than long-term rentals and are typically successful in cities with high levels of tourism. If you are considering an short-term rental investment in Palm Springs, it’s crucial that you understand the rules and regulations surrounding your rental property.
- Short-Term Rental Point Person
Many investors in Palm Springs’s short-term real estate properties do not live within the city. Therefore, the city requires a point person, who must be over 25 years of age, to be responsible for the vacation rental. This person is required to sign documents, inform guests of the city’s rules and regulations, and obtain a signed good neighbor brochure document. If you do live within the city, these responsibilities will fall on you.
- License and Registration, Please
In order to legally rent out your property in Palm Springs, you must obtain a vacation rental or homeshare registration certificate. A vacation rental registration is required for all short-term rentals in which the owner does not reside on the premises. A homeshare registration, on the other hand, allows you to rent out certain rooms in your primary residence. The certificate allows you to host guests for up to 28 days per guest.
- Advertisement Limitations
Your registration certificate will include a unique registration number, which must be displayed on all of your listings and advertisements to ensure compliance with city guidelines. Failure to include the registration number on your ads and listings could result in the revocation of your short-term rental license and registration.
In addition to standard homeownership costs such as HOA fees and property taxes, the city of Palm Springs imposes additional property costs on vacation rental owners. These include the Transient Occupancy Tax and the Tourism Business Improvement District (TBID) Tax. The Transient Occupancy Tax is based on your monthly earnings and must be paid monthly. The TBID Tax charges a 1% tax on short-term stays.
- HOA Safety Guidelines
Even if your property is used as a short-term rental, it must still comply with homeowners association (HOA) safety guidelines. Before you can operate as an Airbnb or short-term rental, you will need to pass a safety inspection to ensure that your property meets all necessary rules and regulations. If your property is part of a complex, you should also review the specific rules and regulations for that community.