All Forum Posts by: Peter Wilkins

Great thread, thanks everyone for the insight.

I have been looking for a couple of months now at making my first-ever real estate investment in a Palm Springs STR. Prices have spiked so much that the numbers are tough to work out. I'm looking at mostly 10-19% CoC return *at list price*, and most of these properties are getting multiples and going over. This could still work for me as we'd like to have a second home there that we can spend time at, but to run this like a proper business including cash reserves for 6 months opex on top of the 20% down payment is a pretty large initial capital investment.

Has anyone bought a STR property in Palm Springs recently (last year) and had success with it?

I also noticed that Bermuda Dunes allows STR and prices are lower, has anyone attempted that?

We're also considering buying a much cheaper property somewhere that doesnt allow STR, and instead doing a monthly or "seasonal" rental, which still allows us to enjoy the property part-time. Has anyone succeeded at this? Thanks in advance!

Great thread, thanks everyone for the insight. 

I have been looking for a couple of months now at making my first-ever real estate investment in a Palm Springs STR. Prices have spiked so much that the numbers are tough to work out. I'm looking at mostly 10-19% CoC return *at list price*, and most of these properties are getting multiples and going over. This could still work for me as we'd like to have a second home there that we can spend time at, but to run this like a proper business including cash reserves for 6 months opex on top of the 20% down payment is a pretty large initial capital investment.

Has anyone bought a STR property in Palm Springs recently (last year) and had success with it?

I also noticed that Bermuda Dunes allows STR and prices are lower, has anyone attempted that?

We're also considering buying a much cheaper property somewhere that doesnt allow STR, and instead doing a monthly or "seasonal" rental, which still allows us to enjoy the property part-time. Has anyone succeeded at this? Thanks in advance!

@Kristel Daugherty thank you, this is good advice if I decide to rent.

@Scott Jensen Thank you Scott, this is the kind of analytical tool I'm looking for to help me decide.  The answer is no: I would not purchase this house as a rental investment OR as a primary residence if I had a do-over.  The best case scenario for rental income is 3.7% / month of the purchase price.  I think getting as much of my money back out as i can and then deploying it into either a smart rental investment where the numbers make sense, or another primary residence if/when the time comes that I actually want to be in is the way to go here.

@Thomas Cummings Approximately $691 principal. I wouldn't strictly need that money back out to buy another place, although it would help. I was considering a cash-out refi to pull 20% out.

@Thomas Cummings

Principal + interest = 2528.36

If I was to purchase another home, it would be at least another year. I would not strictly need all the equity from the current home to do this, although it would help. I was considering a cash-out refinance to get some of the equity back out as 40% is a lot.

I can swing losing $500 a month for the next year, but it's not a tenable long-term situation. Given that in order to be break-even we'd need rents to keep going up, it seems like this is a bad investment as a rental property.  

@Megan Shay Thank you for the offer. I've had multiple comps ran, and I've been keeping a very close eye on the market here. I'm confident that the home is worth around ~$820k-$850k right now.

Hello all! This is my first post here. Looking forward to getting involved with the community. I've listened to many podcasts, read several blog posts, and want to eventually start working on real estate investment deals on the side (perhaps starting with BRRRR). But first, I would love to get YOUR opinion on how I should proceed with my specific situation I got myself into *before* starting my self-education on real-estate investing,.

I'm currently living in the Seattle area, where I purchased my first SFH a year ago as my primary residence. It was an extremely competitive market back then and I got into a bidding war and ended up overpaying pretty significantly for my home by buying at the top of the market in a desirable neighborhood for a turnkey house.

A year later, I've accepted employment in the Los Angeles area and I'm relocating. So now I have to decide if I want to rent out my home, deal with a property management company cross-country, be cash flow negative for a while, or sell the home at a loss and reinvest the money elsewhere.  

The House

3b/2.5ba 1915sqft SFH in zip 98029

Purchase price: $865,000

40% down -> 499k 30 year fixed mortgage @ 4.5%

Remaining mortgage: $489k. PITI: $3172 / month.

I bought at the very top, home has depreciated about 50k over the past year :-(. I put 25k into updates before moving in (new floors, carpets).  

Clearly this was a bad investment from the get-go and I have experienced tremendous buyers remorse about this. It has been a nice place to live however, but now that I'm moving:

If I sell, I probably couldn't get more than $820k for it, putting my loss at 100k or more. But I get the rest of my down payment back out and could invest in something smart, or a better deal on a primary residence elsewhere.

If i rent, I would be hard pressed to get more than 3k / month.  Even if I could rent it at $3172 (break even), I'd be losing ~$317 / mo to the property management company, + any expenses that come up like repairs or vacancy (we're in an in-demand neighborhood). But, I'd get the tax break, and maybe if I rent long enough it will start to appreciate again?

Would you sell or rent the home and why?