All Forum Posts by: John Lee

@Allen Vance, you definitely want to have a firepit and BBQ out in Joshua Tree. One of the main reasons people come out there is for the outdoor desert experience.

For one of our properties, we literally just dug a hole in the ground in the backyard (actually, the construction workers had dug it and used it as a firepit). We bought some decorative rock (slate or something) to line the sides of the pit and Voila! -- firepit! It cost maybe $25.

For the BBQ, we just used a basic propane grill from the Home Depot (you can get a 5-burner for $149-$199 when they go on sale). All in all, these are pretty small upgrades as far as price goes, but big improvements on the guest experience.

One thing I tell people is that for me personally, there are 2 things I never do unless I'm staying at an Airbnb -- use a hot tub and grill. But when you're with a group of friends at a getaway -- those are two things you always do. Of course, if you don't have a hot tub, that would be a big-ticket upgrade.

@Allen Vance, I have 2 properties in Joshua Tree and one in the Disney area that have all performed well (one of our properties has consistently been one of the top 5 in Joshua Tree on Airbnb). Full disclosure: I am starting my own Airbnb property management company out in Joshua Tree. Most property managers don’t really care to get you more business or keep up with maintenance and other essentials that are essential for long-term success in an area like Joshua Tree — I know because we tried a few property managers.

We think it’s not that difficult — although there is a lot of competition out in Joshua Tree, you can be and stay successful. You have to focus on 2 things at all times: ADR (Average Daily Rate) and Occupancy percentage (how often your property is booked). If you can increase those two things at the same time, you can dramatically increase your revenue.

E.g. Your property rents at $149/night on average at about 10 days/month occupancy (just 33%). Your gross will be about $1,490. If you can increase your average rate to $199/night and occupancy to 50% (15 days), then now your gross is $2985. You just more than doubled your gross income (over 100% increase) by just making two small performance improvements in your property.

The key is to research what is required for you to increase from say a $149/night property to a $199/night property. You can’t just increase your price for no reason, you have to justify it through the quality of the listing matching the price point.

In order to increase the ADR, you have to do two things:

(1) ensure your listing (description and photos) matches up to the price point that you want. You need your listing to stand out among the 100s of properties likely in your price point. To do that, it’s marketing 101: focus on what makes your property unique (your Unique Selling Proposition or USP). It may not even be exclusive to you, but your listing has to focus on that USP and sell the person browsing your listing on that USP through every description entry and your photos.

(2) ensure the experience of the person booking your place matches up to what they were told in the listing and matches the price point. You can’t have cheap Walmart towels and large bar soap in a property you rent for $299/night (although at $99/night it’s probably fine). You want the guest to be wowed by your property — it can be as simple as a couple of unique, stunning art pieces.

Just keep in mind people are not going to actually look at your property before booking (this is not a real estate listing where they will come and look at it in person before making a decision). So don’t take pictures like it was a real estate listing. They are booking your property based on two things: (1) the quality of the listing (description and especially, photos) and (2) your reviews (if you keep the guest experience matching the listing and price point, you will have good reviews).

To increase occupancy, there are many well known techniques: using hotel style price algorithms, offering point of sale extensions of stay, lowering the minimum daily stay during periods unlikely to otherwise book. Just remember that if your property is vacant- you make $0. Even if you lower your price to a predetermined minimum (don’t want to go too low or you increase the risk of attracting the wrong kind of guests) — if your property gets booked at the lowered price that is still that much more money you make vs the $0 you would’ve made if vacant.

Broad question, so here's an overview of the area:

Joshua Tree National Park (JTNP) is the tourist attraction. The entrances you need to know about are the West entrance (in the city of Joshua Tree) and the North entrance (in the city of 29 Palms). The best views, attractions, hiking, picnic areas, and campgrounds are near the West entrance. It is about a 45 minute drive from one entrance to the other (if I remember right).

Yucca Valley is adjacent to Joshua Tree (the city). Lots of stores (Starbucks, grocery stores, fast food). New sewer ordinance may add future cost to a purchase. There was some debate over the new STR ordinance, but overall not too restrictive. About 15-20 minute drive from Yucca Valley to the West entrance of the park, depending on where you are in Yucca Valley. City mostly populated by locals, which is why there was some neighbor complaints and debate about short-term rentals in the city.

