Looking for a profitable location for your next real estate investment? Well, here is a place that you definitely have not thought about but which you must consider – Joshua Tree. This small community offers excellent investment opportunities, so do think about investing in Joshua Tree real estate.
What’s the Deal with Joshua Tree?
To begin with, we should answer the question: What is Joshua Tree? This is not a real city. Instead, it is a census-designated place on State Route 62 in San Bernardino County, California. According to data from the last census of 2010, its population barely reached 7,500 people. Nonetheless, it actually is a very good real estate investing destination. The Joshua Tree population comprises of a community of artists, musicians, business people, telecommuters, working families, and retirees. The place hosts the Joshua Tree National Park, which is slightly bigger than the State of Rhode Island in terms of area.
How Could Joshua Tree Become a Real Estate Investing Paradise?
You must be wondering how it is possible that anyone would even think about investing his or her money in Joshua Tree investment property. Investing in Joshua Tree real estate just sounds counterintuitive considering the population size and the size of the local economy. Still, Joshua Tree real estate investments can be quite lucrative. Let’s see why.
Joshua Tree real estate market started booming in the mid-2000s, soon after the launch of the Joshua Tree Musical Festival, which is now in its 15th year. Established in 2003, the Joshua Tree Musical Festival is held twice every year – in May and October – and attracts artists and guests from across the US and around the globe, of all ages and social backgrounds. Once people were introduced to the landscape and lifestyle of Joshua Tree thanks to this music event, many of them – including millennials – started coming back to buy affordable weekend and vacation homes to escape the busy, noisy Los Angeles and even San Francisco environment. Since then, the market for Joshua Tree real estate investments has been growing.
How Does the Joshua Tree Economy Look Like?
The local economy has been growing in recent years. The unemployment rate (6.4%) is slightly above the national average (5.2%), but recent job growth (3.4%) has exceeded the national level (1.6%). Moreover, job growth over the next 10 years is estimated at 40.5%, above the US average of 38.0%. This forecast is something that should catch the attention of any real estate investor thinking about investing in Joshua Tree real estate because it indicates that people will be moving into Joshua Tree. This migration into the area will affect Joshua Tree real estate investments in two main ways. First of all, some of the newcomers will be willing to buy homes immediately, driving prices up. This means that you should be buying a Joshua Tree investment property now to avoid the expected price hikes. Second, many newcomers will choose to become tenants and rent, so there will be a vast demand for Joshua Tree investment properties. Once again, better hurry up with investing in Joshua Tree real estate before it’s too late.
Unsurprisingly, what is pushing the local economy is tourism related mostly to the Joshua Tree National Park and the Joshua Park Music Festival. In 2015 more than 2 million visitors came to Joshua Tree, supporting 1,300 local jobs and generating economic benefits of over $128 million. In terms of specific occupations, 22.0% of the working population is engaged in management, business, and finance; 17.0% in sales, office, and administrative support; and 16.7% in food preparation and serving.
How Does Investing in Joshua Tree Real Estate Look Like?
The first step towards buying an income property is to perform a real estate market analysis in order to get a hold of the comps. As a real estate investor, you are well aware of the time and efforts associated with this endeavor. No worries, now you can save tons of time and energy by simply looking up Joshua Tree – or any other city – in Mashvisor’s investment property calculator. Based on actual and predictive analytics, this rental property calculator yields highly reliable results within seconds of the start of your search. So, let’s see what Mashvisor’s investment property calculator has to say about Joshua Tree real estate investments:
- Median Property Price: $189,000
- Traditional Rental Income: $910
- Airbnb Rental Income: $2,350
- Traditional CoC Return: 2.1%
- Airbnb CoC Return: 10.8%
- Traditional Cap Rate: 5.8%
- Airbnb Cap Rate: 15.1%
- Airbnb Occupancy Rate: 47.2%
Investing in Joshua Tree real estate is very affordable, especially compared to median prices in other markets in California: Long Beach ($589,000), Napa ($749,000), Oakland ($761,000), San Diego ($828,000), and Los Angeles ($939,000). The forecast rental income is very different depending on whether you will go for traditional renting or Airbnb: the traditional rental income is about a third of the Airbnb rental income. This means that profitability is also poles apart, with Airbnb being definitely the more lucrative strategy. This is easily explainable by the key role which tourism plays not only in the local economy but also in the real estate market. The over 2 million tourists per year are driving the Airbnb cash on cash (CoC) return and capitalization (cap) rate up, among some of the highest levels nationwide according to data from Mashvisor’s rental property calculator.
Related: The Best California Real Estate Markets: Affordable and Not So Affordable Areas
What Is the Legislation for Airbnb Investing in Joshua Tree?
Many complain that small towns have not been able to take advantage of the benefits which Airbnb offers at the same scale as large cities. However, this does not hold true for Joshua Tree real estate investments as Airbnb is very popular and highly profitable in this place. As a real estate investor, you will be glad to hear that California has not adopted any major regulations with respect to Airbnb rentals – neither cracking down on them nor legalizing them. Nonetheless, like in many other locations, an Airbnb Joshua Tree investment property is subject to the transient occupancy tax, the rate of which is set at the County level. Having said that, you should keep in mind the dates of the Joshua Tree Music Festival as these are the busiest periods for Airbnb Joshua Tree real estate investments. Then you will be able to set special prices for your Airbnb Joshua Tree investment property, much above the everyday price.
Related: How Much Can I Rent My House For?
As a real estate investor, you should learn to always keep your eyes open for unexpected investment opportunities. Although Joshua Tree is definitely not the first choice that comes to mind, investing in Joshua Tree real estate can be very lucrative.