I see many responses from people who have zero San Diego STRs. Their view is not all incorrect, but also does not convey the full story.
I have had STRs in San Diego county since 1999. I had 4 but one did not selected in the recently enacted San Diego lottery so now I have 3 STRs and one MTR.
The positive is the long time STRs have provided outstanding return and due to prop 13 the return is magnified. How good? my best year had $160k rent for a property I purchased at $375k.
The bad is the city has an anti STR mindset with recently enacted lottery and quotas. The state has some congress members that are anti-STR as the state recently proposed a 15% tax in addition to the occupancy tax (so 15% tax beyond what hotels pay). It did not pass, but it was a bit scary proposition.
Last year I fired my previous PM and switched to Nancy’s vacation rental. I have been very happy with them (I recommend them) but they only serve the beach areas near mission beach (OB, PB, Pt Loma, etc).
Due in part to recent firing of PM I have recent experience starting over with 0 reviews (between 2 units, I lost multiple thousands of reviews). We also started 2 new STRs last year. So I have recent experience starting STRs with 0 reviews. In my view it takes nearly a year to obtain the reviews that achieve near optimal bookings.
Last year due to various issues I had an off year on a great year for STRs. San Diego also locked down more than most areas during Covid so the STR rental revenue took a bigger beating than most areas in 2020 and 2021. In 2019, one property (duplex) produced $160k in rent. I think I will do about $120k to $140k for 2023 on the same property but some of the decline is likely due to having fewer reviews by far than I had in 2019 (from in the thousands to less than 100). I do not consider my example as representative; a more representative example would be without going from over 1000 reviews to less than 100 reviews.
As for cost of furnishing I believe there is a trade off of time versus cost. With enough time and leg work you can furnish very cheap in San Diego. The various “buy nothing has a lot of good furnishings for free. Offer up, Facebook marketplace, Craigslist, etc have cheap furnishing offerings. There are a plethora of consignment stores. However, each day off market is potentially a day of lost rent, so the cheap option is best served if it is in parallel with a unit rehab or other work that needs to be done to the unit to get it STR ready.
Would I start STRs today in San Diego? 2 of our San Diego STRs we started last year. We previously had 2 units of STR in Gulf Shores that we sold because our San Diego properties were producing better return.
Hopefully I hit on most of the questions. In summary, San Diego STR markets has its challenges but can produce great return.
Good luck.
