Tuesday, October 10, 2017

Our New Challenge: Vacation Renting

Our family is embarking on a new challenge.  After selling our all time best investment, a home in Sacramento we bought after the crash for $74,000, we are rolling the proceeds into another home in Indio, CA which we intend to use as a vacation rental property.

We currently live in San Diego and will continue to for the foreseeable future, but real estate here is not a profitable investment.  The Coachella Valley is a natural fit for us, as Nancy and I both come from a long line of desert rats.  We met in Tucson, AZ, where I was in graduate school and she was living, and where her sister lives and we currently own 2 rental homes.  When she was a kid, Nancy used to visit her grandparents and drive their golf cart around the Cathedral City Country Club, just about a mile from where my family used to rent a condo during winter break.  My sister's family lives outside Phoenix and my parents have a home in Rancho Mirage, former and future home of Presidents and Movie Stars.

Indio is an odd place.  It's mostly a working class community that has not seen the best of times, somewhat lacking in tourist facilities such as hotels and restaurants, and whose most prominent construction project appears to be a city jail.  It is close to many resort communities, namely Indian Wells and La Quinta.  However in recent years it has shown up on the cultural map, thanks to the Coachella Valley Music and Arts Festival, which apparently attracts 250,000 people, and its country music sibling Stagecoach, located at the Empire Polo Grounds.  These two events, and to a much lesser extent the BNP Paribas Open tennis tournament in Indian Wells, cause rental prices to skyrocket for 3 weekends a year.  Indio is attempting to build on these events by billing itself the "City of Festivals" and organizing several other minor events during the year but none have the draw of these places.  In 2016, there was also a huge event called Desert Trip, featuring the Rolling Stones, Bob Dylan, the Who, Paul McCartney, and Neil Young -- a constellation of brilliant aging rockers appealing to America's most income-disposable demographic -- but that seems to have been a one-off event that was not repeated this year.

So apparently the finagle of owning a rental property in Indio is to capture the high daily rates during those 3 events in March and April, and keep it busy during the rest of the winter or rent to a Canadian snowbird from November through February.  (Unlike Americans, apparently Canadians can still afford to retire or at least take winters off, and many of them come down to the Palm Springs area.)  Then, anything you can get between May and October is gravy.  The number of vacation rentals seems to be increasing quickly so at some point it may make more sense to revert to a full-time rental.

Real estate in the Coachella Valley, and around Palm Springs in particular, has the peculiar feature of being laid out in a checkerboard pattern, with land in each square alternately available to buy from the previous owner, or lease long-term from the Agua Caliente Cahuilla band of Native Americans.  Thus, many of the available properties in our price range, especially condominiums, have both an HOA and a land lease.  You can get a mortgage but the term must end at least 5 years before the end of the lease.

We weren't sure whether to buy a full-time rental or a vacation rental.  I had read a blog post on the AirDNA analytics website suggesting that Palm Springs has one of the best vacation rental markets in the country relative to the cost of investment, which made us look more at vacation properties.  While this may still be the case, after more research on AirDNA, including a paid subscription, I take their conclusions with a grain of salt.  Their estimates seem to be flawed.  For example, I met the owners of a property that AirDNA projected would have income of about $90k/year and they told me that was about twice what they actually were getting.  Another property in the area AirDNA projected $200k/year for a property with only 3 reviews.  I suspect AirDNA extrapolated those 3 peak weeks when this house was rented out to the entire year, even though it is occupied by the owners the rest of the time.

That said, we did a lot of research on where to buy all over the valley, but almost accidentally stopped at an open house that is walking distance from the Empire Polo Grounds, in the Indian Palms Country Club community and wrote an offer.  It's a beautiful 3-bedroom house built in 2005 and in mint condition.  Indian Palms is a nice, laid back gated community with a golf course, a few community pools, and a "Lifestyle Center" with a fitness center.

We will be listing this on AirBnB in the next week or two and will "soft open" by offering it at a low price initially, in order to accumulate some positive reviews.  If you are interested in staying in it, please let us know.

Sunday, March 22, 2015

Tuesday - Huelva

Day 1: Flight to Spain and first evening in Seville
Day 2: Sunday in Seville
Day 3: Monday at the Alcazar
Day 4: Huelva

Our friends Ken and Martha, and their kids Alex, Abi, Andre, and Athena, are living in Huelva for the year.  Huelva is an hour west of Seville on the Atlantic coast, about 30 minutes drive from the border with Portugal.

Wednesday, March 11, 2015

Sunday in Sevilla

Day 1: Flight to Spain and first evening in Seville
Day 2: Sunday in Seville
Day 3: Monday at the Alcazar
Day 4: Huelva

Sleeping Saturday night for the first time in about 36 hours, we awoke at the crack of noon.  Fortunately, that was about the extent of our jet lag for the week.

We met up with our friends again at Prado San Sebastian.  When you travel with your kids and you don't go to Disneyland, you have to incorporate some of this:

Tuesday, March 10, 2015

The Flight to Spain and the First Night in Sevilla

Traveling to Spain

Since we would be spending a lot of time in airports, I splurged on a pair of Admirals Club passes
bought on Ebay for $35.  Each is good for 1 person plus kids, for as many airports as you will be visiting that day.  American Airlines sells them at the door for $50 per pass.  In retrospect, I don't think I would pay more than $5 for the privilege of sitting in an Admirals Club unless I were by myself and had work to do.  We almost missed one flight, and the time when we were stuck hours at the airport, we had to be at the gate because we didn't know when our flight was leaving.

Monday, March 9, 2015

Disneyland too expensive? Spain may be a better option.

Dearest Internet,

After an extended period of introspection and apathy, I write you from a small but lovely apartment in Seville, Andalucia, Spain.  If you don't want to read the details, skip to The Finagle, below.  Details on our trip will be added as I write them.

Thursday, June 5, 2014

Low-Rolling in Vegas for Not Quite Free - Part 3


An original photo, for a change:  our breakfast.

Breakfast at Harrie's

We forewent free breakfast and instead headed 3 minutes up Swenson to our other favorite restaurant in Las Vegas, Harrie's Bagelmania, located in a shopping strip on Twain Ave. that has seen better days.  Once inside, this place feels like old Miami Beach.  Correction, this is Broward County all the way.  You will be welcomed and the person sitting behind you (and it is always one particular person in a party of two or more) is talking so loudly you can hear his entire conversation whether you choose to or not. That, and their website doesn't even have its own domain name, looks like the owner did it herself in 1997 when someone said she needed to get herself a website, and features the disclaimer, "If you have any comments, suggestions or ideas please visit the restaurant."  I did, but I'm fairly certain it had no impact.