Airbnb Rental Arbitrage in Joshua Tree | What You Need to Know

Airbnb Rental Arbitrage in Joshua Tree | What You Need to Know

What is Rental Arbitrage?

Rental arbitrage is a type of subletting where the tenant of a long term rental rents out the property on a short term basis. The tenant will have signed a long term lease agreement with the owners of the property. They will usually list the property on online vacation rental booking platforms like Airbnb and VRBO.

Tourism Potential

Located in the Mojave/High Desert of California, Joshua Tree is a census-designated place in San Bernardino County, California. It is bordered by Twentynine Palms, Yucca Valley, Landers, and Coachella Valley, and also draws visitors attending events and visiting those areas. They are sometimes also confused for being Joshua Tree itself.

Joshua Tree is best known for being an artist and artisan community as well as a spiritual and alternative healing retreat. It is one of the last remaining vestiges of SoCal’s boho desert culture. It is also the last Wild West with enough space to hike or drive without encountering another person for a long time.

The best performing Airbnb market for Joshua Tree National Park, one of the most popular national parks in the US, drawing over 3 million visitors in 2021, the desert city is also a great place to experience wide expanses of starry skies, contemporary art with a tendency for the weird, Old West vibes, peaceful seclusion, and both luxury and some of the most unique stays.

The city is a desert oasis for luxury travelers looking for escape and/or a party in the desert to the spiritual-minded, artists, designers, musicians, and other creative types, western fans, outdoorsy and sports-minded, and those who just want to experience meditative solitude.

While not overrun with tourist infrastructure, Joshua Tree boasts several cuisine hotspots. It also hosts and is in the vicinity of many music festivals and events.

Rental Arbitrage Potential

According to data from AirDNA, a leading provider of data and analytics to the short term rental industry, in Joshua Tree:

  • Rental Demand is 75

  • Average Daily Rate (ADR) is $290 (Dec 2021)

  • Average Occupancy Rate is 81% (Apr 2022)

  • Average Monthly Revenue is $5,800 (Apr 2022)

However ADR can vary across the town and range from over $1,100 for a villa or lodge home to little over $100 for a trailer.

Meanwhile, 97% of active short term vacation rentals are entire homes with 2-bedroom properties being the most common, followed by 1- and 3-bedroom properties. Sixty-four percent of short term rentals list only on Airbnb while 27% list on both Airbnb and VRBO.

  • The most popular cancellation policy is strict (37%) followed by moderate (27%) and flexible (23%)

  • Most visitors stayed 2 nights (48%) or 1 night (45%)

Meanwhile, according to Rent.com, rents for a home range from $1,500 to $5,500 per month depending on the type of property and its location.

South, Downtown, and North Joshua Tree are top earners in the city for short term vacation rentals.

Airbnb Rental Arbitrage in Joshua Tree, CA

Airbnb Rules in Joshua Tree | Short Term Rental Laws, Regulations, and Taxes

The community of Joshua Tree is unincorporated. It is represented by the Joshua Tree Municipal Advisory Council as the official liaison between the community and the San Bernardino County government under whose purview it falls. Because the state of California does not impose any regulations or taxes on short term vacation rentals, Airbnbs in Joshua Tree are primarily controlled by the County government.

Airbnb Laws and Regulations in Joshua Tree

Definition

San Bernardino County defines a short term rental unit as a residential dwelling unit or portion thereof rented or otherwise used for residential transient occupancy.

Transient occupancy is understood as being occupancy for 30 consecutive calendar days or less.

Permit

Short term vacation rentals are required to have a permit to operate in Joshua Tree. Permits are issued by County Code Enforcement.

Permit Eligibility

  • The owners of the property, contractors licensed with the State of California, and authorized agents for the property owner/contractor can file to obtain a short term rental permit. A tenant of a building can file for a permit only if they are an agent for the property owner or contractor.

  • Each legal dwelling unit requires an individual permit.

  • One person is allowed a maximum of two permits. Old property owners with more however are grandfathered in.

  • A maximum of two short term rental permits can be issued for a parcel of land 2 acres or greater. A maximum of one short term rental permit can be issued for a parcel less than 2 acres.

  • An individual apartment located within a multi-family residential project is not eligible for a permit.

  • Short-term timeshare occupancy of a condominium unit may be authorized by the condominium owners’ association or other governing body having jurisdiction over the timeshare complex, provided enforcement of such occupancy requirement is performed by the same association or governing body. Such occupancy shall not be subject to a STR permit.

  • A single owner is not eligible for more than two STR permits.

  • An STR permit is not transferable. The new owner must apply for a new permit.

  • An alternative shelter such as a trailer, RV, tent, or recreation cabin is currently not eligible for a short term rental permit. Rental of an alternative shelter may be permitted as a campground use.

Airbnb Rental Arbitrage in Joshua Tree, CA

Permit Application

  1. Airbnb operators can submit their applications at the online portal. It is recommended to follow the electronic document guidelines when uploading documentation and avoid using characters in file names.

  2. Once the application has been reviewed for applicability and completeness, it is emailed to the applicant with the appropriate fees assigned. Once the fees are paid (online or at the County government center in Joshua Tree), a notification is sent to surrounding properties and a property inspection is assigned.

