Short Term Rental strategy in San Diego area

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Short Term Rental strategy in San Diego area

Hal MacKenzie
Member since 2021 · 5 posts · 3 votes

Hello, I'm very interested in purchasing a property in the San Diego area, with the intent to AirBnb it out for most of the year and then use it myself for a couple months out of the year.  However it is a fairly expensive area and there are some difficult short term rental restrictions being passed in July, which will essentially require 30 day rental minimums.  I was initially focused on La Jolla, Pacific Beach and Mission Beach areas, but all are subject to these new restrictions which I think will kill my revenue so I have shifted my search slightly further north to areas that have a similar feel but no such restrictions - in particular Encinitas, Cardiff and Carlsbad.  My primary residence is in the NYC and while my wife and I have spent a good amount of time in the San Diego area over the last couple years, we do still have a lot to learn about the San Diego markets.  It would be so much appreciated if there is anyone out there who has experience with short term rentals in these areas and could provide any guidance.  Thanks so much,

Hal

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Twana RasoulBusiness Member
Real Estate Agent · San Diego, CA · Member since 2017 · 1k+ posts · 1k+ votes
4y

@Hal MacKenzie A few items to keep in mind/consider

Short term restrictions in San Diego are being pushed out into next year, 2023, until the Coastal Commission can weigh in on the decision and certify it.  

Your budget will play a big role in what areas are possible to purchase something in and where it is not.  Someplace like Oceanside will be the most affordable North County Coastal community but it certainly is different than Encinitas, Solana Beach or La Jolla and is worth driving around in before making a long distance decision.

Short term rentals can be very profitable but I would caution of ever using short term rental numbers to purchase a property...One should be comfortable with the investment with long term rent numbers.  Of course medium term rental can be a good option as well.

Some HOA's will sometimes restrict even medium term rentals so you want to look out for that. I sold a condo on the beach last year in PB and the HOA restricted rentals of less than 6 months.

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  • Jeffrey Albaum
    Investor · Austin TX · Member since 2018 · 151 posts · 165 votes
    4y

    Hi Hal! I don't have explicit experience with STRs in San Diego - however I do know a fairly large number of investors who are turning to the MTR (Medium term rental) strategy for areas with STR restrictions. By focusing on 30+ day stays, you can still have higher revenues than long term rentals, and can take advantage of interesting niche tenants such as travelling nurses or folks working from home but looking to not be in their hometown. Furnished Finder is an awesome site to post on if you have a MTR and I believe AirBnb even has 30+ day stay options. Hope this is helpful and best of luck!

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  • Hal MacKenzie
    OP
    Member since 2021 · 5 posts · 3 votes
    4y

    That is very helpful insight, thanks a lot Jeffrey

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  • Mark Frattini
    Real Estate Agent · San Diego, CA · Member since 2014 · 338 posts · 176 votes
    4y

    @Hal MacKenzie

    I second what Jeffrey mentioned about using the medium term rental as a way around some of the possible upcoming STR restrictions. You might be able to get away with both strategies. I used to work in healthcare before real estate and I'm seeing a big demand in medium term rentals for travel nurses and other healthcare workers. They are drawn to San Diego for the high pay rate and they usually receive some type of housing stipend, food and even car allowance. Every contract is different but their housing is typically at least partially covered. They are not here to party, work long hours and just need a place to sleep and relax.

    Cardiff is in south Encinitas and Leucadia is located in north Encinitas. Carlsbad is a good option as well. Both of these are coastal north county San Diego and are in high demand. What draws you and your wife to these two areas? I would also take a look into Oceanside. It's about as far north as you can get for the San Diego coastal cities but your dollar will stretch a bit further up there. Depending on your budget Solana Beach could also be an option.

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  • Hal MacKenzie
    OP
    Member since 2021 · 5 posts · 3 votes
    4y

    Thanks so much Mark, this is extremely helpful. In terms of what's driven us to the Encinitas / Carlsbad areas, I would say it was a combination of trying to maintain the San Diego coastal feel that we love combined with the lack of short term rental restrictions. But we actually haven't even been to any of those places yet, will be checking them out in a couple weeks (we live in NYC). Pacific Beach / Mission Beach / La Jolla areas are where we have spent most of our time and have been the primary areas we have been searching, but the upcoming STR restrictions have caused me to panic a bit and almost rule out those areas entirely. However it sounds like that may be a bit of an overreaction and that there is real demand for medium term rentals, which is exciting to hear.

