Palm Springs Overview
Palm Springs is one of the most renowned desert resorts in the State of California. The city is located in Riverside County and is relatively close to San Bernardino, Los Angeles, and San Francisco. However, it is significantly smaller than these major California cities in terms of both area and population.
The Palm Springs’ economy is driven by tourism. Leisure tourists are attracted by the numerous recreational activity opportunities in Palm Springs including swimming, hiking, biking, golf, tennis, and horseback riding among others. The resort city features a unique landscape combining both desert and mountain areas, providing a rich mix of outdoors entertainment options for the numerous leisure tourists.
In addition to the nature, Palm Springs also boasts an abundant art and cultural scene as yet another attraction for visitors throughout the year. The city hosts plentiful local, regional, and international festivals, conventions, and other regular and one-time events.
In the recent past Palm Springs was famous as the holiday destination of numerous celebrities. However, in the past few years many of them have been relocating their vacation homes to other parts of the Coachella Valley area of the California real estate market.
Another distinctive feature of the Palm Springs real estate market is its status of a snowbird destination. In the winter months the Palm Springs housing market is as popular as Naples, Miami, Boca Raton, and Palm Beach in Florida; Los Angeles, Beverly Hills, and La Quinta in California; Scottsdale and Tucson in Arizona; and Las Vegas in Nevada.
While Palm Springs’ permanent population reaches only about 45.6 residents, this number triples during the winter months, between November and March. The main reason for this massive migration to Palm Springs is the hot desert climate which is characterized by warm winter weather, over 300 days of sunshine, and little rainfall.
The Palm Springs real estate market is dominated by mid-century modern architecture. Many of the local architectural attractions include houses of famous American and international celebrities, businessmen, and politicians, characterized by artistic designs.
Palm Springs has been an attractive location for real estate investing, mostly owing to its standing as a paramount holiday, tourist, and recreational destination. This position has established Airbnb Palm Springs as one of the most successful and profitable vacation rental industries in the entire US housing market.
Palm Springs Real Estate Market 2020 Overview
- Median Property Price: $609,300
- Price per Square Foot: $310
- Real Estate Appreciation: 147% between Q1 2000 and Q3 2019 (above the California real estate appreciation rate and significantly above the national average)
- Days on Market: 138
- Listings for Sale: 382
- Price to Rent Ratio: 21 (high)
- Buyer’s Market or Seller’s Market: A neutral market
- Renters’ Percent of Population: 42%
Palm Springs constitutes a small housing market in the State of California. The median property price of $609,300 surpasses the nationwide median home value of $231,000 by more than 162%. This positions the resort city as rather one of the more pricey US real estate markets. Nevertheless, the average price per square foot is reasonable at $310.
Buying a rental property in the Palm Springs real estate market provides investors with a high profitability in the long run. Natural real estate appreciation for Palm Springs investment properties has accumulated to 147% over the last two decades. This exceeds both the appreciation rate in the California housing market and the US housing market. The prices of Palm Springs homes for sale increased by about 4.9% in the past twelve months, according to data from Zillow. They are forecast to rise by around 4.3% in the upcoming twelve-month period, which puts the expected Palm Springs real estate appreciation rate above the national average for 2020. This means that real estate investors can enter the Palm Springs residential real estate market with confidence and purchase rental properties with a high long-term return on investment.
The short-term rate of return on a rental property in Palm Springs is also placed above the national average, positioning this resort destination as one of the best places to invest in real estate in the US in 2020. This holds true for both rental strategies: traditional rentals and Airbnb rentals.
The above-average return on investment for long term rental properties is dictated by the population growth exceeding the national rate and the relatively high proportion of renters in the Palm Springs real estate market. As many as 42% of Palm Springs residents rent a property rather than own a home. The main cause for this fact is the high price to rent ratio in the local housing market. From homebuyers’ point of view, a price to rent ratio of 20 and above translates into renting being the optimal decision. In this situation the prevailing property prices are simply too high compared to the dominant monthly rental rates. All this is good news for real estate investors who are interested in buying a rental property to operate as a traditional rental in one of the most lucrative locations in the California real estate market. Although the population of Palm Springs is small, there are many renters, pushing up rental demand for traditional rental investment properties.