  3. If the property passes inspection, the application is assigned to permitted staff again. If it does not pass, the application is emailed to let them know alongwith mention of the required corrections. Applicants can obtain 30 days to make minor corrections. However, some violations may result in immediate denial of an application.

  4. The successful applicant is notified by email of the permit, conditions of operation, and Good Neighbor brochure which are saved to the permit record. The permit and documents are to be downloaded and utilized accordingly.

  5. Any changes to the information provided in the permit application must be informed to the department.

Permit Appeal by Non-Applicants

Notice will also be sent to all surrounding property owners informing them that a permit has been issued including the applicable appeal provision. Appeals by non-applicants must be submitted within 30 calendar days following the date of the notice. The grounds for appeal however is limited to the claim that past use of the property as a short term rental has not complied with one or more requirements of Sections 84.28.060(b) through (c), or Section 84.28.070, or that, based on competent evidence, any prospective use for such purpose will likely not comply with one or more of such requirements.

Permit Renewal

  • Permits must be renewed annually.

  • Renewal payments submitted after permit expiration are subject to a delinquent fee and continued use is prohibited until the full payment has been received by the County.

  • If the payment is not made within 45 calendar days of permit expiration, the permit expires permanently. To begin operations again, a new permit will have to be applied.

Zoning

It is important to find your property’s accessor parcel number (APN) before beginning your application. This ensures the property in question is within the jurisdiction of the County.

Building and Safety Permits

Applicants can request an inspection for building and safety permits or by calling the Building and Safety Department, Department of Public Work, and Office of the Fire Marshal. The approved plans must be made available to the inspector upon arrival.

Noise Monitoring Program

It is unlawful for an owner, renter, occupant, or guest at a short term rental to make or allow to be made any loud, excessive, or intrusive noise that disturbs the peace or causes discomfort or annoyance to any reasonable person of normal sensitivities in the area. These noises may include but are not limited to shouting, loud laughter, whistling, singing, playing a musical instrument, playing loud music or noise from sound making or sound-amplifying devices, and barking dogs.

Short term vacation rental operators who purchase an approved outdoor sound monitoring system are eligible for a one-time $150 fee credit. The system will send out a text alert when the noise limit has been exceeded.

Airbnb Rental Arbitrage in Joshua Tree, CA

Occupancy Limits

  • Occupancy limits are based on the number of bedrooms in the STR, allowing a maximum of two people per bedroom. The number of bedrooms will be verified using County Assessor data and County building records. For example:

    • Studio/Single-bedroom STR: 4 occupants
    • Two-bedroom STR: 4-6 occupants
    • Three-bedroom STR: 6-8 occupants
    • Four-bedroom STR: 8-10 occupants
    • Five-bedroom STR: 10-12 occupants
  • In addition to the occupancy limits determined based on the number of bedrooms, up to two minor children under the age of 18 may be added to the calculation of STR occupancy.

  • Kitchens, bathrooms, toilet rooms, living rooms, dens, dining areas, halls, closets, storage or utility spaces, and similar areas are not considered bedrooms and cannot be used in the calculation for determining the maximum number of occupants.

  • Notwithstanding the allowances based on the number of bedrooms, the maximum occupancy of any STR cannot exceed 12 occupants, including children.

  • Furthermore, the use of a STR will be limited by the capacity of on-site parking spaces.

Parking

  • All vehicles of STR occupants and their guests must be parked on the STR property.

  • Parking spaces can include garage, carport, and driveway spaces, and may allow for tandem parking.

  • On-site parking areas must be kept free from any obstructions, including, but not limited to, excessive amounts of snow, which would prevent use for vehicle parking.

  • Only the approved parking areas/spaces mentioned in the permit can be used for vehicle parking.

  • No vehicle related to the STR can be parked on neighboring properties or on public or private roads, or in any manner that would create an obstruction.

Record Keeping

  • The property owner or property manager must maintain records sufficient to prove compliance with all applicable laws.

  • The records must be maintained so that they can be readily provided to the County and in such a manner that shows that the property owner or property manager is routinely maintaining such records.

  • Registration must be administered prior to allowing occupancy.

  • Registration must include reviewing STR regulations with at least one adult renter. They must be provided a complete written or digital copy of the requirements of the STR permit and applicable regulations, as well as disclosure of the penalties associated with violations. The registration material must advise the renter of the occupancy and vehicle/parking limitations, responsibility to avoid nuisance behavior, and prohibition of commercial.

  • The renter must sign an acknowledgement which must be retained by the owner in their records for the time of the permit.

Airbnb Rental Arbitrage in Joshua Tree, CA

Good Neighbor Information

In addition to the required posted notices, renters must also be provided a brochure or document intended to remind them that the STR is located in their neighborhood and promotes respect for residents of the neighborhood, including their rights to expect peace, quiet, privacy, and security.

Call Response

  • The owner or agent must be personally available by telephone on a 24-hour basis and maintain the ability to make contact by phone within 30 minutes and be physically present at the property within one hour in order to respond to and remedy complaints regarding the condition or operation of the dwelling unit or the behavior of persons on the property in violation of the law.

