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Airbnb Property Investment Profitability: Homes for sale in San Diego, CA

airbnb property investment san diego

San Diego’s beautiful sunny weather and white sand beaches make it perfect for anyone who wants to relax and be productive with outdoor activities at the same time. While many travelers consider this city on their travel bucket list, it’s most certainly a thrill for property investors too! 

Considered one of the best cities to start Airbnb in the USA, San Diego is a haven for tourists and young professionals alike, which is perfect for property investors who want to earn a passive income by owning properties.

To begin with, the major costs and potential revenue should be considered before deciding to purchase a property. Another excellent option is to do rental arbitrage in San Diego, since it’s fairly popular and does not require you to purchase a property as a start.

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“San Diego is an appreciation market, so theoretically, most homes purchased in the county will increase in value over time. There is strong demand for homes, but not enough supply.

– By Olivia Black on San Diego Real Estate Investment

Here’s an interesting fact: San Diego is one of the best places to Airbnb in California

Aside from looking at a property’s fascinating architectural design, proximity to major tourist areas, and accessibility to the best go-to places, the primary step is to determine profitability. In this article, we’ll discuss the metrics in order to gauge the best property investment.

This includes the best website recommendations for property investment in San Diego, property gross rental yield, cash-on-cash return, and annual revenue, along with some of the most ideal and profitable properties according to their location. Stoked to learn more? Continue reading!

Pros of buying an Airbnb Property in San Diego

It’s a fact that San Diego is a captivating city with almost perfect weather and picturesque beaches. From a variety of shopping options to renowned theme parks, San Diego certainly has something to offer to everyone and you will never get bored here! However, there’s more to learn as to why we recommend purchasing a property in this city. Here are some of the major reasons why you should consider buying a property for Airbnb in San Diego:

1. Popular tourism destination

It’s undeniable that San Diego is one of the major tourist hotspots in Southern California and the tourism sector plays an essential role in San Diego’s economy as it brings a lot of tax revenue! Around 35M travelers visit this city annually to experience its fun recreational activities and lively atmosphere. This certainly is interesting info for investors who want to cater to tourist accommodations.

2. Booming job market 

San Diego is home to many large businesses and startups that allow it to enjoy a strong economy with a booming job market that is mainly based around sectors like healthcare, tourism & accommodations and manufacturing. In fact, the city has an unemployment rate of 2.7% which is lower than the national average of 6.0%.

3. Low crime rate

Safety is always a concern for homeowners and is always best to be aware of everything because we know that crime is something that can happen when you least expect it. Yet, San Diego is a quite safe city as its crime rate is 23 per one thousand residents and the chance to become a victim of property crime is 1 in 52.

Cons of purchasing a property in San Diego

Now that we know the pros of investing in San Diego, let’s take a quick look at some of the cons. It’s always better to look at the two sides of each coin in order to properly set your expectations!

  • Cost of living & real estate in San Diego

San Diego is a captivating city and while it has positive aspects, we also need to analyze its downsides, for example, the housing market and cost of living. The median property price is near $900K with a 1-year value change of 7%.  On the other side, the living cost is 50% more expensive than the US average.

airbnb property investment san diego

Is Property Investment Profitable in San Diego?

Using an Airbnb income calculator, it was discovered that a 2-bedroom apartment in San Diego can generate an annual revenue of $63,610 with a steady occupancy rate of 76% and a nightly rate of $181.

airbnb property investment san diego

airbnb san diego

Cheap Homes for Sale in San Diego

Finding the best properties that have the potential to produce high yields and capital growth are certainly some of the preferences of major investors. It’s always best to ask for assistance from real estate agents to access exclusive and unique properties during the development stage. 

At the same time, it’s even better when a property investor like you conducts research about predicted growths and market forecasts. Here are some of the homes for sale in San Diego under 300k, along with the calculated gross rental yield, cash-on-cash return, and annual revenue:

airbnb property investment san diego
airbnb property investment san diego

1315 Pepper Dr Spc 64, El Cajon, CA 92021

1. Studio-type Property for Sale San Diego
  • 0.2 miles to W. D. Hall Elementary School
  • Asking Price: $139,900
GROSS RENTAL YIELD 24.00%
ANNUAL REVENUE $33,355
CASH ON CASH RETURN 46.22%
airbnb property investment san diego
airbnb property investment san diego