With regards to short term rentals, rental demand is also strong for Airbnb Palm Springs. As mentioned above, Palm Springs’ population grows three-fold in the winter months of each year. Snowbirds are in search of comfortable, welcoming vacation rental homes to escape the colder states in the warm climate of this resort destination. Even though demand for short term rental properties in the Palm Springs real estate market is somewhat seasonal as limited to the colder months of the year, it is still enough to result in a high profitability for this rental strategy in the Palm Springs housing market.
In sum, the Palm Springs real estate market 2020 is forecast to remain one of the most profitable locations for investing in rental properties, regardless of your preferred rental strategy.
Best Property Types for Investing in the Palm Springs Real Estate Market in 2020
- Single Family Homes for Sale in Palm Springs, CA: 190 real estate listings
- Median Property Price: $872,100
- Price per Square Foot: $380
- Average Monthly Traditional Rental Income: $2,710
- Average Traditional Cash on Cash Return: 0.9%
- Average Monthly Airbnb Rental Income: $5,370
- Average Airbnb Cash on Cash Return: 3.7%
- Condos for Sale in Palm Springs, CA: 174 real estate listings
- Median Property Price: $340,200
- Price per Square Foot: $242
- Average Monthly Traditional Rental Income: $2,080
- Average Traditional Cash on Cash Return: 1.6%
- Average Monthly Airbnb Rental Income: $3,460
- Average Airbnb Cash on Cash Return: 4.6%
- Townhouses for Sale in Palm Springs, CA: 8 real estate listings
- Median Property Price: $453,800
- Price per Square Foot: $278
- Average Monthly Traditional Rental Income: $2,340
- Average Traditional Cash on Cash Return: 0.7%
- Average Monthly Airbnb Rental Income: $3,810
- Average Airbnb Cash on Cash Return: 2.8%
- Multi Family Homes for Sale in Palm Springs, CA: 4 real estate listings
- Median Property Price: $790,800
- Price per Square Foot: $258
- Average Monthly Traditional Rental Income: N/A
- Average Traditional Cash on Cash Return: N/A
- Average Monthly Airbnb Rental Income: N/A
- Average Airbnb Cash on Cash Return: N/A
- Foreclosed Homes for Sale in Palm Springs, CA: 9 real estate listings
- Median Property Price: $747,500
- Price per Square Foot: $280
- Average Monthly Traditional Rental Income: $2,360
- Average Traditional Cash on Cash Return: 1.1%
- Average Monthly Airbnb Rental Income: $4,260
- Average Airbnb Cash on Cash Return: 3.1%
Mashvisor’s Palm Springs real estate data shows that single family homes and condos are the most popular types of homes for sale in Palm Springs at the moment. This housing market trend is expected to continue in 2020. Single family homes make up for half of all houses for sale in Palm Springs, while condos contribute another 46%. Meanwhile, there are only a few townhouses and multi family homes for sale in addition to a limited number of foreclosures. However, with diligent Palm Springs real estate market analysis, savvy investors can find rental properties for sale even from these property types.
Why Investing in Single Family Homes in Palm Springs
The main reason why real estate investors should consider buying a Palm Springs single family home in 2020 is the abundance of listings to choose from. However, if you are willing to invest in this specific property type, you will have to be prepared to pay 43% above the median home price in the Palm Springs real estate market. Nevertheless, with 190 single family homes for sale in Palm Springs, real estate investors are likely to be able to find a profitable rental property within their budget. In terms of return on investment, single family homes are the second most profitable property type in Palm Springs, after condos. But once again, with such an abundance of options, investors should use all available real estate investment tools to search for and find top-performing income properties for their preferred rental strategy. Importantly, single family homes are good for rentals because they attract good, responsible tenants who pay rent on time and don’t cause excessive damage.
Why Investing in Condos in Palm Springs
During Palm Springs real estate market analysis, condos emerge as the best property type for buying an investment property. First of all, they sell for a fraction of the average real estate price in the Palm Springs housing market. This makes them an optimal choice for beginner real estate investors and other property investors who have limited financing opportunities. Second, Palm Springs condos for sale provide the highest return on investment, both as traditional long term rental properties and Airbnb short term rentals. Nonetheless, before buying one of the 174 condos for sale available in Palm Springs, rental property investors should explore the rules and regulations of the homeowners’ association. Many HOAs limit and restrain or altogether prohibit the use of condo units as rental properties, particularly when it comes to vacation rentals.
