I live in a beautiful single level condominium in Palm Springs, CA – It’s Paradise. In late February a unit across the green belt from me sold for a record price. At first I was a little stunned, because it was a mediocre fix-and-flip, and then came the “Seasonal Rental” sign, “oh, an investor” I thought, followed shortly by Coronavirus/Covid-19.
I obviously felt bad for the new owner who had purchased not just the unit itself, but window coverings, towels, dishes, TV’s, furniture and the hundred other items necessary for a proper short-term-rental. It’s never been rented for a day.
In mid March here in Palm Springs, the busiest time of year for our city, all vacation rental owners were told they had to cancel all pending rental contracts. Additionally, short-term-renters already in units, with contracts, had to return home. This past week the city moved to extend the “no short-term rental” policy through the end of May, and it may very well be extended again.
There are not many people wanting to visit Palm Springs in June through September, it’s just too hot – so for this year at best, it’s a total loss.
I lived through the real estate crash of 2008 when over 10 million people lost their homes to foreclosure.
Prior to that crash, I had a friend that placed a deposit on a condominium he had no intention of living in, simply because he knew he could flip it for a profit by the time construction would be complete. Thousands were making these same gambles… the wild west.
The bad news for him and others, all things must come to an end.
Many individuals have jumped on the short-term-rental bandwagon, the question becomes, will there be renters to rent? And what is your holding power?
In perusing the new “homes for sale” listings here in Palm Springs, I’m noticing a few of the homes coming in the market have fabulous decorator touches, decorated to the point they make any hotel room look bland.
The Airbnb and short-term-rentals are arriving.
There are 23,000 vacation rental COMPANIES in the US, I’m not even sure of the number of rentals. There are 535 short-term rentals just in “Downtown Palm Springs” and these short-term-rentals are in every neighborhood in America.
In 1937 Napoleon Hill said “Within every adversity is an equal or greater benefit. Within every problem is an opportunity. Even in the knocks of life, we can find great gifts.”
The sale of short-term-rentals may very well be the solution to the housing shortages plaguing cities across America. The good news for the short-term-rental owners is the real estate market has not crashed – the demand is still high, interest rates are at historic lows and you’ll most likely make a handsome profit.
I’m not an active real estate agent – but if I was, I’d certainly know who I’d be target marketing!
Jeff Hammerberg is a licensed real estate broker and the Founding CEO of GayRealEstate.com, a company serving the needs of the LGBTQ community for over 25 years.