2621 Sweetwater Rd SPACE 72, National City, CA 91950

2. 1-Bedroom Type Property for Sale San Diego
  • 1.3 miles to Lemon Crest Elementary School
  • Asking Price: $129,900
GROSS RENTAL YIELD 29.33%
ANNUAL REVENUE $38,099
CASH ON CASH RETURN 62.22%
airbnb property investment san diego
airbnb property investment san diego

8661 Winter Gardens Blvd Spc 16, Lakeside, CA 92040

3. 2-Bedroom Type Property for Sale  San Diego
  • 0.3 miles to Oakland Elementary School
  • Asking Price: $224,900
GROSS RENTAL YIELD 25.46%
ANNUAL REVENUE $58,531
CASH ON CASH RETURN 50.61%
3 bedrooms sandiego
3 bedrooms sandiego

4958 Old Cliffs Rd, San Diego, CA 92120

4. 3-Bedroom Type Property for Sale San Diego
  • 0.6  miles to Foster Elementary School
  • Asking Price: $299,000
GROSS RENTAL YIELD 28.94%
ANNUAL REVENUE $86,543
CASH ON CASH RETURN 61.07%
4 bedrooms sandiego
4 bedrooms sandiego

6333 College Grove Way Unit 11202, San Diego, CA 92115

5. 4-Bedroom Type Property for Sale San Diego 
  • 1 mile to Vista La Mesa Academy
  • Asking Price: $449,000
GROSS RENTAL YIELD 25.00%
ANNUAL REVENUE $112,265
CASH ON CASH RETURN 49.24%

Conclusion

San Diego can generate a nice cash flow for property investors as long as the right neighborhood is targeted and potential revenue is calculated using an Airbnb rental arbitrage calculator. While there are many other cities to invest in California aside from San Diego, it’s definitely worth the time & effort to speak with a short-term rental expert to make the wisest decision for property investment. But still, considering its housing market and cost of living are higher than the nation average, then this market may not be suited for investors with a limited budget.

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Airbnb Investment All About Airbnb

Best Places to Airbnb in San Diego: Profitable Areas for Real Estate Investment

best places to airbnb in san diego

Key Takeaways
  • San Diego offers a booming job market that attracts many young professionals. In addition to this, it has a strong tourist market that has helped Airbnb hosts to earn a nice passive income by owning rental properties. 
  • Learn about the advantages that real estate investors have when investing in San Diego, CA.
  • We will also reveal the 10 best neighborhoods and nearby cities in San Diego along with their recommended property type and Airbnb dataset.

Introduction

San Diego enjoys a privileged location on the Pacific Ocean coast of Southern California. Thanks to this, it offers great sunny weather and marvelous beaches, making it a perfect destination to add to your travel itinerary.  

As one of the top cities to start Airbnb in the USA, San Diego is a fascinating place for tourists and professionals alike. This makes it great for real estate investors who want to earn a passive income with rental properties. In addition to this, San Diego is also one of the best places to do Airbnb in California

But you may want to dive deeper and figure out which is the most profitable place for Airbnb property investment in San Diego – so let us lend you a hand!

In this article, we feature the best places to Airbnb in San Diego, California and some of the expectations for rental properties in this city. Interested to learn more? Continue reading!

Advantages of buying a rental property in San Diego

Investing in Airbnb in San Diego real estate is a recommended way of earning a passive income since it offers a good return on investment to Airbnb hosts. San Diego offers different leisure activities and picturesque beaches that will take your breath away. But what kind of advantages does this city offer to investors? Check out some of the reasons why doing real estate investment in San Diego is a good idea:

  • Growing job market 

Many major companies as well as startups are located in San Diego and its surroundings. Thanks to this, the city has a strong economy with a job market that is steadily growing. It also attracts many young professionals that are looking for great job opportunities. Currently, the city has an unemployment rate of 2.7% which is lower than the national average of 6%.

  • Tourists love San Diego

It’s a given fact that San Diego is a major tourist destination in California, thus, the tourism industry contributes a lot to this city’s economy. As a matter of fact, San Diego welcomes over 35M travelers every year! So property investors who are looking to cater to tourist accommodations will find it great that every month a great number of visitors come to this vibrant city to experience its fun recreational activities.

  • It is a safe city

Crime is something that can happen at the least expected moment. Hence, worrying about whether your preferred location is safe or not is a must! So you can avoid them from happening or even be prepared for any outcome. While San Diego is a large city with a bustling tourist market, it’s quite safe since its crime rate is 23 per 1,000 residents and the chance to become a victim of property crime is 1 in 52.

Is Airbnb Profitable in San Diego, CA?