Why Investing in Townhouses in Palm Springs
Although there are just a handful of townhouses for sale in the Palm Springs real estate market, this is an option worth the attention of real estate investors. Townhouses get listed for three quarters of the prevailing property value in Palm Springs, which makes them a more cost-effective option for new residential property investors.
Why Investing in Multi Family Homes in Palm Springs
Buying a multi family investment property to rent out is a smart real estate investment strategy in any housing market, including the Palm Springs real estate market. Investing in multi family real estate provides an instant diversification of one’s investment portfolio as it includes the purchase of multiple housing and thus rental units with a single real estate deal. Additionally, managing a few rental properties under the same roof is much easier and more efficient than owning and renting out a number of properties in different US housing markets. Besides, hiring a professional rental property management company is an excellent idea with multi family homes for rent. Now, investors should take into consideration than there is only a small number of multi family homes for sale in Palm Springs, CA at the moment. Still, their price per square foot is considerably below the city average, which makes them a superb option for buying a reasonably priced Palm Springs investment property. Because of the limited number of multi family rental homes in the Palm Springs housing market, Mashvisor’s real estate data analysis does not provide estimates of the average performance and rate of return. But using the best real estate investment tools for 2020 such as an investment property calculator, you can analyze the expected performance of any multi family home for sale in Palm Springs, California to choose a top-notch income property to rent out on a short or long term basis.
Why Investing in Foreclosed Homes in Palm Springs
Last but not least, regardless of your choice of a rental property type, you have the option to buy a foreclosure. Investing in foreclosed homes for sale in the Palm Springs real estate market or in any other real estate market comes with many advantages. First and foremost, foreclosures, bank-owned homes, and short sales come at discounted prices as the owners are motivated to sell as quickly as possible in order to recover the remaining part of the mortgage. Our Palm Springs real estate market report 2020 highlights that in Palm Springs, CA foreclosures are cheaper per square foot though their listing price exceeds the city median home value due to the bigger size of these properties. All in all, buying a foreclosed home can be an extremely good real estate investment decision as long as it’s done based on sufficient market research and investment property analysis.
To start exploring the top-performing investment properties of any type in Palm Springs, start your 14-day free trial with Mashvisor today.
Important Statistics for Palm Springs Real Estate Investors
- Crime Rate Index: 6 (100 is safest)
Palm Springs is safer than only 6% of the cities in the US housing market and exhibits a high crime rate of 47 crimes per 1,000 citizens.
- Walk Score: 63
- Transit Score: 36
The Palm Springs real estate market is relatively walkable with a walkability score of 63. This means that some errands can be run on foot. Public transportation features only few available options in the city.
- Cost of Living Index: 122 (below the California cost of living index of 138 and above the national average of 100)
- Goods and Services Index: 108 (less than the California index of 110 and more than the national average of 100)
- Housing Index: 146 (below the California level of 196 and above the national level of 100)
Overall, Palm Springs is a relatively expensive city at the national level but remains cheaper than California cities as a whole. While goods and services are moderately priced, the Palm Springs housing market presents real estate investors with home values which surpass the national median with 46%. Nonetheless, compared to the rest of the California real estate market 2020, Palm Springs homes for sale are listed at reasonable rates.
Property Tax Rates
- Average Effective Property Tax Rate in Palm Springs: 0.83%
- Average Effective Property Tax Rate in Riverside County: 0.968%
- Average Effective Property Tax Rate in California: 0.77%
The real estate tax rate in the Palm Springs residential market is not excessive and unreasonable. The average effective Palm Springs property taxes amount to 0.83% of the assessed value of the home, where the assessed value of the property equals the purchase price at the time of the sale. This property tax rate is below the average level in Riverside County of 0.97% as well as the below the national average rate of 1.03%. Riverside County has the second highest real estate taxes rate in the California housing market after Kern County. California real estate taxes are low on average at 0.77%.
However, when it comes to the absolute value of property taxes in the Palm Springs real estate market, investors should be prepared to pay a considerable sum as a result of the high-priced Palm Springs rental properties. It is crucially important to factor this cost into the rental property analysis to assure positive cash flow and enough return on investment including both a good cap rate and a good cash on cash return.
