If you’re thinking about buying a vacation rental in Palm Springs, you’ll want to first understand the Palm Springs Airbnb rules and how they affect the overall ROI of your investment property.
Because of the rapid growth of vacation rentals worldwide, many homeowners and investors are curious about how they can leverage platforms like Airbnb to increase their financial gain with relatively little risk. What they DON’T often know is how to navigate the risk before and after buying a short-term rental property.
While a long-term rental strategy is a more risk-averse option, an STR investment property has a lot higher potential upside if done right.
Is Airbnb Allowed in Palm Springs?
For anyone looking to buy a vacation home in Palm Springs, the very first thing you should be asking is, “Is Airbnb allowed in Palm Springs?”
The short answer is yes—but there are a few caveats.
Palm Springs, California, is a world-renowned tourist destination that has attracted tons of STR investors, especially in the last decade.
As tourism boomed and vacation rentals became more popular, the City had to reconcile the trade-offs between tourism dollars and increasingly agitated residents. Which is what led to Palm Springs being one of the first major vacation destinations to revise their Airbnb rules before things got out of hand.
Let’s take a look at some of the vacation rental laws currently in place…
Top Palm Springs Airbnb Laws to Know
Palm Springs Airbnb laws are some of the strictest in the country because of the City’s nuanced regulatory framework.
The Palm Springs vacation rental ordinance, which has been in effect for more than a decade, specifies how to conduct business as an owner of a short-term rental property. These laws affect how much you earn and how much you spend while operating.
Palm Springs Airbnb rules were updated in April 2017 when Ordinance 1918 was passed by the City Council. It brought about several revisions to the previously-enacted laws which aimed to increase the barrier to entry for outside investors and slow the unfettered pace of vacation rental growth.
As a potential investor who’s considering whether this is a good market to get into, it’s important to understand all the top vacation rental rules and how they will affect your bottom line. Here are some of the highlights:
| Vacation Rental Permit | You must obtain a valid permit and renew it annually. The initial cost to apply is $1,072 not including additional expenses associated with preparing your home. |
| Safety Inspections | You must pass a safety inspection, whereby the City will send an inspector to make sure your home meets the basic safety standards for rental activity. If you have a pool or any custom electrical work, you’ll likely need additional inspections. |
| Occupancy Limits | There’s a maximum number of guests allowed at any particular property, which is based on the size and number of rooms. |
| Rental Contracts | Owners and Renters must execute a written rental contract for each stay, even for friends and family. The owner must submit this contract to the city before the guest arrives. |
| TOT Taxes & Reporting | You must submit a monthly report to the City summarizing the rental revenue you’ve earned and then remit the taxes payable to the city via check or through their online portal. |
| 24-Hour Local Contact | You must register a local contact who is available 24/7 to address any complaints that come in while renters are occupying your property. |
| Insurance | Proof of insurance is required and must meet a minimum liability coverage amount of $500,000 per occurrence. (Click here to learn more about insurance for STR owners) |
| No Outdoor Noise | The City has zero tolerance for loud noise, which means you shouldn’t be installing surround sound in the pool or backyard. |
Airbnb rules differ by city, but Palm Springs has a few peculiarities to protect local residents from “too much” tourism and distasteful renters.
New Airbnb Regulations in Palm Springs
In 2022, the City of Palm Springs introduced new Airbnb rules and regulations that further restricted occupancy and guest use, and made it even more difficult to get into the STR market. Here’s a summary of important updates and changes you need to know:
This is the single most important Palm Springs Airbnb rule you need to understand, which essentially puts a cap on the revenue your vacation rental is capable of generating and, subsequently, your ROI on an investment property.
The new law changes the total number of rental contracts available for each property, decreasing from 36 to 26. This essentially translates to 26 opportunities to book your home to travelers and earn enough rental income to cover your property’s expenses while putting some extra money in your pocket.
Think about it this way: you have 26 widgets on the shelf and you have to sell each one for as much as possible. They expire at the end of the year so if you don’t sell them, you’re leaving money on the table. If you sell them too quickly, your business loses money. So you need to take a thoughtful approach about how you sell your widgets, and to who.
Density Cap on Airbnb Rentals in Palm Springs
The new Airbnb regulations have introduced a cap on the number of vacation rental permits the city will issue. The caps are divided by neighborhoods so that no more than 20% of the homes in a given neighborhood can be a short-term rental.
The idea of these capped airbnb rentals in Palm Springs is to dilute the density of STRs in any one particular area, helping to ensure local residents aren’t overrun by tourists.
Bottom line: there’s now a fixed supply of properties in Palm Springs that are even eligible to be an Airbnb rental, which means we’ll likely see a correlation between property value and those neighborhoods who have already hit max density.
New permits will be issued on a first come, first serve basis. If a particular neighborhood has reached a 20% density, you can still submit an application for your VR permit, but it will be processed in the order it was received only after the existing permits expire, get suspended, or otherwise fall off the list causing the density to dip under the 20% mark.
You can see the neighborhood breakdown by clicking here. The city also keeps an updated list of density per neighborhood here.
Does Your Property Qualify?
Still not sure if the property you’re about to buy is eligible for a short term rental permit? Give us a call today and we’ll help you confirm; absolutely risk-free and at no cost to you. “Trust but verify” is a lesson we’ve learned the hard way, and we don’t want you to make a mistake that can easily be prevented.
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FAQs About Palm Springs Airbnb Rules
What is a short term rental in Palm Springs?
The short term rental definition for Airbnbs in Palm Springs is any rental activity for a period of 28 nights or less. If you only intend to rent your home for 30 nights at a time, the Airbnb rules and regulations wouldn’t apply to you.
Which neighborhoods in Palm Springs are best suited for vacation rentals?
This really depends on your overall budget and the goals you have for your investment. If maximizing ROI is your goal, you’ll want to be in a desirable neighborhood closer to the downtown area and out of PSP’s flight path.
How do I apply to make my property an Airbnb?
If you know you want to start the application process for your short-term rental property in Palm Springs, head on over to the City’s website to start filling out the forms. If you’re not in a neighborhood that’s capped out, be prepared to entertain an inspection and cut a check to the compliance department.
Need AirBnB Management Services in Palm Springs?
It’s important to understand Palm Springs Airbnb rules if you’re planning to buy a vacation rental property here.
Yes, Airbnb is allowed in Palm Springs, but the barrier to entry is increasing and there’s an inevitable ceiling to how much you can earn because of these new vacation rental laws. While it’s true that these rental regulations are more stringent than other markets, they also make for a more predictable return.
Operationally speaking, Palm Springs rental rules add a layer of complexity to your management strategy so it’s helpful to either know someone locally or hire someone you can trust, especially if you want your STR property to be a more passive investment.
If you’d rather not worry about navigating the Airbnb rules in Palm Springs, consider partnering with a professional vacation home rental agency who can be your eyes and ears on the ground. Not only will they take a lot of work off your plate, you’ll likely end up earning more money—even after the fees.
