If you’re thinking about buying a vacation rental in the Coachella Valley, you’ll want to first understand the Palm Springs Airbnb rules that are in place and how they affect the overall ROI of your investment property.
Because of the rapid growth of vacation rentals worldwide, many homeowners and investors are curious about how they can leverage platforms like Airbnb to increase their financial gain with relatively little risk. What they DON’T often know is how to navigate the risk before and after buying a short-term rental property.
While a long-term rental strategy is more risk-averse option, a vacation rental investment property offers a much higher upside if you do it right. This post will tell you what it means to "do it right" in Palm Springs.
For anyone who is looking to get into vacation rentals, the very first thing we suggest doing is getting an understanding of the vacation rental laws of the target market.
So if you’re purchasing a short-term rental investment property in this popular desert oasis, the very first thing you should be asking is, "Is Airbnb allowed in Palm Springs?"
The short answer is yes—but there are a few caveats.
Palm Springs, California, is a world-renowned tourist destination that has attracted tons of STR investors, especially in the last decade.
As tourism boomed and vacation rentals became more popular, the City had to reconcile the trade-offs between tourism dollars and increasingly agitated residents. Which is what led to Palm Springs being one of the first major vacation destination to revise their Airbnb rules before things got out of hand.
Let's take a look at some of the vacation rental laws currently in place...
Palm Springs Airbnb laws were last updated in April 2017 when Ordinance 1918 was passed by the City Council. It brought about several revisions to the previously enacted Airbnb rules which aimed to increase the barrier to entry for outside investors and slow the unfettered pace of vacation rental growth.
In particular, this new ordinance imposed additional restrictions on occupancy, guest use, and management of short-term rental properties in Palm Springs, adding more complexity to the initial laws enacted by Ordinance 1907.
Here are some of the highlights you need to know about as an STR investor:
These are some of the basic rental rules related to the ongoing operation of your vacation rental property. As you learn more about Airbnb laws, you’ll notice that there are similar rules in many cities.
Where Palm Springs is different, though, is in how residents are protected from “too much” tourism and distasteful renters...
Palm Springs Airbnb laws are some of the strictest in the country because of the City’s nuanced regulatory framework. It’s not just about the lengthy process of obtaining valid permits, it’s also about working within the rental limitations thereafter.
The Palm Springs vacation rental ordinance, which has been in effect for more than a decade, specifies how to conduct business as an owner of a short-term rental property. These laws affect how much you earn and how much you spend while operating.
Here are a few of the main rules to know about once you’ve received a blessing from the planning department:
This is the single most important Palm Springs Airbnb rule you need to understand, which essentially puts a cap on the revenue your vacation rental is capable of generating and, subsequently, your ROI on an investment property.
There are only 32 contracts allowed per calendar year, plus an additional 4 in the third quarter. This translates to 36 opportunities to book travelers and earn rental income that covers the cost of your property while putting some extra dollars in your pocket.
Think about it this way: you have 36 widgets on the shelf and you have to sell each one for as much as possible. They expire at the end of the year so if you don't sell them, you're leaving money on the table. If you sell them too quickly, your business loses money. So you need to take a thoughtful approach about how you sell your widgets, and to who.
Live check-ins basically require that someone meet and greet every vacation rental guest within 24 hours of checking into the property. The idea behind this Airbnb law is to personally reiterate what it means to "be a good neighbor" in the City of Palm Springs.
This also gives owners a chance to verify the age of renters and obtain a signed rental contract for proper record-keeping. If you aren't able to do it yourself, you can hire someone else to do it or enlist the help of a local property management company.
One of the biggest risks of vacation rental neighbor complaints is outdoor noise. The City of Palm Springs is known for having zero tolerance for this law.
It’s fairly easy to prevent violations before they happen if you take proper steps to manage guest expectations. But if you fail to adequately prepare for these situations, you risk a hefty fine and even losing your vacation rental permit which could equate to tens of thousands of dollars in loss of business.
Another Palm Springs Airbnb rule is the requirement of a local contact who is available ‘round the clock, seven days a week. If there are any vacation rental neighbor complaints, this is the person who’s supposed to respond within minutes to address the issue, either virtually or on-site.
If you have someone you trust on the ground, you could ask them to be your local contact and use their number on the city's records. In the case that a neighbor complains, this person would save you from having to drop everything and go to the property to sort things out.
It's important to understand Palm Springs Airbnb rules if you're planning to buy an investment property in the city.
Yes, Airbnb is allowed in Palm Springs, but there's a ceiling to how much you can earn because of the vacation rental laws that exist. While they are more stringent here than in most other markets, these laws also make for a more predictable return.
Operationally speaking, Palm Springs rental rules add a layer of complexity to your management strategy so it's helpful to either know someone or hire someone you can trust, especially if you want your STR to be more passive.
Whether you find a professional vacation home rental agency or make friends with your neighbor and ask him or her to help you out occasionally, it'll make your life a lot easier to have a local presence in your pocket.
If you'd rather not worry about how to navigate the Airbnb rules in Palm Springs, hire a professional to take it off your plate and make your life easier. With Savvy by your side, not only will you do less work and have less stress, you'll actually end up earning more money—even after our fees!
Call us today to discover what it's like to be a Savvy Owner. Or click here to learn more about our full-service property management solution.