If, as a real estate investor, you are looking for ways to bring down your ongoing rental expenses, you should consider the option of investing in one of the states with no property tax. These include Alabama, Hawaii, Louisiana, Texas, West Virginia, and Wyoming.
Palm Springs Housing Market: Traditional Rental Properties
- Average Monthly Traditional Rental Income: $2,410
- Average Traditional Cash on Cash Return: 1.2%
- Price to Rent Ratio: 21
- Renters’ Percent of Population: 42%
- Optimal Property Type: Condo or single family home
- Optimal Number of Bedrooms: 1 or 2
- Traditional Rental Listings: 289
Generally speaking, investing in long term rentals will be one of the best-performing real estate investing strategies for beginners in 2020. The benefits are numerous including a stable rental income, minimum rental property management, and the possibility for a passive real estate investment. However, in order to maximize the rate of return on your rental property, it is crucial to buy an income property in one of the best places to invest in real estate in 2020, such as the Palm Springs real estate market.
Rental properties in Palm Springs come with a great rental income which leads to a fairly high cash on cash return as a measure of the return on investment, based on Mashvisor’s Palm Springs real estate data. The truth of the matter is that more experienced real estate investors might frown upon a rate of return of 1.2% as a number above 8% usually qualifies as a good cash on cash return. However, beginners need to remember that this is just the city-level average, while specific Palm Springs houses for sale provide much higher returns. The key to success with investing in Palm Springs rental properties is to conduct careful neighborhood analysis as well as property search and investment property analysis to find a traditional rental property with a top performance.
The factors which affect positively the Palm Springs rental market include strong demand from renters and great rental rates. Rental demand is determined by the fact that as many as 42% of Palm Springs residents prefer to rent a property rather than purchase their own home. The high price to rent ratio of 21 is the grounds for this preference as it indicates than renting makes more financial sense than buying.
If you believe that investing in a rental property in the Palm Springs real estate market is the right real estate investment move for you in 2020, then you should search through condos and single family homes. According to Mashvisor’s Palm Springs real estate market analysis, these two property types bring the highest return on investment with this rental strategy. Meanwhile, investment properties with one and two bedrooms also tend to yield the best rate of return on long term rentals.
Landlord-Tenant Law and Regulations in the Palm Springs Real Estate Market
Broadly speaking, California is a rather tenant-friendly state, and the California landlord-tenant laws apply to the Palm Springs housing market. Besides, there are specific rental rules and regulations particular to Palm Springs with the idea to provide fair housing to all citizens. The Fair Housing Council of Riverside County (FHCRC) is one of the bodies responsible for resolving disputes between landlords and tenants to assure the appropriate implementation of the county and city landlord-tenant laws.
For instance, there exists a limit on the legal amount of security deposits in the Palm Springs real estate market. A landlord can’t ask for a security deposit exceeding twice the monthly rental rate unless the long term rental property is furnished. In addition, deposits are required to be refundable. The landlord has the legal right to withhold all or a part of the security deposit after the tenant moves out in a number of different cases including moving out when owing rent, damaging the rental property beyond normal wear and tear, leaving the rental unit dirties than when moving in, and/or failing to restore personal properties. Otherwise, Palm Springs landlords need to return the security deposit with a written explanation of all deductions within 21 days after the tenant vacates the housing unit.
A landlord in Palm Springs is permitted to enter the rental unit, provided that he/she has given a 24-hour written notice to the renter. The basis for entering the rental property include such reasons as making necessary repairs, improvements, or decorations; allowing workers or contractors in order to implement needed work on the income property; showing the property to prospective tenants, buyers, and/or lenders; and having a court permit to do so.
Speaking of repairs and fixes, tenants in the Palm Springs rental market should request all repairs in a written form and keep a copy of the request. Emergences must be acted upon within 72 hours, whereas non-urgent repairs should happen within 30 days.
