Do Joshua Tree Short Term Rentals Actually Make Money?

[Rohin Dhar]

From afar, It's been wild seeing the price of homes in Joshua Tree absolutely skyrocket in the last few months. Homes are selling for 2-3X their prices in 2019. I started monitoring the area at the end of 2020 and it feels like the prices have doubled since then in about a quarter.

I'm curious for folks with properties there if it's a great market or if it's super competitive and hard to cashflow at today's prices? I remember pre-pandemic people mentioning it was pretty crowded already and hard to standout. That said, the prices still seem reasonable if the market has decent occupancy and pricing year round.

Also, is there any risk of the regulatory hammer coming down on the market from the county or locals? Almost every California city eventually makes running STRs pretty challenging if local residents or second home owners complain about them. La Quinta, Cathedral City, Palm Springs etc have made STRs pretty challenging to varying degrees.

[Jason Kudo]

@Rohin Dhar, Joshua Tree and the high desert in general is a hot market. Good, well priced properties are flying off the shelves within a week and most if not all are selling anywhere between 10-25% above list price. Keep in mind that the listed price is just the suggested retail price and is more of a starting place for negotiation than anything else, especially in this market where almost all properties are selling above list price. You have areas like the Western Hills Estates neighborhood of Yucca Valley where there is a lot of new construction going up in the $500k range and most if not all of these are being built to cater to the STR investor and these are being gobbled up.

Are there a lot of STRs in the high desert? Yes. Is there a lot of competition? Absolutely. Have stricter STR regulations been put in place in San Bernardino County recently? Definitely, but I think this has more to do with safety reasons than anything else. Before these regulations, you could buy a 5 acre parcel of land, plop a trailer on it, and call it an STR. No safety inspection of the trailer, no nothing. You can see why some regulations are needed. In general though, Joshua Tree has very few motels/hotels so aside from the camping sites, JT needs STRs to survive the festival seasons, the 3M+ visitors the park sees every year, and the LA hipsters who like JT as a staycation destination. So much so that there is a new glamping site being built near the JT park entrance. Yucca Valley and Twentynine Palms have more hotel/motel options but still the point remains and those looking for the high desert experience are not going to book a hotel/motel aside from maybe the Joshua Tree Inn. Is it possible that SB County will bring the hammer down on STRs in the high desert? Yes of course, but these are risks we have to be willing to take and this possibility holds true no matter where you look.

Aside from the competitive aspect, I think an STRs success is mostly predicated on the owner's ability to establish a niche and cater the marketing and advertising to that niche. The experience is important. The little details are important. Basically, the success of the STR will depend on how the business is run.