Palm Springs is a low DSCR friendliness short-term rental market within the Desert / luxury category. Property type and tourism patterns drive STR economics here in particular ways that distinguish Palm Springs from peer destinations.
Palm Springs, CA is a low short-term rental DSCR market. Property type: Desert / luxury. Median home value approximately $725K. Average nightly rate: $395.
Occupancy rate in Palm Springs averages approximately 62%, which combined with the nightly rate produces gross annual revenue per property of approximately $89K.
Palm Springs STR strictly regulated by city. STR regulatory environment in Palm Springs: restrictive.
Palm Springs seasonality and tourism patterns
Tourism patterns in Palm Springs produce specific seasonal patterns. Lenders annualize these patterns when computing DSCR coverage.
Palm Springs STR economics
Running the numbers for a Palm Springs STR acquisition: gross revenue around $89K annually based on 395 per night and 62% occupancy. After operating costs and debt service, net cash flow depends on financing terms. Capital required at acquisition: down payment plus furniture and setup (typically $15K-50K) plus reserves.
Palm Springs specific FAQ
Palm Springs sees varied seasonal patterns. Lenders use annual averaged occupancy in underwriting.
Property type performance varies in Palm Springs. Analyze comparable data via AirDNA.
Palm Springs has restrictive STR regulations.
Palm Springs averages approximately 62% occupancy. Premium properties outperform; standard properties cluster near average.
Palm Springs averages approximately $395 per night. Premium units command 1.5-2.5x average.
Full-service STR management in Palm Springs runs 20-35% of gross revenue. Co-host arrangements run 15-25%. Self-management saves the fee but consumes 10-20 hours weekly.
A Palm Springs STR at the median home value of $725K typically requires 25-30% down, furniture and setup ($15K-50K), reserves (6-12 months PITIA), and closing costs. Total initial capital roughly $289K+.
Bottom line for Palm Springs STR investors
Palm Springs STR works for investors comfortable with the desert / luxury operating profile and restrictive regulatory environment. Match the property to the market and the math typically works. Mismatch and the property struggles regardless of underwriting.
STR regulations vary by city and change frequently. Verify current local rules before acquisition.