Before Kaitlyn Sage, a real estate broker in Southern California, and her clients listed their one-bedroom bungalow in Joshua Tree, they kitted it out with furniture, extra linens, outdoor murals, and dishes—all the trappings for a successful Airbnb. The sellers bought the house at just under $300,000 in December, used it as an Airbnb for two months, and, riding the hot market in the region, decided to sell it just two months later.
The amenities and location were two big incentives—Sage said the market in Joshua Tree right now is flourishing, with turnkey properties attracting cash offers by the hundreds—but a huge selling point was the property’s prior success as a source of income. The listing mentions that, as an Airbnb, the little one-bedroom bungalow raked in about $6,000 per month at a 70-percent occupancy rate. Sage closed the house this week at a nearly $100,000 gain for the sellers.
Buying an investment property to use as an Airbnb has been common practice since the website launched years ago. But the market for turnkey Airbnbs—completely furnished and ready to go as soon as the papers are signed—is thriving amid the pandemic. Sage said being able to quote vacation rental income in a listing is seen as a huge perk for potential buyers, and drives selling prices up.
As cities continue to pass legislation that makes it harder to operate an Airbnb or short-term rental, markets like Joshua Tree, where no such regulations exist, are increasingly flooded with turnkey Airbnb properties for sale. “A lot of places in Southern California have stopped short-term rentals since the pandemic started, but Joshua Tree is kind of like, the wild west,” Sage told VICE. “It’s open season out there.”
Sage’s sellers on the one-bedroom bungalow bought the house in December, just after it’d been newly renovated, and with the furniture already in place. Sage said it was unclear if the house had been used for an Airbnb already, but it was certainly set up to be used as one by future owners. The new owners transferred the house to a local property management company that runs Airbnbs out in Joshua Tree and immediately started raking in thousands of dollars.
Ryan Pineda, a real estate investor in Las Vegas who flips houses, said he’s making more money from his eight Airbnbs in Big Bear, California than ever before. As the pandemic has shut everyone inside their homes, people looking for a safe way to travel have increasingly turned to Airbnbs over hotels. This only incentivizes the deal for sellers who can share their Airbnb revenue when listing their houses for sale.
Sage said the market for turnkey properties in areas like Joshua Tree is so hot right now that she received over 100 inquiries for her one-bedroom in less than a week—too many offers for her to respond to. Investors looking for immediate move-in deals, she said, call with cash offers, are willing to pay more than market average, and typically offer more than asking price.
In cities across the country, listings that mention Airbnb potential are priced higher than neighboring houses. In East Austin, which has seen a boom in gentrification and, in turn, tourism over the past decade, a five-bedroom house that’s currently listed at nearly one million dollars mentions an estimated “vacation rental net income over $80,000” in the listing description. And in Phoenix, a three-bedroom house that mentions Airbnb potential is currently listed at $789,000—at least $200,000 more than similar listings in the same neighborhood.
Colin Maher, a real estate agent and entertainment lawyer in Nashville, told VICE that the major incentive of being able to list potential Airbnb income is that it opens listings up to investors. As Nashville makes it more difficult to run Airbnbs inside city limits, certain condo buildings in commercial areas have become overrun with short-term rentals. A listing Maher currently has for a one-bedroom condo is in a downtown Nashville building that’s already 80 percent Airbnbs, he said, adding that the listing mentions prior use as a vacation rental.
“Does someone want to live permanently in a condo that’s 80 percent short-term rentals?” Maher said. “Probably not; I certainly wouldn’t want to. But all the investors are going to be interested, and they’ll buy it at a premium.”
Sage said that, at this point, anyone who wants to finance in Joshua Tree, rather than pay cash, essentially has to look for a fixer upper. The turnkey properties sell too fast and at too high a price, and an influx of cash offers from investors and potential Airbnb hosts from LA make financing offers look weak.
“It’s obviously driving up all property values in the area, which is good for most people, but it is going to make it a little more expensive out there,” Sage said, summarizing one of the primary arguments against allowing Airbnbs to multiply in any given region. “I don’t know if the locals love it.”
As Airbnbs continue to thrive and attract buyers in places like Joshua Tree, locals are, more and more often, pushed out by rising property values and housing shortages. Is the future of Joshua Tree an odd ghost town where nobody actually lives, filled only with vacationers and weird, alien-shaped trees? If the market continues as it’s going now, maybe so.