Looking to buy my first rental (Palm Desert area)

[Rafael Ro]

Hello all,

Would really appreciate some advice from experienced investors, particularly in the Coachella Valley area (Palm Springs, Rancho Mirage, Palm Desert, La Quinta, Indio, etc).

This area is going through a bit of a transition - it's very trendy, and it's full of airbnbs, but city laws are getting stricter on these and they're issuing less or no permits in most cities. Still, there are some exceptions.

There are a couple of BIG events that can bring in a lot of money from a few weekend rentals, but this is not necessarily something I'm counting on. I think I would rather have a stable long term tenant. 

I have about 60k cash that I can invest and I would like to buy my first investment property. If that 60k is a 25% downpayment (so I can get good rates) then I'm basically looking for a property that's 240k or less. I would like to buy in a nicer area, particularly South Palm Desert (to attract better tenants but also for some personal reasons). I believe this could potentially get me a condo -- a decent 1 bedroom/studio or a small 2 bedroom in a bad shape, with some luck. 

I can afford to buy this condo, at that price range, and could weather a small storm too, if it came to that. But if we had a covid type situation where tenants could live rent free for over a year, then it would put a decent amount of stress on our finances.

If I wait a year, I believe I'll be able to invest 100k, so could but a 400k property. For 400k, with today's prices, I could get a great 2 or 3 bedroom condo, and possibly a small fixer house. But I'd be tapped out - no money for a remodel. 

As a sidenote, we currently own our primary residence and have a little bit of equity there. 

My question is this - given the above circumstances - what would you recommend for an amateur investor (who's a good researcher)?

1) Hold the cash and wait for the market to drop. I can literally see the same condos selling for 20% less 4-5 months ago. The area is HOT.. but also appreciated a ton very quickly. Maybe it will come down. 

2) Buy a condo as described above.

3) Wait until you have more money to buy something bigger.

4) Whatever else comes to mind. I even considered buying an RV as an investment, but I have 0 interest in RVs so it feels like a silly move. Also considered buying land in the middle of the desert for potential appreciation or to eventually build on.

Would also love to meet anyone that's interested in investing in the area! 

Thank you all!