Are you wondering whether your real estate investment in San Diego would be profitable or not? Airbtics assures you that investing in an Airbnb property in San Diego is lucrative. However, you should note that the level of profitability depends on the property type and location.

According to Airbtics’ data, an Airbnb host can expect an average annual revenue of $107,662 and a median occupancy rate of 77% for operating a 3-bedroom property in San Diego.

best places to airbnb in san diego

Top 10 Areas for Real Estate Investment near San Diego, CA

San Diego is the eighth-largest city in the US and the second in the state of California. It has more than 100 lively neighborhoods, hence, it’s understandable if you’re having a hard time choosing the best place to set up your Airbnb listing in San Diego.

Check out the best neighborhoods and nearby cities in San Diego that are highly recommended for starting an Airbnb business:

1. Middletown, San Diego
  • Total Number of Airbnb Listings: 79
  • Best bedroom size: 3 bedrooms
  • Median property price (3 bedrooms): $795,000
  • Airbnb Annual revenue: $143,940
  • Gross rental yield: 18.11%
2. Mission Hills, San Diego
  • Total Number of Airbnb Listings: 126
  • Best bedroom size: 3 bedrooms
  • Median property price (3 bedrooms): $1,024,000
  • Airbnb Annual revenue: $150,465
  • Gross rental yield: 14.69%
3. North Park, San Diego
  • Total Number of Airbnb Listings: 301
  • Best bedroom size: 3 bedrooms
  • Median property price (3 bedrooms): $979,000
  • Airbnb Annual revenue: $102,492
  • Gross rental yield: 10.47%
4. Mission Valley, San Diego
  • Total Number of Airbnb Listings: 110
  • Best bedroom size: 3 bedrooms
  • Median property price (3 bedrooms): $900,000
  • Airbnb Annual revenue: $91,149
  • Gross rental yield: 10.13%
5. Downtown San Diego
  • Total Number of Airbnb Listings: 731
  • Best bedroom size: 3 bedrooms
  • Median property price (3 bedrooms): $799,990
  • Airbnb Annual revenue: $84,664
  • Gross rental yield: 10.58%
6. Carlsbad, CA
  • Distance from San Diego: 29 miles 
  • Total Number of Airbnb Listings: 479
  • Best bedroom size: 2 bedroom
  • Median property price (2 bedroom): $780,000
  • Airbnb Annual revenue: $91,568
  • Gross rental yield: 11.73%
7. Oceanside, CA
  • Distance from San Diego: 35 miles 
  • Total Number of Airbnb Listings: 677
  • Best bedroom size: 3 bedrooms
  • Median property price (3 bedrooms): $799,999
  • Airbnb Annual revenue: $127,203
  • Gross rental yield: 15.90%
8. La Quinta, CA
  • Distance from San Diego: 83 miles
  • Total Number of Airbnb Listings: 699
  • Best bedroom size: 3 bedrooms
  • Median property price (3 bedrooms): $699,000
  • Airbnb Annual revenue: $99,435
  • Gross rental yield: 14.22%
9. Palm Springs, CA
  • Distance from San Diego: 83 miles 
  • Total Number of Airbnb Listings: 2,093
  • Best bedroom size: 3 bedrooms
  • Median property price (3 bedrooms): $995,000
  • Airbnb Annual revenue: $127,725
  • Gross rental yield: 12.83%
10. Indio, CA
  • Distance from San Diego: 89 miles 
  • Total Number of Airbnb Listings: 381
  • Best bedroom size: 5 bedrooms
  • Median property price (5 bedrooms): $639,000
  • Airbnb Annual revenue: $200,213
  • Gross rental yield: 31.28%

Takeaway

San Diego has a variety of property options as well as profitable areas that offer a nice cash-on-cash return to real estate investors. While there are plenty of neighborhoods and nearby cities in San Diego with great rental yields and annual revenue, it is worth noting that you should still analyze your options thoroughly.

Now that you discovered the best places to Airbnb in San Diego, California, jump ahead and check Airbtics’  Airbnb profit estimator. Take the next step to maximize your profitability while you also stand out among your competitors!

Explore The Most Profitable Airbnb Locations Near San Diego

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Airbnb Rental Arbitrage All About Airbnb

Rental Arbitrage San Diego


Table of Contents
    Add a header to begin generating the table of contents

    What is Rental Arbitrage?

    Rental Arbitrage is a method similar to house hacking, however, the only difference is that you don’t own the house. Instead, you convince a landlord to lease you a property which will be furnished and subleased on Airbnb and VRBO.

