Palm Springs, CA: Vacation Rental Investment Guide (June 2026)
Midcentury-modern desert resort. Coachella Valley desert, ~2h from LA and San Diego.
The Numbers
Median Price
$640,000
ADR
$470
avg daily rate
Occupancy
50%
Proj. Gross Revenue
$85,775
per year · 13.4% gross yield
5-Yr Appreciation
+10%
Property Tax
1.15%
effective / yr
The STR Math
The median Palm Springs deal, run through DSCR math
- Purchase price (median)
- $640,000
- Down payment (20%)
- −$128,000
- Loan amount
- $512,000
- P&I @ 7.91% / 30yr
- $3,725/mo
- Property taxes (1.15%/yr)
- $613/mo
- Insurance (~0.6%/yr)
- $320/mo
- PITIA (full payment)
- $4,658/mo
- Est. STR gross ($470 ADR × 50% occ.)
- $7,148/mo
Illustrative DSCR
1.53
Above the 1.25 threshold most STR lenders want for their best pricing tiers.
Illustrative only, not a quote or pre-qualification. Uses the June 2026 median price and an ADR × occupancy revenue estimate, an indicative STR rate of 7.91% (10-year Treasury + a typical STR spread — see the live data dashboard), the market's effective tax rate, and estimated insurance. Gross revenue is before cleaning, management, utilities, and platform fees — lenders also haircut projected STR income. Actual numbers vary by property and borrower.
Strategy Check
STR vs long-term rental in Palm Springs
Short-term rental
Wins- Gross income
- $7,148/mo
- Est. PITIA @ 7.91%
- $4,658/mo
- Est. DSCR
- 1.53
Long-term rental
- Lease rent
- $3,200/mo
- Est. PITIA @ 7.53%
- $4,524/mo
- Est. DSCR
- 0.71
Short-term wins on gross by about $3,948/month ($7,148 STR gross vs $3,200 lease rent) — that premium is what pays for furnishing, cleaning, and management, with margin left over if you operate well. Note the fallback: at 0.71 estimated LTR DSCR, lease rent alone doesn't carry the median purchase here — this market's debt wants nightly revenue behind it, so the STR permit picture matters doubly.
Regulation Reality
Can you legally run an STR in Palm Springs?
Vacation-rental certificate required, one per owner, and Ordinance 2075 (2022) caps permits at roughly 20% of homes per neighborhood — several popular neighborhoods are waitlisted; many HOAs and land-lease areas add their own bans.
For underwriting, a permit cap changes the order of operations: the permit question comes before the revenue question. Confirm in writing whether the specific address can get (or transfer) a permit before you model a single night of revenue — a property outside the permit pool is a long-term rental wearing a vacation home's price tag. Priced and permitted correctly, the 13.4% gross yield is still on the table.
The Second-Home Angle
Your weekends plus rental income — two ways in
Design-forward pool homes, golf, and a packed winter social calendar 2 hours from LA — the classic SoCal snowbird second home.
That dual-use case — your own stays in the weeks you want, rental income the rest of the calendar — is what separates a vacation market from a spreadsheet market, and it opens a second financing door that pure investment properties don't get.
Second-home conventional
As little as 10% down and rates close to a primary residence. The trade: lenders require genuine personal use, qualify you on your own income (W2/DTI), and limit how much of the year the home can be rented out — and some restrict short-term renting entirely. Best when the house is mostly for you and the rental income is offset, not engine.
DSCR investment loan
Typically 20%+ down, priced off the property, and qualified on the property's rental revenue — projected STR income included — rather than your personal income. No personal-use restrictions: rent it 50 weeks, block your own July, run it like the business it is. Best when the income is the point.
Occupancy rules matter: misrepresenting a rental property as a second home is occupancy fraud. If you want unrestricted rental use, the DSCR route exists precisely so you don't have to stretch the truth.
Appreciation & Exit
The hold case in Palm Springs
Five-year appreciation of roughly 10% is modest — this is a cash-flow-first market, and your return case should stand on revenue rather than price growth.
Exit liquidity in vacation markets is buyer-pool-dependent: you're selling to the next investor or second-home buyer, both of whom shop with the same seasonality and regulation facts you're reading now. A property with a transferable permit, a documented revenue history, and a real off-season strategy sells like an asset; one without them sells like a house.
Verdict — conditional
Worth pursuing — with conditions
- —The permit, not the property, is the deal: Vacation-rental certificate required, one per owner, and Ordinance 2075 (2022) caps permits at roughly 20% of homes per neighborhood — several popular neighborhoods are waitlisted; many HOAs and land-lease areas add their own bans.
- —The math is genuinely good — an estimated 1.53 DSCR and 13.4% gross yield on the median deal — so a confirmed permit converts this from a maybe to a clear yes.
- —Seasonality: Peak season is winter-spring (Jan-Apr, festival season around Coachella); summer 110-degree heat cuts rates and occupancy hard.
Pursue it with: permit eligibility confirmed in writing before you write the offer. Get those right and this is a buy, not a pass.
Seasonality: Peak season is winter-spring (Jan-Apr, festival season around Coachella); summer 110-degree heat cuts rates and occupancy hard.
Data as of June 2026 — refreshed periodically. Town-level estimates for screening, not underwriting; verify comps, permits, and insurance quotes on the specific property.
Next Step
Get a quote from an STR expert who lends in California
Real pricing on your actual deal — second-home and DSCR routes compared side by side, qualified on the property's income, no hard credit pull to see numbers.
Palm Springs vacation rental FAQ
Is Palm Springs a good place to buy a vacation rental?
It's worth pursuing — with conditions. Palm Springs, CA projects roughly $85,775 a year gross (13.4% gross yield, est. 1.53 DSCR on the median deal at 20% down), but STR permits are capped, so confirm permit eligibility for the specific address before you offer. Get that condition right and the market rewards it (June 2026 estimates).
Can I make money on Airbnb in Palm Springs?
The market math says yes: $470 ADR × 365 nights × 50% occupancy ≈ $85,775 a year ($7,148/month) gross before operating costs. Against an estimated $4,658/month PITIA on the median $640,000 purchase, that's roughly a 1.53 DSCR — real margin. Peak season is winter-spring (Jan-Apr, festival season around Coachella); summer 110-degree heat cuts rates and occupancy hard.
Can a Palm Springs property double as a second home?
Yes — and the dual-use case is much of the appeal. Design-forward pool homes, golf, and a packed winter social calendar 2 hours from LA — the classic SoCal snowbird second home. Two financing routes: a second-home conventional loan (as little as 10% down with owner-occupied-adjacent rates, but lenders impose personal-use and rental-day limits) or a DSCR investment loan (20%+ down, qualifies on the property's rental income, no personal-use restrictions). Most buyers choosing between them are really choosing between maximum leverage and maximum rental flexibility.
Run the numbers yourself
Calculator
STR calculator — pre-filled for Palm Springs
ADR, occupancy, and median price loaded. Adjust to your deal.
Financing
STR / vacation rental loans, explained
How lenders underwrite projected Airbnb income — and what it costs.
Live Data
Market data dashboard
10Y Treasury, indicative STR rate ranges, and the full leaderboards.
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Joshua Tree, CA
$370,000 median · $265 ADR · 13.6% gross yield
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