Wondering if a San Diego short-term rental could help offset your mortgage or become a smart investment? It can be tempting, especially in a city with year-round tourism, major events, and strong visitor demand. But in San Diego, short-term rental success depends on more than buying in a popular area and listing your property online. You need the right property, the right license tier, and a realistic plan for day-to-day operations. Let’s dive in.
Why San Diego gets investor attention
San Diego has a strong tourism base. The City of San Diego describes it as a year-round visitor destination, and the San Diego Tourism Authority reported 32.5 million visitors in 2024, including 18.0 million overnight visitors and $14.8 billion in visitor spending.
That demand helps explain why short-term rentals stay on so many buyers’ radar. Countywide hotel occupancy reached 74.3% in 2024, and major events also drive travel demand throughout the year. In 2024, San Diego hosted 61 primary events that accounted for about 1.1 million hotel room nights, and Comic-Con International drew more than 135,000 attendees.
At the same time, this is not an easy market. AirDNA estimates San Diego had 15,524 active short-term rental listings, 60% occupancy, a $333.70 average daily rate, and roughly $39,000 in annual revenue per listing. Those figures suggest opportunity, but they also show strong competition and should not be treated as a guarantee of performance.
San Diego short-term rental rules matter first
Before you focus on revenue, start with the city’s rules. In San Diego city limits, any dwelling unit or part of one rented for less than one month requires a Short-Term Residential Occupancy, or STRO, license, regardless of zoning.
The city allows a host to hold only one license at a time. A host also may not operate more than one dwelling unit for STRO at a time, and licenses are not transferable. That means your ownership and operating plan needs to match the city’s framework from day one.
The city currently uses four STRO tiers:
- Tier 1: Up to 20 days per year
- Tier 2: Home sharing in a primary residence
- Tier 3: Whole-home rentals outside Mission Beach
- Tier 4: Whole-home rentals in Mission Beach
There are also important usage limits. A permanent resident who occupies the home at least 275 days per year can still qualify for Tier 2 and allow up to 70 days of whole-home STRO. Outside that exception, whole-home use for 21 to 89 days is not allowed under the ordinance.
For Tier 3 and Tier 4, the city requires a two-night minimum stay, quarterly reporting, and at least 90 days of utilization per year to keep the license. These are not small details. They directly affect how you use the property and whether your plan is even workable.
License availability can shape your options
Not every tier has the same level of availability. As of May 8, 2026, the city reported 141 Tier 1 licenses issued, 2,363 Tier 2 licenses issued, 4,750 Tier 3 licenses issued with 856 remaining, and 1,097 Tier 4 licenses issued with 0 remaining.
That last point matters if you are thinking about Mission Beach. The city says the Tier 4 application period is closed, so a strategy that depends on getting a new Tier 4 license is not a practical fit right now.
Some property types are not eligible
This is one of the biggest due diligence areas for buyers. In San Diego, ADUs are prohibited for STRO use, except for certain permitted companion units approved before October 15, 2017.
The city also limits live/work units. Short-term rental use is allowed only in the live portion, and only if the host is a permanent resident. RVs, campers, tents, sheds, tree houses, and similar temporary structures are not allowed.
The city defines a host as a natural person with the legal right to occupy the unit. That means an LLC cannot be the host. A lessee may qualify only if the lease allows subleasing for less than one month.
The real cost is more than the purchase price
A San Diego short-term rental comes with city taxes, licensing fees, and operating costs. One of the biggest line items is Transient Occupancy Tax, or TOT.
Effective May 1, 2025, San Diego’s TOT rate is 11.75%, 12.75%, or 13.75% depending on the tax zone. Operators must collect it with rent and remit it monthly. Late payments can trigger a penalty of 1% on the first delinquent day plus one-third of 1% for each day after that, up to 25%.
You will also need the right registrations before the city processes a license. The host needs an active TOT certificate, the dwelling unit must be current on Rental Unit Business Tax, and a non-owner host needs a Business Tax Certificate. The city also will not process applications for units with pending enforcement actions.
Licensing itself has direct fees. As of March 1, 2025, the city lists the following:
| STRO Tier | Application Fee | License Fee |
|---|---|---|
| Tier 1 | $33 | $193 |
| Tier 2 | $33 | $284 |
| Tier 3 | $41 | $1,129 |
| Tier 4 | $41 | $1,129 |
STRO licenses expire two years from issuance, and the fees are non-refundable. On top of that, Rental Unit Business Tax applies when all or part of a property is rented for more than six days in a calendar year.