Joshua Tree is a community and not technically a city (it is a census-designated place and considered part of the unincorporated zone of San Bernardino County, therefore subject to county laws regarding STRs). They are very community-oriented and do not want big businesses in their "city". They even successfully fought to not have a Dollar General Store open up in the community. Therefore, Airbnb's (and STRs) are a large part of the community economy since there are no large hotels or motels. Airbnb is not likely to ever go away or be prohibited in Joshua Tree. Highway 62 runs through Joshua Tree. Generally, north of the highway, you can find cheaper real estate (esp if you are looking for wide open land and lots of multiple acres). You can also find the same as you head east on Hwy 62 toward 29 Palms (city where the marine base is located). As you head down Park Blvd (which turns into Quail Springs Rd) toward the West entrance of  JTNP, you will find plenty of neighborhoods. Locals generally want to live south of the highway. A lot of great communities, but they get more and more expensive as you move closer to the entrance of the park (Friendly Hills, Upper Friendly Hills, Joshua Tree Highlands, Monument Manor). To get a big lot of land in these areas is likely going to be very pricey, especially as you move closer to the park entrance.

29 Palms is further east (marine base is located there, so you have the military-type community and strong traditional rental market). Wonder Valley is even further east (may be up and coming, but a lot of wasteland-looking properties out there still). 29 Palms is very STR-friendly and they recently passed an ordinance that favors STRs. However, the average daily rate as you head further east is lower than in Joshua Tree proper, even though you have the convenience of the North park entrance.

I own and operate 2 rentals out in Joshua Tree, one in Friendly Hills (less than 5 minutes from the saloon in a neighborhood) and one in Monument Manor (a mile from the West entrance and in open land, 7.5 acres). Most that come out to Joshua Tree want the open land and the feeling of isolation. However, our rental in the neighborhood still does well, as we did modern decor and market it toward all the millenials and city-folk who are heading out for short vacations.

I would recommend you look first in Joshua Tree proper, preferably south of the highway (although there are good rentals that do well north of the highway). Just know that although the tourism has increased, so has the # of Airbnb properties, so you have to be able to compete somehow if you want to keep your occupancy high. Find a way to stand out from the competition in a trendy way and you can do well.

Love the area and would invest in the area 1000 times over if I could do it again. Another thread here on BP said that if they were to invest in the area again, the one thing they would do differently is start 2 years earlier! Prices have increased dramatically, but there are always deals to be had.

Have 2 homes, friend bought a house and I plan to help rehab, and I’m planning a new construction project — all in Joshua Tree. Love the desert.

Doing BR-STR-RR strategy (BRRRR but with Airbnb).

Are you flipping or holding?

Just saw your post. Garden Grove did not have anything on the books until recently. Due to the Anaheim situation, people started looking over there and the # of STRs grew rapidly. The city cracked down on it, and there is a dedicated staff policing neighborhoods and looking at listings on Airbnb. Here is a link to the city's website with the details:

https://www.ci.garden-grove.ca.us/short-term-vacation-rental

@Account Closed, just speaking from my experience -- just keep an eye on your debt-to-income (DTI) ratio. Lenders can vary, but most will take somewhere between the low 40's for strict lenders, to low 50's for other lenders (back-end DTI or total debt including new mortgage).

We actually bought a vacation home (2nd home) in Joshua Tree last year in October. Financed with 20% down -- we were currently living in a lower-end condo. We sold our condo soon after and bought a SFH in a better neighborhood and closed in January. We pretty much maxed-out our DTI ratio for the two purchases, but we had calculated it ahead of time and knew we could do both.

This may not apply to you as if you buy land, you might buy cash. Although, we have been looking and the value of build-able lots has gone up astronomically in JT. We've seen lots of land that were selling for 20-30k a year ago sell for 50k last summer, and even 100k+ this year.

I would recommend that you start looking for your primary home in Nashua (whether single or multi) and find out what you expect the price range to be. Then shop for lenders and get pre-approved (not just pre-qual) for a loan in the high-end of your price range. Ask the lender what DTI they will accept, and then just do the math and figure out what you can look for in a vacation rental (if cash, no real issues, but if you finance, you figure that into the DTI ratio).

If you have all of that in order and don't take on any new debt, it doesn't matter which one you buy first.

Funny, my partner and I just had a conversation about how crazy the JT market is and how it might be a bubble. The pending legislation is also an issue (heard that it will particularly affect the "glamping" type homestead rentals).

Last summer, I told my partner that I wanted to get 3 properties by the end of the year (we ended up with two), and then 6 more in the next year. The rush was because of the likelihood of increased cost of entry, as we saw how prices were appreciating. Well, it's already kind of too late, so we are looking for good deals or looking to buy land at a good price and build.

