Anyone having success with arbitrage in San Diego?

[Rebecca Berens]

In 2024, we purchased a home in Kentucky and it’s now a flourishing airbnb. I’m now interested in arbitraging my next STR and struggling to find a good deal in San Diego where I live (for obvious reasons). I’d ideally like to find one here so I can design it myself without hiring someone. I’m open to going out to state again but hoping to find a diamond locally, which seems unrealistic.

[Dan H.]

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