    Rental Arbitrage is a smart technique to earn money in any type of property including a multifamily house, duplexes, or triplexes. You can easily use the money from your short-term rental to pay off your lease and profit some more. If you own a duplex or triplex then it is pretty straightforward and easy. You can live in one section and rent out the other – which is also known as house hacking. People use this after taking a loan on a property and use the rent to pay off the mortgage. The short-term rental income helps you pay for the long-term lease that you have on the house. This helps you keep the difference at the month-end after paying for the long-term lease.

    Assume you are renting a duplex in San Diego for $1,800/month. You are living by yourself on one of the sides and you decide to sublease the other on Airbnb. Let’s say you listed it for $100/day and got 80% occupancy. This will bring in approx $2,600/month in revenue. Not only will it help you pay off your complete rent, but give you a profit of $800. This in a nutshell is called Rental Arbitrage.

    Learn more about Rental Arbitrage contracts & business with the help of this guide!

    Things to do before getting started?

    How to convince the landlord

    Let’s say you want to get into Rental Arbitrage. Now comes the big question, how to find a good property and how to convince the landlord. Later in the blog, we’ll be explaining how to find a good property by doing proper research using Airbnb analytics. In this section, we will be focusing more on how to convince landlords. As you’ll begin your Rental Arbitrage journey you’ll come to know that this is the hardest part of the whole process.

    You need to be prepared, and well researched. Good communication skills really come in handy here. Also, one thing to always keep in mind. Never sublease without informing the landlord. There will be a huge number of people coming in and going out when you’re sub renting. It will not be hard for the landlord to figure out that you are subletting and you might end up getting in trouble.

    Now for the convincing, rule number one is, always talk about the upsides. If you can rent the property on Airbnb, so can the landlord himself. You need to make a deal with the landlord that is beneficial for them. So they lease the property to you instead of renting it by themselves.

    Points to tell an indecisive landlord.
    • Doing Rental Arbitrage is a full-time business. It doesn’t generate passive income like long-term leasing. You should try approaching older people who are looking for some sort of passive income. They are more likely to agree to a fixed long-term lease. You can also reach out to full-time working professionals or business owners. They will also be happy with a source of passive income till their property is well maintained. This brings us to our next point.
    • You are more likely to take care of the house than a normal renter. As you are using the property to do business you will take good care of it to make sure you get better reviews. Having a beat-up property isn’t good for business and you are more likely to monitor it often. Not monitoring it will affect your revenue a lot. You may end up paying a huge sum of money for damages done by someone else. So telling this to the landlord might instil some confidence in them.
    •     You can ensure timely monthly rent. You can tell the landlord that doing Rental Arbitrage is a full-time business with ups and downs. It doesn’t guarantee fixed income at all like long-term leasing. But if they lease it to you, you’ll make sure to pay the lease no matter what. Either from the money made after rental arbitrage or from your savings. You need to ensure timely monthly lease payments to gain the trust of a landlord.

    In conclusion, you need to take care of the property like your own. Make sure to timely pay the monthly lease and keep the situation beneficial for both parties.

    Ensure the Property and Gain landlords trust

    Being on the safe side is always a good idea. From trouble guests to bothering landlords. You need to make sure you are using the right tools to ensure the property is safe and neighbours are happy. Many landlords will have this concern when renting out their property to you. They will be worried about neighbours raising noise complaints. It is a legitimate concern. To help you with all these problems here are some suggestions that you can implement and have peace of mind.

    • Simply Safe – These are home monitoring tools that you can install in the house to make sure no suspicious activity is happening there. Make sure to let the guests know about them and have their consent.
    • Auto host – Automatically screens problematic tenants.
    • Alexa Guard: If you already own an Alexa, you can use its Alexa guard feature to detect parties. It is an inbuilt feature that monitors changes in sound and sends you an alert in case the guests are having a party and making too much noise.
    • InsuraGuest – This insurance and tech company helps you with risk analysis and gives protection beyond Airbnb and VRBO policies.
    • Short-term Rental Calculator – Give your landlord ease of mind by providing income estimates backed by Airbnb data.

    You can integrate the majority of these tools with a PMS of your choice.

    how much can you make on airbnb
    rental arbitrage pros and cons

    What is the initial cost of starting rental arbitrage in San Diego?

    You can expect to spend anywhere between $3,000 to $5,000. This cost includes Deposit, Furnishing, Amenities, Legal Paperwork, and LLC Incorporation.