Then there are the normal ownership expenses. Rental property costs can include mortgage interest, property tax, maintenance, utilities, insurance, depreciation, advertising, repairs, and professional fees. In practice, many short-term rentals also have furnishing, turnover, and management costs, so gross revenue is only part of the picture.
San Diego STR ownership is active management
Many buyers picture a short-term rental as passive income. In San Diego, it is closer to running a small hospitality business.
The city requires a local contact who can respond to complaints within one hour. That means you need a reliable system for guest issues, noise concerns, cleaning coordination, and turnover logistics.
If you live out of area, this becomes even more important. A property can look good on paper and still become stressful if you do not have the right local support in place.
When a San Diego short-term rental makes sense
A San Diego short-term rental often works best when the property and your plan clearly fit the city’s rules. Owner-occupants and highly engaged hosts usually have the strongest fit because they can align the home with the correct tier, stay current on taxes and licensing, and actively manage the operation.
It may also be more appealing if the property benefits from San Diego’s year-round visitor economy or major event demand. Homes with strong access to coastal destinations, convention activity, or other visitor draws may have better short-term rental potential, although performance still depends on competition, seasonality, and execution.
For some buyers, a short-term rental can support a larger ownership strategy. You might be purchasing a home that works for part-time personal use, future relocation needs, or income support during periods you are not occupying it. The key is making sure your intended use actually fits a valid license tier.
When a San Diego short-term rental may not fit
This strategy is often a poor fit if you want a low-touch investment. The licensing, taxes, reporting, and one-hour local contact requirement all add operational pressure.
It is also a weak fit if your plan depends on using an ADU or JADU as the short-term rental unit. The city’s restrictions make that a major issue for many buyers who assume a detached unit can be used freely.
Another common problem is the 21 to 89 day whole-home plan. Unless you qualify under Tier 2 as a permanent resident, that usage pattern does not fit the city’s rules.
And if your strategy depends on a new Mission Beach whole-home license, today’s city data does not support that plan. Tier 4 is fully allocated and closed.
Questions to ask before you buy
If you are serious about buying for short-term rental use, ask these questions early:
- Which STRO tier fits this property and my intended use?
- Is this property type allowed under the city rules?
- What TOT zone applies to this address?
- If I need Tier 3, can I realistically meet the 90-day utilization rule?
- Who will serve as the one-hour local contact?
- Who will handle cleaning, guest turnover, and maintenance?
- Do the estimated numbers still work after taxes, fees, and operating costs?
These questions usually matter more than the headline revenue estimates. A property is only a good short-term rental candidate if the rules, costs, and management plan all line up.
The bottom line for San Diego buyers
A San Diego short-term rental can be a smart play, but it is not the right fit for every buyer or every property. The market has real visitor demand, yet it is also regulated, competitive, and operationally demanding.
If you are buying with short-term rental goals in mind, the best approach is to evaluate the property through the city’s licensing rules first and the income potential second. That order can save you time, money, and costly surprises.
If you want help evaluating whether a San Diego home fits your short-term rental goals, connect with Alanna Strei for practical local guidance backed by real-world STR insight.
FAQs
What license do you need for a short-term rental in San Diego?
- In San Diego city limits, you need a Short-Term Residential Occupancy, or STRO, license to rent a dwelling unit or part of one for less than one month.
Can you use an ADU as a short-term rental in San Diego?
- Usually no. The city prohibits ADUs for STRO use, except for certain permitted companion units approved before October 15, 2017.
Is Mission Beach still available for new whole-home short-term rental licenses?
- No. As of May 8, 2026, the city reported that Tier 4, which applies to whole-home rentals in Mission Beach, had 0 remaining and the application period was closed.
How much is San Diego short-term rental tax?
- San Diego’s TOT rate is 11.75%, 12.75%, or 13.75% depending on the tax zone, effective May 1, 2025.
Is a San Diego short-term rental passive income?
- Usually not. The city requires active compliance, monthly tax remittance, and a local contact who can respond to complaints within one hour.
What makes a San Diego property a good short-term rental candidate?
- A strong candidate usually has a property type allowed by the city, a clear fit for the correct STRO tier, a workable operations plan, and realistic financial expectations after taxes, fees, and ongoing expenses.