The Riverside County landlord-tenant law also stipulates the requirements for informing the renter of a rent increase or the need to move out. If the real estate investor will raise the rent with no more than 10%, he/she needs to notify his/her tenants at least 30 days in advance, while the required minimum period for rent increases of more than 10% is 60 days. The State of California does not impose limits on the rent increase. At the same time, if a landlord in the Palm Springs real estate market wants a renter to move out, he/she should give him/her a 30-day warning in case of a month-to-month lease and the tenant having lived in the rental unit for less than one year. If the renter has occupied the property for more than a year, the required warning period goes up to 60 days. In case of a one-year lease, the tenant is allowed to continue residing in the unit for the remainder of the period. Similarly, when the renter wants to move out, he/she needs to inform the landlord a week in advance in case of weekly rent payments and 30 days beforehand in case of paying rent on a monthly basis.
These are the main rules set by the applicable landlord-tenant legislation in order to assure the provision of the rights of both parties in the Palm Springs real estate market.
If you’d like to explore the opportunities for investing in a traditional rental property in Palm Springs, you should read the law in detail to guarantee that you operate your long term rental in compliance with the law.
Palm Springs Real Estate Market: Airbnb Rental Properties
- Average Monthly Airbnb Rental Income: $4,470
- Average Airbnb Cash on Cash Return: 4.1%
- Average Airbnb Occupancy Rate: 59.4%
- Optimal Property Type: Condo or single family home
- Optimal Number of Bedrooms: 1 or 3
- Airbnb Rental Listings: 281
- Airbnb Palm Springs Legal Status: Legal for owner-occupied homeshares and non-owner occupied vacation rentals, with the latter being rented out for a maximum of 36 guest stays per year. A 11.5% transient occupancy tax needs to be paid on a monthly basis.
- Annual Events in the Palm Springs Real Estate Market with the Best Airbnb Occupancy Rate:
- Palm Springs International Film Festival: beginning of January
The Palm Springs International Film Festival is one of the largest in the entire North America, hosting more than 135,000 attendees and guests each year. The festival shows numerous new and celebrated international features and documentaries. The Film Awards Gala honors the best achievements in the past filmic year.
- Tour de Palm Springs: February
Over 8,000 bike riders of all ages and capacities take part in the annual Tour de Palm Springs. The proceeds go to more than 150 non-profit organizations in the Coachella Valley.
- Palm Springs Modernism Week: second half of February
For 15 years the Palm Springs Modernism Week has been highlighting and celebrating mid-century modern architecture, art, design, and vintage culture, hosting over 350 events featuring all different forms of art.
- Riverside County Fair and National Date Festival: middle of February
The Riverside County Fair and National Date Festival has been running for more than 70 years, providing family fun and entertainment over the course of ten days.
- BNP Paribas Tennis Tournament: March
This two-week tennis tournament combines ATP World Tour Masters 1000 and Sony Ericsson WTA Tour Premier with the best male and female professional tennis player. The BNP Paribas Tennis Tournament brings together to the Palm Springs real estate market more than 300,000 tennin fans.
- American Documentary Film Festival: end of March
The American Documentary Film Festival constitutes the largest and most significant documentary event on the West Coast.
- Coachella Valley Music Festival Weekend One and Two: two weekends in April
The Coachella Valley Music Festival Weekend comprises of a three-day series of events featuring different musical genres such as alternative rock, hip hop, and electronic music. Several states play music continuously, attracting many visitors and guests from all across the US.
- Palm Springs International Short Film Festival (Shortfest): mid-June
Shortfest in Palm Springs is definitely among the most popular and renowned short film festivals in the world. The featured short film genres include live actions, documentaries, and animated films.
As our Palm Springs real estate market analysis 2020 shows, Airbnb is the more remunerative rental strategy in the resort city. This makes a lot of sense keeping in mind that tourism is the driving economic sector in Palm Springs as well as the many tourists who visit the city each and every year.
Mashvisor’s Palm Springs real estate data estimates the average Airbnb cash on cash return at 4.1%, significantly above the traditional CoC return. Nevertheless, even 4.1% sounds like a low return on investment. But you should not forget that this is simply the city average, while some of the most lucrative Palm Springs vacation rentals yield a double-digit rate of return.
When buying an investment property in Palm Springs to rent out on Airbnb or another homesharing platform, focus on homes for sale in Palm Springs with estimated high Airbnb occupancy rate, positive cash flow, and a cash on cash return above 8%. Of course, the latter depends massively on your financing method: mortgage or cash.
