BY BRUCE CATHCART
Spring has sprung here in the Coachella Valley and that means it is that time of year again when our three big music festivals return. You most likely have heard the unbelievable stories about homeowners who are actually moving out of their own homes and renting them to complete strangers for ridiculously large amounts of money over the Coachella and Stage Coach Weekends. Surprisingly most of them are true! An average home or condo can rent for up to $5,000.00 each weekend while luxury homes can go for anywhere from $15,000.00 to $30,000.00 for EACH WEEKEND! Some homeowners manage to pay their home mortgage payments for the entire year just by renting their homes out for these three weekends. But before you convert your house from a home to a hotel to get your hands on some of these big bucks there are several things that you will want to consider to protect yourself and your ASSets!
I’ll get to my best advice to consider right after we check the month of March home sales data for the Coachella Valley. We started off the first two months of 2018 continuing our trend of more pendings and solds each month, year over year, and on track to exceed last year’s totals which were the highest in the last 13 years! With our inventory shrinking and interest rates rising would we be able to continue this trend? Let’s take a look at the March data and see how we did.
According to the Desert Area MLS as of 4/1/18 there were 1,255 pending transactions of residential properties here in the Coachella Valley in the month of March. That follows our seasonal pattern being up from the 1,186 pendings in the previous month (February) and very close to the same number when compared to the same time last year when we had only 1,268 pending sales. The fact that it is fewer pending sales than last March breaks the trend of monthly pending sales increasing year over year for the past 4 years. In February there were 714 solds and we were up considerably in March with 1,004 solds. That is still slightly fewer than last year’s home sales in March (2017) when we sold 1,047 homes. This too breaks the trend of monthly solds increasing year over year for the past 4 years. Though the decrease in both year over year pendings and solds is very slight, with interest rates rising and inventory falling it is definitely something we need to pay close attention to in the coming months. Our Year to date solds for 2018 stands at 2,527 compared to last year’s total of 2,542. Last year was the best year in terms of total sales and dollar volume since 2005 and was a great year for the Coachella Valley Real Estate market. Even though we are only a few homes behind last year’s numbers, we ended the first quarter of 2018 in very good shape!
Our inventory of homes for sale went down again this month with 3,726 homes available on April 1, 2018 compared to 3,846 homes available on March 1, 2018. Last year at this time we had 4,674 homes available for sale. Inventory has been off by over 20% but so far that has not significantly affected our sales numbers. Hopefully it will not become a factor this year. So far, so good for now! We’ll just have to keep a close watch the inventory of homes here in the Coachella Valley and see if it continues to shrink along with our sales numbers throughout the coming months.
Homes rentals here in the Coachella Valley are considered either long term, seasonal or short term (“vacation rentals”) depending upon the length of the rental period. A long term rental is usually rented without furnishings for six months to a year. A seasonal rental is rented “turn-key furnished” (which means just bring your clothes and toothbrush) for a minimum of 30 days and up to six months. Short term or vacation rentals are also rented turn-key furnished and can be for as brief as a single night but not longer than 30 days… like a hotel. In order to take advantage of all three music festivals your home will have to be rented out as a short term/vacation rental. The first thing that you must do is to check with the City or County to see if they allow short term rentals (STR) in their jurisdiction and if they do is a license/registration/permit required. Learn about their special rules and regulations as well as the fines associated with the breaking of those rules as they can be just as exorbitant as the rental amounts! If your home is located in a gated community with a Home Owner’s Association (HOA) you must check with the HOA to see if they allow STR and if they do is a license/registration/permit required. If you are still good to go, then you will want to check with your insurance agent about getting Vacation Rental Insurance. This is different from your regular home owners insurance and you will want to make sure you have full coverage. Next you will need to get a good contract to use with your renters. Having a written agreement will protect both parties should anything not go exactly as planned during the rental period. You must also have a means to accept payment and a security deposit for the rental. Setting up online payment processing is super easy and will allow you to take credit cards for both the rent and deposit. Having a credit card from the responsible party can also help keep damages to a minimum! Finally, it is recommended that you lock up or remove your valuables and irreplaceable items from your home for the duration of the rental. These are just a few of the important things I recommend you consider to protect yourself and your property if you decide to rent your home out as a vacation rental. Of course my best advice on this is to speak with your trusted real estate professional and get their recommendation and contact information for a Vacation Rental Property Manager. These professionals specialize in short term rentals and will have the necessary information, contracts, ability to accept payments, locate renters and advise you every step of the way for a fee equal to 20-30% of the rental amount.
Join me each month this year as we keep a close eye on our Coachella Valley real estate market. If you have a real estate question or concerns please email me at the address below.
Bruce Cathcart is the Broker/Co-Owner of La Quinta Palms Realty, “Your Friendly Professionals” and can be reached by email at email@example.com or visit his website at www.laquintapalmsrealty.com.