STRs La Quinta/Indio still feasible?

Question

Hi all!

Looking to get into my first deal.

Never invested before in any property and STRs seem to be much more appealing than traditional rentals.

I'm looking into STRs in La Quinta/Indio area.

A couple questions for anyone who's familiar with the cities:

1. How are your occupancy rates? According to AirDNA, LQ only has a 40% occupancy rate, can anyone confirm? This seems drastically low and only a 30% rental demand.

2. How's the competition? There seems a ton of STRs in both cities since they're STR-friendly. Are you still able to compete without racing to the bottom?

3. How's the process of obtaining a license? Is there a huge waitlist or pretty easy?

4. What part of LQ do you see the best returns in? From my research, the NW or SE parts of the city appear to be the most lucrative.

5. Do 1/1 or 3/2s bring in more profit? Or something else entirely? I know this area is popular for the music festivals so I assume larger properties are in more demand (for groups)?

6. Any suggestions on LQ vs. Indio? Profitable? Demand?

7. Do you think it's possible to remotely manage as a beginner? I'm in OC and I plan to drive over there 1 or 2 times a week to restock/check the property. But if the renters need something fixed, I'll drive over WITH hesitation. I hope this isn't a common thing (once per month or less). Any experiences with how often you need to meet your renters?Thanks for any help you can provide!

Andrew R. · Answer

Hello, adding to this discussion, I worked up a ProForma for the Indio area and can't get it to Cash Flow. Would any local experts be willing to look at the attached and see if my numbers are accurate or way off? Thanks!

Mark Futalan · Answer

@Roy Hu

Hi Roy, I have 2 in the LQ area and like John said, it’s important to have a unique, well designed/themed property in order to do well with STR’s in this area in my opinion. Competition has definitely increased the past few years and differentiating yourself from other listings whether that be in uniqueness, occupancy count, amenities, themed style properties, is definitely the way to go. Managing remotely is not hard just make sure you have a good cleaner and maintenance people who you can count on or call in case of emergency. Automating things also helps a lot (thermostat/security cameras/ messaging etc) and can make managing remotely a lot easier.

John D. · Answer

1. How are your occupancy rates? According to AirDNA, LQ only has a 40% occupancy rate, can anyone confirm? This seems drastically low and only a 30% rental demand.

----Is that the average AirDNA occupancy rate?  With a smaller unit, you should be targeting greater then 40%, and most of the well run, higher performing homes do significantly greater then 40%.  With that said, I know homes at 40^ occupancy that makes TONS of money (although those are normally larger properties)

2. How's the competition? There seems a ton of STRs in both cities since they're STR-friendly. Are you still able to compete without racing to the bottom?

----If your home is un-differentiated and there are hundreds that look just like it, you will likely be competing on price.  Put out a superior or unique product, and less so.

3. How's the process of obtaining a license? Is there a huge waitlist or pretty easy?

----It's pretty straightforward and quick in both cities, unless you are applying for a bedroom count that doesnt match County records or related.

4. What part of LQ do you see the best returns in? From my research, the NW or SE parts of the city appear to be the most lucrative.

----Very property dependent, you can find very specific property opportunities almost anywhere.

5. Do 1/1 or 3/2s bring in more profit? Or something else entirely? I know this area is popular for the music festivals so I assume larger properties are in more demand (for groups)?

----There aren't many/any 1/1 SFRs.  You are probably going to need to do individual property analysis, I don't think there's a good rule of thumb here.

6. Any suggestions on LQ vs. Indio? Profitable? Demand?

----This also is very property specific, don't think there's a blanket answer here.

7. Do you think it's possible to remotely manage as a beginner? I'm in OC and I plan to drive over there 1 or 2 times a week to restock/check the property. But if the renters need something fixed, I'll drive over WITH hesitation. I hope this isn't a common thing (once per month or less). Any experiences with how often you need to meet your renters?

----There are lots of owners that make remote management work, if you can build a local team, and are OK being always available via your phone.

If you need a good realtor referral let me know, I am working with an agent that has first-hand experience managing hundreds of homes through the desert cities.  Very diligent and unparalleled knowledge.  He's no longer running a property management company but the experience he built doing that in the past is invaluable, especially for investors that aren't sure what City they want to operate in.  There are some strong opportunities in Rancho Mirage, Cat City (when they are open for new licenses again), Thousand Palms, etc. as well.

Roy H. · Answer

Thank you both for the helpful input!

I noticed you both mentioned to "stand out" in some way to differentiate from the other listings- are these things like pools, spas, and overall a "luxury" experience?

At this point, from the advice here, it looks like larger houses with a ton of amenities so they can have a good time is the way to go for LQ.

Any other pieces of advice you wish knew when you first started?

At this point, I'm thinking of going for a larger property at this point since it seems like LQ attracts the larger crowd for the festivals and such.

I'm still early in the research, so it's still a matter of location at this point. @John D. if you'd like to send over the referral, I'll be glad to keep him in mind as I move along here =].

Thanks for helping a newbie out!

Andrew Geisler · Answer

Hello,

I can help.   I have a 3 bedroom townhouse in LQ.   Occupancy rates for me were approximately 50% in 2019 (this was my first full-year.)  This year it is projecting to be a bit better, but it is early in the year.  Obviously the property rents better in the spring months (Golf tournament, Tennis Tournament, Coachella, Stagecoach.)   There is a lot of competition, but stand out!  Do a good job renovating your place and decorate it well, take some good pictures.  Those are very important.  Getting a license was easy and not really that expensive.  I self-manage, but I have a local contact in case of emergency (you will need one to obtain a license)

I can't help on the profit because i only know 3/3, but it seems to be doing reasonably well.  It made a profit in its first year, and I have tightened up the ship a little bit on the expense side and have a higher occupancy rate, so I suspect a bigger profit this year.

I can't help with the area, I think a house in North LQ would be a good value, I have a townhouse in PGA west.  It has good amenities, but the HOA fee is expensive!

I go down to check on the property 2-3x yearly.  If you have a great cleaner/local contact they can handle everything and you won't need to go check on it often.

Hope that helps!

-Andrew

STRs La Quinta/Indio still feasible?

Most Popular Reply