Airbnb Palm Springs Laws and Regulations
As a result of the booming tourism industry, Airbnb Palm Springs has been one of the most successful short term rental industries in all of the US housing market. In 2017 Palm Springs hosts generated Airbnb revenue of $29 million. This should come as no surprise taking into consideration the good average monthly Airbnb rental income of $4,470.
Similar to other top locations for investing in Airbnb rentals, local authorities have imposed some strict regulations governing short term rentals in the Palm Springs real estate market. Most importantly though, Airbnb Palm Springs remains legal in 2020.
Palm Springs short term rentals are divided into two main categories. First of all, homeowners in the Palm Springs housing market can rent out a bedroom or a few bedrooms in their primary home while they remain on site for a period of 28 days or less. This short term rental type is known as a homeshare. Palm Springs homeshares can be rented out for an unlimited amount of time per year. The second type of Palm Springs short term rental properties constitutes such which are entire properties – such as a second home or a vacation home – and get rented out for 28 days or less when the Airbnb host is not present. These non-owned occupied short term rentals are called Palm Springs vacation rentals and face a limit of 36 Airbnb guest stays per year. The occupancy of both kinds of Airbnb Palm Springs rental properties is restricted to two adults per bedroom per night and one vehicle per bedroom.
Despite the restrictions on operating Palm Springs Airbnb properties, owning a non-owner occupied short term rental remains legal in the Palm Springs real estate market, meaning that out of state and full time investors with multiple rental properties can benefit from the high profitability of short term rentals in the resort city. This is a major difference between Palm Springs and other most profitable places for buying a vacation rental home such as Los Angeles, San Diego, New York, Chicago, and others.
As mentioned previously in this Palm Springs real estate market 2020 report, the local economy is based and relies heavily on tourism. Naturally, not only hotels but also Airbnb Palm Springs investment properties are a major source of revenue for the local government. Palm Springs Airbnb hosts should be aware of the registration and licensing requirements for operating a short term rental legally.
Both Palm Springs homeshares and Palm Springs vacation rentals need to be registered, and the registration fee amounts to $236 and $944, respectively, to be renewed annually. This will provide the host with a city-issued Registration Certificate. Additionally, Airbnb hosts must apply for a Transient Occupancy Tax Permit. The Transient Occupancy Tax rate is 11.5% and should be filed monthly even in the case of zero Airbnb occupancy during the month.
Best Rental Strategy in the Palm Springs Real Estate Market
Buying a positive cash flow property with a high return on investment depends not only on the location but also on the rental strategy. Some housing markets are better suited for owning traditional rentals, while others offer higher returns on Airbnb rental properties. It all depends on the local economic, demographic, social, and cultural factors and indicators.
Luckily for real estate investors, the Palm Springs housing market is a top location for real estate investing in either strategy. Still, Palm Springs short term rentals supply investors with a considerably higher return. Mashvisor’s analysis of the Palm Springs real estate market 2020 clearly reveals that Airbnb is the optimal rental strategy there.
What factors contribute to this? First and foremost, the large number of tourists who come to Palm Springs, specially in the winter months, due to the warm and mild climate and the winter sun, bring a lot of money to local Airbnb hosts. The rental demand leads to a high Airbnb occupancy rate, which is one of the leading factors for a high Airbnb cap rate and cash on cash return. Snowbirds are the number one element of the success of the Palm Springs Airbnb business in recent years.
Another important component are the endless annual festivals, tournaments, and other events in addition to one-time conferences and others. These occasions spread out throughout both the summer and the winter bring millions of Airbnb guests to the Palm Springs real estate market each year.
Last but not least, the supportive stance of the local authorities who have decided to keep both owner-occupied and non-owner occupied Palm Springs short term rentals legal is equally important. Many top destinations for Airbnb guests have lost their status as the most profitable locations for Airbnb rentals due to the prohibitions imposed by their city councils.
The combined effect is a prospering Airbnb Palm Springs industry with multiple opportunities for savvy real estate investors.
However, if you favor investing in traditional, long term rentals, you should not be discouraged. After all, becoming a landlord rather than becoming an Airbnb host has many benefits such as a more secure source of income, less managing responsibilities, and fewer legal issues and concerns. As long as you make use of the prime real estate investing software tools and apps in 2020, you can locate profit-making traditional rental properties in Palm Springs.