  • Within one hour of receiving a report of a complaint, the STR owner must confirm whether or not the complaint is valid. If the complaint is valid, the STR owner must immediately take corrective action within the lawful authority of the owner to resolve the violation or stop the nuisance behavior that disturbs the peace for the entire duration of the occupancy of the person causing or allowing such violation or nuisance behavior. Corrective action may require immediate eviction of the renters and contacting law enforcement, if necessary, for the removal of renters, guests, and their vehicles from the property to the extent authorized by law.

  • Owners must keep a written record of the times and type of complaints received, what response was undertaken, and when such complaints were resolved. This written record must be made available to the County upon request and should be retained by the owner for the term of the permit.

Trash Collection

  • In the Desert Region, owners must procure trash collection service and trash collection containers from the County-approved refuse collection hauler when the service is available except trash collection service. Containers are optional if the owner resides on the property and removes trash promptly. A sufficient number of containers based on the occupancy levels of the rental unit must be procured.

  • Trash must be removed from the premises after each occupancy unless routine commercial trash collection is provided to the premises.

  • Trash must be properly disposed of in trash receptacles. All exterior trash can lids must be secured with self-contained locking handles, bungee cords, or other suitable methods and trash cans must be secured in an upright manner.

  • Accumulation of trash and debris on the property or within the residence is prohibited.

Animals

  • Pets must be leashed or kept in an enclosed area on the property at all times.

  • A dog cannot be kept or maintained on the property without a current license issued by the County or other municipal dog licensing agency.

  • The person owning or having control of any animal cannot allow it to stray or run at large upon any unenclosed area on or off the property.

  • A dog cannot be brought off the property unless it is restrained by a leash and the person is competent to restrain the dog, or the dog is properly restrained and enclosed in a vehicle, cage, or similar enclosure.

  • The animal cannot be allowed to create excessive noise.

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Airbnb Rental Arbitrage in Joshua Tree, CA

Other Short Term Rental Rules

  • The short term rental cannot be used for any commercial activity, which includes but is not limited to weddings, receptions, corporate retreats, business meetings or conferences, filming, photo shoots, parties, or any similar activities, unless regulated under an applicable approved County-issued permit.

  • The owner is responsible for compliance with the California Fire Code, California Building Code, the National Fire Protection Association Standards or regulations, and any other applicable uniform codes, as adopted by San Bernardino County, and other applicable laws and codes.

  • The permit must be posted inside the unit on or adjacent to the front door, along with an exit/emergency evacuation map.

  • A clearly visible and legible notice must also be posted in a prominent location within the unit, containing the following information:

    1. Address of the STR
    2. Name of the managing agency, agent, property manager, or owner of the unit, and a telephone number at which that party may be immediately reached on a 24-hour basis
    3. Maximum number of occupants permitted to stay overnight in the unit
    4. Maximum number of vehicles allowed to be parked on the property
    5. Contact person or agency, and phone number for snow removal
    6. Instructions for disposal of trash
    7. Notification that failure to comply with any and all requirements may result in enforcement actions to address the violation
    8. State in a prominent format that users of the dwelling unit are prohibited from disturbing the peace of the surrounding neighborhood and that doing so is a violation
    9. Location of utility service connections, including how to access service connections and instructions and any tools necessary to disconnect the STR from utility services in the event of an emergency
    10. Phone numbers of local emergency medical and law enforcement services
    11. Property boundary map for the purpose of deterring trespassing on other privately owned properties and identification of the approved parking area(s)
  • Every short term residential rental unit must be cleaned after each occupancy, including the cleaning and changing of any linens provided for renter use.

  • Spas/hot tubs must be covered and locked when not in use.

Airbnb Taxes in Joshua Tree

Transient Occupancy Tax

Short term vacation rentals located within the borders of San Bernardino County are liable for a 7% Transient Occupancy Tax imposed by the County.

To be able to collect the tax, hosts have to apply for a Transient Occupancy Tax Registration Certificate.

However, Airbnb collects the tax on behalf of its hosts in Joshua Tree, so they don’t have to go through this process.

Conclusion

The pandemic years of 2020-1, boosted the attractiveness of the town to visitors with its national park, great outdoors, peace, and spiritual retreat from crowded and locked down cities. Short term rental demand surged by 54% from 2019 to 2021, making Joshua Tree one of the top two fastest growing markets in California and one of the top 25 fastest growing markets in the US. More than 9 times as many permits as in 2019 were issued in 2021 and home prices quadrupled. Unique stays were replaced by modernist homes. And the Joshua trees themselves were threatened.

After a 45-day pause in permit issuance and several amendments to San Bernardino County’s short term rental ordinance, new permits are being issued again. While the town is not likely to continue to experience the same surge in visitors in the coming years, STR potential remains, drawing in high-spend visitors staying in luxury homes. The requirement for a special use permit that is not given for new tents, yurts, etc. may also increase rates for such existing stays. The great outdoors and the national park will also continue to draw travelers though some may opt to stay in neighboring destinations like Yucca Valley for lower rental prices.

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