“Is Investing In Short Term Rentals in San Diego a Good Idea?”
I get asked this question all the time. In my video, I discuss the 3 important elements when considering investing in short term rentals. I mention Airbnb exclusively throughout the video, but this applies to all vacation rental hosting platforms. The information below is specifically related to the point I make about understanding your local laws/ordinances that pertain to short term rentals.
As I mentioned in my video, San Diego passed a new ordinance for short term rentals, or vacation rentals. This applies to all rentals that are less than 30 days in length, whether it is on Airbnb, VRBO, or any other similar hosting site. There is a 4 tier system (more details below) which goes into effect July 1st, 2022. Not only will homeowners be required to have a license, there will be a cap on the number of “whole-home” vacation rentals allowed in the city of San Diego. One of the biggest changes in the ordinance is that owners will be limited to one Short Term Rental Occupancy license within the City of San Diego.
Tier 1 – Part-Time
This applies to owner/resident renting their homes out for no more than 20 days per year. During the time period they are renting out their property, they do not need to occupy any part of the residence. A perfect example of this is a homeowner/resident who wants to rent out their property to someone else while they are on vacation. They still need a permit, but the number of permits issued will not be capped (more information of the cap on Tiers 3-4).
Tier 2 – Home Sharing
You are eligible for this type of permit if you are renting a portion of your home more than 20 days a year while residing in the property. Home sharing does include an ADU (Additional Dwelling Unit) or a duplex, as long as the occupant is residing in a portion of the property.
The guidelines for home sharing allow for the permanent occupant to be absent from the property for up to 90 days per calendar year. That enables people to still rent their home out under this permit while on vacation.
Tier 3 – Whole Home (excluding Mission Beach)
The bulk of short term rental investors fall within this category. The owner does not reside in the property and rents the home out for more than 20 days per year.
There are a few very big changes for short term rentals that fall within Tier 3. The biggest change is that the total number of licenses that will be issued will be capped at 1% of San Diego’s total house units (approx. 5,400). As mentioned in the title, this excludes Mission Beach. Guests are also required to stay for a minimum of 2 nights. I do not think that has a large impact, as many owners already have minimum stay requirements of 2-3 days.
Initial licenses will be given out through a lottery system, which has yet to be developed. There was an amendment that was added that will prioritize “good actors”. These are people that abided by the city’s previous rental laws, are in good standing, and don’t have existing complaints against them. If you have an existing short-term rental, I would highly recommend looking into what it takes to be a “good actor”.
Tier 4 – Mission Beach Whole Home
Mission Beach has an extremely high percentage of vacation rentals so it needed to be excluded from Tier 3. Similar to Tier 3, these are homes that are being rented for more than 20 days a year and the owner does not reside on the property.
The number of licenses issued in Mission Beach will be capped at 30% of the area. While this sounds high, it is estimated that over 50% of the homes in Mission Beach are being used as short term rentals. This tier will also require guests to stay for a two-night minimum.
Initial licenses will be given out through a lottery system, which has yet to be developed. There was an amendment that was added that will prioritize “good actors”. These are people that abided by the city’s previous rental laws, are in good standing, and don’t have existing complaints against them. If you have an existing short-term rental, I would highly recommend looking into what it takes to be a “good actor”.

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Ryan Ponce - REALTOR®
DRE# 01902950
(619) 228-6790
Ryan@www.livingthesandiegolife.com
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