To start looking for lucrative traditional or Airbnb rental properties in the Palm Springs real estate market now, sign up for Mashvisor.
Advantages of Investing in Real Estate in Palm Springs
The pros of buying an investment property in the Palm Springs real estate market in 2020 are many. The most important benefit, of course, is the above-average return on investment for long term and short term rental properties. Mashvisor’s nationwide real estate data analysis demonstrates that Palm Springs is indeed one of the best-performing housing markets for both rental strategies.
The successfulness of traditional rentals is brought by the growing population, the high price to rent ratio, and the fact that 42% of the population prefers to rent rather than own a house.
Airbnb Palm Springs has emerged as such a money-making real estate investments strategy owing to the popularity of Palm Springs among celebrities, tourists, and snowbirds and its reputation as one of the best resort cities not only on the West Coast but also in the entire US housing market. The proximity to major California cities has also played a positive role in this regard. Importantly for Palm Springs short term rentals, the city and county authorities have been understanding and encouraging, choosing to permit both Palm Springs homeshares (owner-occupied primary residences) and Palm Springs vacation rentals (non-owner occupied properties).
The fact that both rental strategies come with a great rate of return means that even beginner investors uncertain of their future path can enter the Palm Springs real estate market with confidence in 2020. They can go for either rental strategy in line with their perceived preference and choice of investment property potential. If a few months of years down the road they realize that they are not well suited for this particular strategy, they can switch to the other.
Disadvantages of Investing in Real Estate in Palm Springs
No real estate market is ideal for investments as they all pose some unique challenges. The most significant factor which Palm Springs real estate investors should take into consideration is the high property prices of homes for sale in Palm Springs. Income properties in the resort city are listed for well above the national home value, which makes financing a rental property somewhat challenging. Nevertheless, property prices in the Palm Springs real estate market 2020 are not as unaffordable as in other California housing markets such as San Francisco, Los Angeles, and San Diego. Creative real estate investors will be able to find ways to take a mortgage loan or obtain another form of investing such as a hard money loan or borrow from private money lenders.
Another obstacle which property investors interested in Airbnb Palm Springs rentals in particular need to contemplate is the seasonality in the Palm Springs housing market. The vast majority of guests and visitors come in November-March to enjoy the sun and warmth as compared to the rest of the US. Nevertheless, there are some events in the summer months as well to prevent a zero Airbnb occupancy rate. To attract Palm Springs Airbnb guests in the off-season time, hosts should consider a flexible Airbnb pricing policy where they lower their nightly rates significantly in the spring and summer.
Palm Springs Housing Market Forecast 2020
On balance, Palm Springs real estate market trends 2020 are looking positive for investors. With regards to profitability, both traditional Palm Springs rental properties and Palm Springs vacation rentals will continue bringing an excellent short-term return on investment, according to Mashvisor’s Palm Springs real estate market analysis. The capitalization rate and the cash on cash return will be way above the average for the US housing market 2020.
Long-term return will also outperform the nationwide level as appreciation will exceed 4%. This means that real estate investors will be making money in the long run too.
Of vital importance is the fact that Airbnb Palm Springs will remain legal for owner-occupied and non-owner occupied short term rentals in 2020. This distinction between the Palm Springs housing market 2020 and other major cities in California and beyond will play a major role in attracting California real estate investors as well as out of state ones.
Resources and Tools for Investors in the Palm Springs Real Estate Market 2020
Buying the Best Palm Springs Rental Properties
The real estate investing world has become incredibly competitive in recent decades as more and more beginners are attempting to join the millions of successful residential property investors in the US. To gain a competitive advantage against the rest, it is fundamentally important to get access to the must-have real estate investment tools including the Property Finder.
Initially, a heatmap tool can help investors get an overall picture of the Palm Springs real estate market providing a color-coded map of the best neighborhoods in Palm Springs, CA for investing in traditional rentals and Airbnb rental properties. Next, an investment property calculator will be of indispensable assistance in analyzing the profitability potential of homes for sale in Palm Springs, whether they will turn into positive cash flow properties, and how much return they will yield. The analysis is based on traditional and Airbnb rental comps from the neighborhood. A rental Property Finder tool will help real estate investors find the top-performing Palm Springs houses for sale based on their preferred rental strategy, budget, and other search criteria and expectations. Lastly, a rental property calculator will speed up the process of investment property analysis to show what rental expenses, cash flow, cash on cash return, cap rate, and occupancy rate a real estate investor can expect from any property in the Palm Springs real estate market in 2020, whether listed on the MLS, a foreclosure, or and off-market property.
