Areas for STR in San Diego -- looking for properties

[Javier Mendez]

Hi everyone,

I'm considering an investment property in San Diego and would appreciate any help. Considering a single family home I can Airbnb and use as a vacation home when I go visit family in the area. Budget I'm considering is <700K -- credit report and downpayment should be no problem. This would be a long term buy and hold for me. I'm not located in the area but I have family in the area that could help with rehab, if necessary -- closer to move-in ready would be ideal but not a deal breaker if its in a solid location. I'm not necessarily looking for a high ROI property since I'm banking on appreciation and plan to frequent the area to visit my folk. Location is really important to me though.

My main question is any recommendations on locations I should be looking at? I really like the golden hill/south park area due to its proximity to downtown and being so central (assuming its great for ABNB). Would love to hear some opinions on other areas to consider. 

Lastly, whats the market feel from local investors/agents? Are we in a seller's market? I'm not in a rush to be a buyer and have patience for a good value property. 

[Dan H.]

The city council for the 2nd time in 5 years has passed anti STR regulations.

The first time they passed rules that banned STRs of less than 60 days unless owner occupied.  A petition gathering occurred to put it on the ballot.   Once the signatures were gather to qualify for the ballot, the council rescinded the ban (which had not gone into affect). 

About a week ago the city council approved (has further process to be passed) a plan to limit STRs.   The proposal was for a lottery.  No one knows if this will end up ever going into effect. 

We have had our STRs since 1999 trying to abide by all rules, pay all required fees, etc We use profession PM to help ensure that unruly guest are dealt with swiftly and to help ensure that we are following the rules. With the rules as currently proposed, we could end up not selected in the lottery and no longer have STRs (note our units were STR before AirBnB or VRBO). If there are STR rule limitation, I would like to see the rules reward those that have been following the current rules and have not had many noise complaints, etc.

There is also an anti STR sentiment at the state level.

I recommend against considering an STR in city of San Diego or coastal San Diego county unless the numbers also work as an LTR and you are fine being forced to have the LTR rather than STR.

There is a very good chance STR will be further regulated in San Diego. If not by this proposal, by a subsequent proposal.

Note: this proposal to further limit STRs comes after many STR owners took a beating in 2020. STRs were forbidden from sometime in March to some point in June and again from prior to Thanksgiving through to 2021. Our rents for 2020 were down just over $60k compared to 2019. This regulation is hitting STR owners when they may already be hurting financially. I am not against further STR regulations, but I think 1) it should address it going forward and not eliminate long time, non-problem STRs 2) the timing is horrendous. An owner chose to not place their unit into the LTR market when shut down to as COVID starts to diminish have the STR prohibited because you were not selected in the lottery. By the way if our units are not selected in the lottery, one will be our second residence and hopefully, due to owner occupied, no lottery is required for 2nd to be an STR. so instead of 2 units being STR Only one will be as a big reason we are STR is so we can use/stay at our property when we want.

Good luck