Anyone having success with arbitrage in San Diego?

Question

Dan H. · Answer

congrats on getting a purchase from 2024 to be working so good for you. That was after the easy to find profitable RE purchase period. I question if it is doing well, why not do it again?

On to your question:I know one fairly well known RE person (coach, lots of varied experiences over a lot of years, has a monthly meet up, etc) locally that does arbitrage. She started with MTR arbitrage and in spite of telling me it was doing well, has pretty much given up those units at their most recent lease end. She was up to a handful of arbitraged units between STR and MTR, but believe with giving up some/all the MTR she is at a couple/few units.

We have STRs in San Diego for decades. Their STR rent to current value ratio is not good implying if purchased today their cash flow would not be good. Their incredible return is achieved via appreciation which is not a source of profit for the arbitrager. In addition the arbitrager does not benefit from the equity paydown. The arbitrager basically has a job as a STR/MTR PM with a bit more upside, but tons more risk.

In addition as an owner of properties, I have never understood why someone would choose a low capitalized arbitrager over a licensed, insured, professional PM or an unlicensed co-host where the owner gets the upside.

I recognize it is a challenging time to be an RE investor, but I really believe arbitrage is not a worthwhile pursuit. Too much effort and risk, not enough upside.

Good luck

Andrew Steffens · Answer

Is it possible for arbitrage to work anywhere anymore? Only way I see it maybe working is a beach mansion on a multi year lease.

Cody L. · Answer

Montrose (77006) is one of the most desirable areas of Houston. Has ranked in the top 10 neighborhoods in the US.

And there are a lot of older vintage garden style multifamily properties with $1000/month (or less) 1 beds. Or even ~$900 "all bills paid" studios.

Ironically the rent in 'war zones' is not that much less. That's why you can cash flow so much in those bad areas. You pay 1/2 (or less) per door for the rental, but only take a ~20% haircut on rent. I used to buy those warzone type deals all the time. Still have some, but now focus on better areas as the cash flow isn't quite as critical and I've found it more enjoyable to have properties in nicer areas.

Edit: In regards to seeing 'the math mathing' -- that's not something I get involved with. The math has to work for me as someone that leases these via LTR. We only have 3-4 properties were we allow people to STR. If they're able to make the numbers work, then that's great for them. Given how long some of them have leased with us, I assume they do okay. Also, I do agree it's a lot of work for $800, but if you have 10 or 20 units, now you're talking about $8k-$16k/month. Might make it more worth the time.

Bill B. · Answer

I guess you got lucky and they only added a $275/yr fee and 21% tax on STRs instead of outlawing them. And didn’t do a minimum space between units law. Or you’d have had 50 vacancies instantly with no notice. Nice to have enough demand that when the government adds 21% and now Airbnb adds 13% they can still find demand… (They collect 34% of the income for allowing you to operate. Good gig if you can get it. ) I don’t know if you can be held financially responsible if your tenants “forget” to register, pay the taxes, or fail inspections but with the 5 figure fines handed out in Vegas per unit, I’d make sure of course I’d also make sure both you and they have STR landlord insurance policies instead of regular ones, hate to lose everything to a drinking minor. It’s not for me but as long as you’re collecting far over market rent more power to you. Maybe you could help the OP find a place there

Houston has updated its short-term rental (STR) regulations, effective August 1, 2025, requiring hosts to register their properties annually with a $275 fee and comply with safety standards like smoke and carbon monoxide detectors. Hosts are also obligated to collect hotel occupancy taxes (totalling 13%) and pay applicable sales taxes. The city is in the process of launching the online registration system for these new rules, which were implemented to address concerns about safety and neighborhood impact. Key Rules and Requirements

• Annual Registration:Hosts must register their short-term rentals with the city annually.
• Registration Fee:A $275 annual registration fee is required.
• Safety Standards:Properties must meet certain safety standards, including functioning smoke detectors, carbon monoxide detectors, and clear exit paths.
• Occupancy Limits:The number of occupants per rental is limited to ensure safety and prevent overcrowding.
• Tax Obligations:Hotel Occupancy Tax: You must collect and remit the 13% hotel occupancy tax from guests (6% state tax + 7% local tax).Sales Tax: An 8.25% sales tax also applies to the rental income.
• Hotel Occupancy Tax: You must collect and remit the 13% hotel occupancy tax from guests (6% state tax + 7% local tax).
• Sales Tax: An 8.25% sales tax also applies to the rental income.

• Hotel Occupancy Tax: You must collect and remit the 13% hotel occupancy tax from guests (6% state tax + 7% local tax).
• Sales Tax: An 8.25% sales tax also applies to the rental income.

Jules Aton · Answer

IDK arbitrage is fraught with so many issues notably the outlay to furnish an entire place that you don’t own with decor that is unlikely to translate to a Midwest property should things not work out in CA.

Anyone having success with arbitrage in San Diego?

Anyone having success with arbitrage in San Diego?

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