This is a long post and appreciate you reading through it. We are looking to buy a SFH in Palm Springs (or possibly Indio) for STR purpose. I know the forum has a bunch of info (appreciate it) but wanted to ask a few Qs as it relates to our needs:

1) PS vs Indio - We visited both places over the weekend and almost considered a brand new home on the lake at Terra Lago in Indio but had a last minute pause. We liked the TL home and nice lakefront view but here are some cons: pretty far/isolated, no real dining options outside and besides the music festivals/BNP tournament, didn't know if it would do well as a STR. Also, almost every lakefront home on TL is on STR. Indio is currently STR friendly as well as the HOA but I've heard there may be caps coming soon by the HOA - we wouldn't have to worry yet. However, PS is more established and we are focusing on 4/2 SFH (no land lease and under city caps). Even if STR goes south, we feel there is decent demand for 30+ day rentals as well as the property prices holding its value long term. Or is Indio a good safe bet with potential appreciation - especially the Terra Lago area?

2) PS specific home - We looked at a few and were intrigued by one that is a 3/2 (plus self sufficient ADU, former garage) with a nice pool, yard but 2/2 on city records. The house was rehabbed with good quality materials and overall looks great but should I be worried with unpermitted modifications? Per the listing agent, the additions/changes were way before this seller and he simply just spruced it up. Oh and no garage (converted to ADU with bathroom and kitchen) and a carport instead. Questions on risks/liabilities: 1) Will the appraiser appraise it as a 2/2 2) How will insurance view it? In the event of some disaster, will they do a replacement cost for a 4/2 or 2/2? 3) STR guests - if something goes wrong on the unpermitted add ons, will it be a bigger risk/issue vs something happening in the permitted portion? I do plan to hold it in an LLC, have good insurance and umbrella as well.

3) Older homes in PS - most of the homes in PS are built in the 40s-50s and for those that own them, do you constantly run into issues with major ticket items - plumbing, electrical, etc (things that are not visible to the naked eye). Or anything else to consider when purchasing homes built that old?

4) Prop Mgmt - I am not new to real estate but new to STR and live 6-7 hours away from the area. Read the book on STR by Avery and most recommend DYI if you are tech savvy and can be hands on. Do you recommend self managing in PS (or even Indio) where tenants may be a little more high maintenance:) I ask because PM fees can be anywhere from 20-30% and will deplete any cash flow we may generate. We plan on using DSCR loan (yes high rates but our complicated taxes makes non conventitional as our only choice at the moment) so PM fees will def kill anything. However, we also want to make sure we start off strong with a seasoned PM and then possibly take over in a year (but reviews may not transfer?).

Ultimately STR here may not work out but we do have a desire to buy in the area. I appreciate your feedback on any/all of the above. Thanks BP community!

Amit

Riverside, California

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