The market divides into three distinct investment clusters. The beach corridor — Pacific Beach, Mission Beach, and Ocean Beach — concentrates 76% of listings and commands ADRs of $237–$310 with annual revenues reaching $73,037 in Pacific Beach (92109), though entry requires $1.4M+ and tolerating 4–5% gross yields. The urban core — Downtown (92101) — offers the most accessible entry at $740K median home values with a 6% gross yield and $41,744 in annual revenue, making it the strongest candidate for DSCR-financed acquisitions. The North County coast operates under separate city regulations: Carlsbad (92008) generates $80,180 annually at $337 ADR, Encinitas (92024) reaches $85,467 at the highest ADR of $353 with five-bedroom properties producing $221,275 per year, and Oceanside (92054) delivers the best value at $63,076 revenue on $1,075K home values for a 6% gross yield.
Revenue scales aggressively with property size. One-bedroom units — which make up 46% of supply — generate just $34,322 annually, while three-bedroom properties produce $91,571 and four-bedrooms reach $126,846. Seasonality runs 1.7x from trough (February, 50% occupancy, $293 ADR) to peak (July, 73% occupancy, $393 ADR), with summer months averaging $8,102 in monthly revenue. The Chalet ROI calculator can model these numbers against specific acquisition scenarios.
The investor who wins in San Diego is cash-rich or low-leverage, targeting three-plus-bedroom coastal properties with a five-to-ten-year horizon. They understand that at current mortgage rates of 6.4–7.0%, most leveraged purchases break even or run slightly negative on cash flow — the return comes from equity build, appreciation, and the compounding value of holding a license in a market where only 895 Tier 3 whole-home licenses remain before the citywide cap is reached and Tier 4 (Mission Beach) has been fully allocated at zero availability. A Chalet agent specializing in STR acquisitions can navigate the license-aware buying process.
Why Not Invest in San Diego Airbnb Rentals?
The risks are tangible and must be weighed honestly. The STRO ordinance's license non-transferability rule means a property sale voids the STR license — constraining exit strategy. TOT rates increased to 11.75–13.75% under Measure C in May 2025. A proposed vacation home tax was defeated 3-2 in January 2026 but could resurface. California's SB 346, effective January 2026, gives the city enhanced enforcement tools. Tourism growth has decelerated to 1%, and 2,849 new hotel rooms under construction will add competitive lodging supply. Operating expenses — 20% management, 15.5% platform fees, 12–14% TOT, plus insurance, taxes, and maintenance — compress the 5.74% gross yield to thin net margins for leveraged investors.