Sign up for Mashvisor today to get access to all these real estate investment tools for making profitable property investments in the Palm Springs real estate market in 2020.
Hiring the Top Real Estate Agents in Palm Springs, CA
Working with one of the best Palm Springs real estate agents comes with many advantages, principally for beginner real estate investors, out of state real estate investors, and investors looking for a passive income from rental properties. Even experienced investors might find it beneficial to hire one of the top-performing real estate agents in Palm Springs.
To help you out, here are some of the most popular real estate agents in the Palm Springs real estate market according to data from Mashvisor:
- Palm Springs real estate agent Angela Maciel-Gibbons
- Palm Springs real estate agent Elaine M Stewart
- Palm Springs real estate agent Amie Arbid
- Palm Springs real estate agent Jorge Chan
- Palm Springs real estate agent Sheila Weinberg
Buying an Investment Property at House Auctions in the Palm Springs Real Estate Market
In such expensive markets as the Palm Springs one it is a must to look for opportunities for finding and buying investment properties below market value. This is the best way to push up your return on investment right away. One possible way to do that is to invest in foreclosed homes, bank-owned homes, and short sales. As a savvy property investor, you should keep an eye on real estate auctions – both traditional and online ones – in the Palm Springs real estate market.
Managing Traditional Rental Properties in Palm Springs
A main drawback of investing in real estate properties is being a landlord. This reality prevents many from joining the exciting and profitable world of real estate investments in Palm Springs. But this doesn’t have to be the case. Hiring a professional property manager solves this issue and provides investors with a passive real estate investing in one of the most lucrative housing markets in the US in 2020, namely the Palm Springs real estate market.
Managing Airbnb Palm Springs Rentals
Similarly, if you prefer to go for Palm Springs short term rentals, you don’t have to necessarily become an Airbnb host. Instead, you can work with an Airbnb rental property manager who will handle all the responsibilities associated with owning and renting out a vacation home on your behalf professionally and efficiently. Because of their experience and professionalism, property managers are able to minimize the rental expense and optimize the return on investment, regardless of the chosen rental strategy.
Our Top Real Estate Blogs for Investors in the Palm Springs Housing Market
If you’d like to expand your Palm Springs real estate market research and deepen your understanding of investing in rental properties there, you can have a look at some of Mashvisor’s real estate blog posts related to this:
- Investing in the Palm Springs Real Estate Market: What You Need to Know
- Should You Invest in the Palm Springs Real Estate Market 2019?
- Airbnb Palm Springs: A Good Real Estate Investment in 2019?
- Palm Springs Real Estate Market 2018 – Forecast and Overview
- Airbnb Palm Springs 2018 – Is It a Good Investment?
Other Best Places to Invest in Real Estate in 2020
In case you’ve decided that the Palm Springs real estate market might not be the best option for expanding your investment property portfolio in 2020, you should have a look at some of the other top-performing locations in the US housing market 2020:
- Atlanta Real Estate Market
- Austin Real Estate Market
- Baltimore Real Estate Market
- Boston Real Estate Market
- Charlotte Real Estate Market
- Chicago Real Estate Market
- Columbus Real Estate Market
- Dallas Real Estate Market
- Denver Real Estate Market
- Houston Real Estate Market
- Jacksonville Real Estate Market
- Las Vegas Real Estate Market
- Los Angeles Real Estate Market
- Miami Real Estate Market
- Nashville Real Estate Market
- New York Real Estate Market
- Orlando Real Estate Market
- Philadelphia Real Estate Market
- Phoenix Real Estate Market
- Portland Real Estate Market
- Raleigh Real Estate Market
- Sacramento Real Estate Market
- San Antonio Real Estate Market
- San Diego Real Estate Market
- San Francisco Real Estate Market
- Seattle Real Estate Market
- Tampa Real Estate Market
- Washington Real Estate Market