You can rent out pretty much anywhere in JT, but the look of the house and the surrounding area will dictate the nightly rate. Seems to favor unique, artistically decorated houses or homes with some element of seclusion and attractive natural surroundings.

We designed our strategy around the "worst-case scenario"/multiple exit strategy plan. Of course, first option is short-term rentals via AirBnb and VRBO. Second option is long-term rental (marine base nearby can attract steady renters) -- so we looked at the basics of real estate: good neighborhood, good schools, where locals in JT want to live. Third option is just to sell the house if the first two options don't work out, so again, the basics of real estate dictate the areas with best resale value historically.

Based on that research, we decided to look primarily near the West Entrance of the park, even though houses there are higher than other areas of JT. Neighborhoods like Monument Manor, Joshua Tree Highlands, Friendly Hills area -- basically anything south of Alta Loma and relatively close to Park Blvd.

Also, I know from a neighbor of mine that you can't rent out an Airstream trailer on an empty lot. You have to have a dwelling there. Just like anywhere else, you won't have issues unless someone complains. We have someone on our street who seems to have made it his mission to crack down on anyone not following regulation. Good news is that STRs are allowed, so there has been nothing negative coming my way yet. The house that we bought was an operating STR for almost 20 years.

I have 2 properties in Joshua Tree, one has been listed for several months and the other listing is about to go live this coming week (we have done extensive renovations on each).

Currently, as Joshua Tree is in San Bernardino County, you have to register your STR at the county tax office and pay the 7% TOT quarterly (end of Jan, April, July, and October). You self-report your revenue and pay 7%, which, of course, is normal to pass on to your guests. I walked in to the county office and registered my property same day, and got the actual license (which must be posted in your home) in about a week.

Have not heard anything recent, but there has been word of an ordinance coming out in the city of Joshua Tree. The city council website has some info, but that website does not seem to be updated regularly. Ordinance from the city would be good, as regulation means it is allowed legally and would make it more difficult to ban it (although I don't think that is likely to ever happen).

You are probably aware of the climate -- Palm Springs (city proper), just passed an ordinance limiting the number of rentals you can have per year. Other low desert cities may pass regulations, but have yet to do so. 29 Palms just passed an ordinance allowing it, and part of the push was to join the economy created by STR's as the neighboring cities have already been taking advantage of it.

Joshua Tree is a different kind of city (different from neighboring Yucca Valley, which has more of a suburb feel and 29 Palms, which is a military town). JT is home to artists, musicians, and the people there are very protective of their town and its identity. They are opposed to big business, gated community developments, and the people will fight against any big company trying to open a store in town or doing large-scale real estate developments. Big hotels are never likely to come to JT. This creates a strong short-term rental opportunity, and the city seems to embrace STRs. However, you have to keep the small-town, community-pride feel. If neighbors, or people in town, see you as someone that is not from the area trying to build an STR empire, you will likely get brushback.

As I also do STRs in Orange County, CA -- comparitively, I view JT as relatively low-risk to ever losing the option to rent out my properties short-term. I try to stay involved in the community and talk to my neighbors (I don't live out there but do a lot of work on my house, so people see me often enough to think I'm a "local"). I also try to support local businesses as much as possible.

I watched the whole Anaheim STR ban go down over several months and actually watched several 3-4 hour council meetings in their entirety. The bad STR owners ruin it for everyone. STRs are a unique kind of real estate investment: a hybrid of a hospitality business and a single-family home. You have to run the business like a hotel (customer is always right, don't go cheap on stuff, communicate often with your guests, ensure their vacation is memorable). But you have to also realize you are a single-family home in a neighborhood, and you have responsibilities just like any other homeowner. Noise control, trash control, parking control, looking out for the welfare of your neighbors, being involved in the community, understanding unique local concerns (e.g. light ordinance in JT or the care of environment concerns in JT). It's not enough to just tell your guests, you have to have checks in place to make sure the noise, trash, and parking do not get out of hand.

I follow listings in certain neighborhoods in JT and have noticed that things are selling very quickly now, often cash offers (as they close within a week). Prices have appreciated a lot, and listings sell for around list. It's obvious what's going on, and I just hope the STR owners will not ruin it by treating it strictly as a business and forgetting about the community at large.

@Steve Enochs -- I have a couple of properties in Joshua Tree and have been looking to branch out to multi-family. Could you message me further details? Busy with renovations so I'm not in front of my computer much and have not figured out how to message through phone app.