Joshua Tree/29 Palms properties for Rental Arbitrage

[Yevgeniy Kharitonov]

Hi. We're looking to buy our first investment property and looking at Joshua Tree/29 Palms area. Idea is to buy a property specifically for Rental Arbitrage. Are there any companies out there that can look at the specific property and provide their opinion on whether or not Rental Arbitrage will work? Also, anyone aware of any permitting issues in the area? Looks like they are very STR friendly and want to bring in more business. Any insight, suggestion will be greatly appreciated!
 

[Paul Sandhu]

Why don't you just use the property you buy as a short term rental? Don't make things complicated by trying to buy and then arbitrage. 

[Yevgeniy Kharitonov]

My understanding is that arbitrage companies offer higher than market rental price and removes the headache of running a STR myself.

[Michael Hyun]

I think it's possible, but it'll be hard to find. I've bought a home in JT and Yucca Valley for Airbnb. Yucca is imposing new regulations, its worth looking into. So is twenty nine palms. Joshua Tree is still in the unincorporated area of San Bernadino County. 

The problem in my opinion with Rental Arbitrage (RA) is that you wont be able to find a decent property in JT. They are mostly older homes and need significant renovations if you want to compete with the other Airbnb's in the area.

Other metropolitan areas are fine, since you can mostly rent a well-renovated home and just furnish it - but since the homes in JT are always in pretty bad shape, you'd need to paint, maybe replace some floors, maybe install a pool, etc. Not to mention that everyone knows about STR there. If the owner is listing it as a LTR and not a STR, its because they don't want to deal with STR at all.

Just my two cents.

[Jason Kudo]

Regarding regulations. The town of Yucca Valley and 29 Palms both have STR-friendly regulations. Yucca Valley has implemented a 10% cap and 29 Palms has a cap of 12%. Both town governments are at about 50% in terms of where they are with the caps. Plenty of room to grow.

There are several reasons why owners choose to LTR versus STR. Mainly because there is a shortage of LTRs and high demand for them so LTR rent prices have increased dramatically over the last couple years. The other big reason is that STRs in the high desert have a certain look and in order to achieve that look, owners typically have to spend more money in reno to get to that STR look and this includes amenities that your average LTR in the high desert is missing such as outdoor showers, hot tubs, etc.

[Laura Kastner]

Quote from @Jason Kudo:

Regarding regulations. The town of Yucca Valley and 29 Palms both have STR-friendly regulations. Yucca Valley has implemented a 10% cap and 29 Palms has a cap of 12%. Both town governments are at about 50% in terms of where they are with the caps. Plenty of room to grow.

There are several reasons why owners choose to LTR versus STR. Mainly because there is a shortage of LTRs and high demand for them so LTR rent prices have increased dramatically over the last couple years. The other big reason is that STRs in the high desert have a certain look and in order to achieve that look, owners typically have to spend more money in reno to get to that STR look and this includes amenities that your average LTR in the high desert is missing such as outdoor showers, hot tubs, etc.

Hey Jason,

What do you think is bare minimum in the hi-desert STR “look”?

[Brandon Carlson]

@Jason Kudo the 12% cap in 29 palms, when did that come into effect? 

[Jason Kudo]

Quote from @Laura Kastner:

Quote from @Jason Kudo:

Regarding regulations. The town of Yucca Valley and 29 Palms both have STR-friendly regulations. Yucca Valley has implemented a 10% cap and 29 Palms has a cap of 12%. Both town governments are at about 50% in terms of where they are with the caps. Plenty of room to grow.

There are several reasons why owners choose to LTR versus STR. Mainly because there is a shortage of LTRs and high demand for them so LTR rent prices have increased dramatically over the last couple years. The other big reason is that STRs in the high desert have a certain look and in order to achieve that look, owners typically have to spend more money in reno to get to that STR look and this includes amenities that your average LTR in the high desert is missing such as outdoor showers, hot tubs, etc.

Hey Jason,

What do you think is bare minimum in the hi-desert STR “look”?

Hey Laura,

The hi-desert STR look is full of natural light and soft, muted tones; pastels rather than primary or neon colors. Natural materials. Stay away from overly loud backsplash or kitchen tiles and stay away from black on white modern farmhouse and opt for earth tones. Light and airy.

[Jason Kudo]

Quote from @Brandon Carlson:

@Jason Kudo the 12% cap in 29 palms, when did that come into effect? 

 I believe it was March. I watched the council meeting where they voted on it. You can find the video recording on their town website.