Every year in the US real estate market, short-term rentals become more and more popular and with that, they become more and more profitable. An Airbnb rental is, on average, the best real estate investment in many state and local markets according to Mashvisor’s data. The California real estate market, for instance, is known for its Airbnb success. Arguably one of the most overlooked Airbnb markets is in Palm Springs, California. How lucrative is Airbnb Palm Springs? Why should you prefer the Palm Springs real estate market over other markets? And most importantly, is Airbnb legal in Palm Springs? Keep reading this post to find out!
Related: Should You Invest in the Palm Springs Real Estate Market 2019?
Is Airbnb Legal in Palm Springs?
There is a lot to discuss when it comes to the Airbnb regulations in Palm Springs. For starters, is Airbnb even legal in Palm Springs? The answer is yes! Airbnb is fully legalized in Palm Springs, California. We’ll break down the Airbnb laws in the city into the following categories:
According to Palm Springs law, short-term rentals fall under two types. Airbnb non-owner occupied rentals are classified as vacation rentals. Vacation rentals are rented out for 28 days or fewer. If a portion of the property, such as one or more bedrooms, is rented out with the owner present, the property is known as a homeshare. Homeshares, like vacation rentals, are rented out for 28 days or fewer.
Airbnb Palm Springs has several operating requirements. Airbnb hosts are required to have a Vacation Rental/Homeshare Registration Certificate and a Transient Occupancy Tax Permit. Investors who do not obtain a Registration Certificate will face a $5,000 fine and permanent ineligibility for operating a vacation rental. Airbnb hosts also require a “responsible person” over the age of 25 to perform the following duties:
- Sign a contract with the operator.
- Meet and greet guests in person to explain the rules and regulations.
- Obtain a signature of receipt of the Statement of Rules and Regulations/Good Neighbor Procedure.
Transient Occupancy Tax
Owners of Airbnb Palm Springs investment properties are required to pay an 11.5% Transient Occupancy Tax.
Airbnb hosts will receive a four-digit City ID number when they complete the application for the Vacation Rental/Homeshare Certificate. The City ID number must be included in the property’s advertising description using the following format: “The City of Palm Springs ID #XXXX”.
Occupancy and Night Limits
Airbnb regulations in Palm Springs also include occupancy and night limits. For occupancy limits, the limit is 2 adult overnight guests per bedroom and 1 vehicle. As for night limits, vacation rentals have a limit of 32 guest stays per the calendar year with an additional 4 guest stays during July, August, and September. Homeshares, unlike vacation rentals, do not have annual limits for guest stays.
Related: Your Real Estate Investment Guide to Airbnb Rental Properties: Where Is Airbnb Legal?
How Airbnb Palm Springs Is Performing in 2019
Now that we’ve discussed the regulations in the city, we can discuss how the market is currently performing. The best way to analyze Airbnb Palm Springs investment properties is to use an Airbnb profit calculator. Where can you get access to such a calculator? Right here at Mashvisor! To learn more about Mashvisor’s Airbnb profit calculator, click here! In the meantime, here are the Airbnb analytics of the Palm Springs housing market:
- Median Property Price: $611,787
- Price per Square Foot: $307
- Price-to-Rent Ratio: 23
- Rental Income: $5,097
- Cap Rate / Cash on Cash Return: 5.7%
- Occupancy Rate: 62%
Related: Airbnb Analytics: How Investors Stay Ahead of the Competition
Why You Should Invest in Airbnb Palm Springs
As you can see from Mashvisor’s Airbnb analytics, there is much to be said about investing in Palm Springs real estate. We’ll use this helpful data for a full break down of the market. Here are the reasons why Airbnb real estate investors should purchase a Palm Springs investment property.
Cities that rely on tourism are often some of the best cities for Airbnb investment, and this is definitely the case for Palm Springs. Tourism is the largest industry in the region, with 1 in 4 jobs being tourism-based. The industry generated over $5.5 billion for the economy in 2017. As it pertains to Airbnb short-term rentals, over 600,000 visitors resided in STRs during the last year. These tourism figures make Airbnb Palm Springs ripe with investment opportunities that enjoy a high Airbnb occupancy rate as we continue through 2019.
Besides the Airbnb occupancy rate, another driving force of rental property profitability is rental income. As seen in the Airbnb analytics, the average investment property is extremely profitable, with an average rental income of a whopping $5,097. Return on investment is also high at 5.7%. These figures are only averages, meaning the typical Airbnb Palm Springs investment property will most likely have even higher statistics than these averages.
A Palm Springs real estate investor will also benefit from the market’s high appreciation rate. According to Neighborhood Scout, during the last 12 months, the Palm Springs real estate market appreciated by 9.69%. This rate is higher than 90.45% of cities and towns in the nation. The city’s high appreciation rate has historical precedence. During the last 10 years, the Palm Springs real estate market appreciated by 70.28%. This places the city’s rate in the top 10 percent in the US. Palm Springs’ appreciation rates are still high in 2019. During the latest quarter, the appreciation rate was 2.44%. This equates to an annual appreciation rate of 10.11%. Appreciation is an excellent added bonus to investing in Palm Springs real estate.
Excellent Market Relative to the State
Palm Springs is exceptional, even in a state known to have some of the best Airbnb markets. According to Mashvisor’s Airbnb analytics, the average rental income and ROI in the California real estate market are $3,419 and 2.41%, respectively. As discussed previously, Palm Springs’ values for these metrics are much higher. The Palm Springs real estate market is also better than the state median in terms of the property price. The median California property price is $693,843, while the median Palm Springs investment property price is $611,787.
It’s also key to remember that a lot of cities in California have banned Airbnb for real estate investors and even for homeowners. So, a market like Palm Springs that not only allows non-owner occupied properties but will also be profitable is definitely the place to start your Airbnb property search.
To start investing in profitable Airbnb Palm Springs investment properties, click here to start your 14-day FREE trial with Mashvisor!