    But doesn’t this contradict the Low upfront cost of Rental Arbitrage? Well, these estimates vary from city to city. There is a possibility to do Rental Arbitrage for even less than this depending upon your situation and the type of property you lease.

    Still, the amount is lesser than investing in a new property and getting a mortgage of thousands of dollars. In addition to this, you won’t be on the hook for property maintenance expenses and being stuck for years with debt.

    But this doesn’t mean Rental Arbitrage can be done with zero or very tight budget. There will be some upfront costs that you have to expect so it’s ideal to own some extra cash is also a good thing to have. This will help pay off the lease during off-season in case bookings don’t happen right away.

    Expense 1: Rental Deposits

    A rental deposit is going to be one of the first and major expenses. You would need money to be able to sign a long-term lease with the landlord. Therefore, you will need a security deposit, along with your payment for the first and last month’s rent. Sometimes you can negotiate with the landlord and use the first month’s rent as a security deposit.

    Expense 2: Furnishing

    Most of the time you should always aim to lease a place that is semi-furnished. As someone with a fully furnished home might be doing short-term rentals themselves. Also furnishing a place from scratch can add anywhere from $3,000 to $5,000 to your initial capital.

    If the place is semi-furnished, then your best bet is to shop for cheap stuff. You can go and find cheap supplies from places like Home Depot and IKEA. Sometimes even Walmart can have a hidden gem if you look closely.

    Expense 3: Photography

    Do it yourself! iPhones have good cameras. DIY photography will save you some money.

    Expense 4: Cleaning Services

    This is included in the starting costs, but you will eventually end up spending on cleaning services. The best way to save money is to do it yourself initially if you have the skills and experience.

    If you have no experience or you don’t want to invest time in cleaning a place. Then your best bet will be to hire a professional cleaner. This can cost you anywhere from $50 to $250 depending upon the size and location.

    Maintaining a professional relationship with a Real Estate lawyer can be very helpful in the Airbnb business. Airbnb regulations keep updating and you would need some legal guidance on the way to adjust your business accordingly.

    They can also come in handy if you face any legal issues with the landlord or guests. They can help in damage claims and insurance as well in case of any mishappening.

    how much can you make on airbnb

    Legality and Regulations in San Diego

    This year in February City Council approved guidelines governing short-term rentals or rental arbitrage. The guidelines require a permit to work an STR unit, set up limits on the number of licenses a host might get, make a reasonable cover-up on the total number of entire homes STR units, and make an authorizing interface to follow, oversee and uphold all parts of the STR. Licenses will be needed to work an STR in the City of San Diego starting July 1, 2022.

    The Short-Term Rentals ordinance will separate city short-term rentals into four categories:

    • Part-time rentals- Leased for a total of 20 days or less each year. The proprietor or long-lasting occupant doesn’t have to live nearby during the short-term rentals.
    • Home-sharing rentals- Leasing a room in the home for over 20 days out of each year insofar as the property owner resides on sight. Home sharing incorporates duplex properties and qualified adornment abiding units and granny flats when the host lives nearby.
    • Whole-home rentals- Rentals for over 20 days out of each year where the owner doesn’t stay nearby. The number of licenses given won’t surpass 1% of San Diego’s complete lodging units outside the Mission Beach Community Planning Area.
    • Whole-home rentals in Mission Beach- The number of licenses given won’t surpass 30% of the Mission Beach Community Planning Area.
    • Visitor two-night least stays required.

    Renters who have effectively observed San Diego’s rental laws in the past will benefit. Also, the legalization has a good-neighbourhood policy wherein the two hosts and visitors could be fined up to $1,000 for disregarding rental regulations.

    Best areas for Rental Arbitrage San Diego

    Some obvious places come to mind when thinking of San Diego like Carmel mountain ranch, and pacific beach. But two of the best choices for rental arbitrage top our list. The first one is:

    1. La Jolla

    rental arbitrage san diego la jolla

    According to our Airbtics Dashboard, La Jolla is the top market to start your Rental Arbitrage business. There are more than 599 Airbnb listings with 105 private rooms properties and 119 one-bedroom properties. The monthly revenue for most properties is more than $24,253/month with occupancy being more than 72%.

    1. Del Mar Heights

    rental arbitrage san diego del mar heights

    According to our Airbtics Dashboard, Del Mar Heights is the second-best market to start your Rental Arbitrage business. There are more than 581 Airbnb listings with 131 private rooms properties and 102 one-bedroom properties. The monthly revenue for most properties is more than $13,856/month with occupancy being more than 66%.

     

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    Read More:  Airbnb Rental Arbitrage California

     

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