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  • Robert Comstock
    Member since 2018 · 138 posts · 56 votes
    4y

    If your going to do medium term (Nurse) rental you may want to consider UTC or bayho.  Both are close to the hospitals, universities, and beaches and can give you that coastal vacation home (without the congestion) feel as well.  

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  • Hal MacKenzie
    OP
    Member since 2021 · 5 posts · 3 votes
    4y

    Thanks so much Robert! Will definitely look into those areas too

    0Reply
  • Jacquelyn West
    Fort Worth, TX · Member since 2017 · 71 posts · 25 votes
    4y

    I am definitely looking for a SFR to turn into a Traveling Nurses homes

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  • Twana RasoulBusiness Member
    Real Estate Agent · San Diego, CA · Member since 2017 · 1k+ posts · 1k+ votes
    4y

    @Hal MacKenzie A few items to keep in mind/consider

    Short term restrictions in San Diego are being pushed out into next year, 2023, until the Coastal Commission can weigh in on the decision and certify it.  

    Your budget will play a big role in what areas are possible to purchase something in and where it is not.  Someplace like Oceanside will be the most affordable North County Coastal community but it certainly is different than Encinitas, Solana Beach or La Jolla and is worth driving around in before making a long distance decision.

    Short term rentals can be very profitable but I would caution of ever using short term rental numbers to purchase a property...One should be comfortable with the investment with long term rent numbers.  Of course medium term rental can be a good option as well.

    Some HOA's will sometimes restrict even medium term rentals so you want to look out for that. I sold a condo on the beach last year in PB and the HOA restricted rentals of less than 6 months.

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    3Reply
  • Hal MacKenzie
    OP
    Member since 2021 · 5 posts · 3 votes
    4y

    Thanks a lot Twana, extremely helpful insight, and interesting development on the San Diego STR restrictions. If those went away it would certainly make things easier, but seems like they're just going into effect slightly later than originally expected so probably doesn't change much regarding my strategy. Which San Diego areas would you consider viable in terms of long term rentals? From an investment perspective I'd be focused on immediate cash flow and in general the numbers I've been running when evaluating properties have only really worked for STR. The LTR numbers haven't been very close, seems like the rent to price ratio isn't good enough. But maybe I haven't dug deep enough there or been focused in the correct areas, so would love any further guidance there. Thanks so much!

    1Reply
  • Nicholas Ardakani
    Member since 2021 · 3 posts · 1 vote
    3y

    Looking at a few places in San Diego to rent out - in terms of the medium term rental strategy, which areas are best to focus on? Are downtown areas like Little Italy or East Village high demand? Or is it better to focus more north near Ocean / Pacific Beach and other areas near University of San Diego?

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  • Dan H.Pro Member
    Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
    3y
    Quote from @Nicholas Ardakani:

    Looking at a few places in San Diego to rent out - in terms of the medium term rental strategy, which areas are best to focus on? Are downtown areas like Little Italy or East Village high demand? Or is it better to focus more north near Ocean / Pacific Beach and other areas near University of San Diego?


    The city, other than Mission beach, still has STR permits available.

    As for longer furnished rentals, I do not believe there is strong correlation between good STR location and good MTR location at least for mission beach. I say this because one of my str units that has been an str since 1999 somehow did not get a permit even though it had max entries in a weighted lottery. I have had issues renting it furnished as 30+ day rental. It is very small unit with great location which works great as STR, but too small for extended rental. It really should be an STR It is 2 BR and 600' but worth a lot due to its location. It is definitely more suited as vacation rental than a long term residence.

    My view is best MTR rentals are near medical facilities and universities.   I know someone doing well with MTR arbitrage in Vista with multiple medical facilities semi close.  I think downtown works better than mission beach for MTR.  


    good luck

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