How to Research a Short-Term Rental Investment in San Diego: Revenue Projections, Occupancy Rates & More

Purchasing a property to use as an Airbnb or VRBO can be an appealing way to invest in San Diego real estate. But before making an offer, it’s important to understand what a property could realistically earn, how often it might be booked, and what expenses will affect your bottom line.

The good news? There are several online resources that can help you evaluate a potential short-term rental investment before you buy. The key is knowing which numbers to look at, how to interpret the data, and what to verify before moving forward.

As a San Diego Realtor specializing in investment properties and short-term rentals, I encourage buyers to look beyond the listing price and estimated rental income. A successful investment starts with understanding the property's earning potential, operating costs, competition, and local licensing requirements.

1. AirDNA: Research Short-Term Rental Revenue & Occupancy

One of the most useful starting points for short-term rental investment research is AirDNA. The platform provides market data, historical rental performance, occupancy estimates, average daily rates, and revenue projections for vacation rental properties.

AirDNA's Rentalizer tool allows you to enter a specific property address and generate an estimate of its potential short-term rental performance based on comparable properties and market trends.

What you can research:

• Estimated annual revenue: How much a property might generate in rental income over 12 months.
• Occupancy rate: The percentage of available nights expected to be booked.
• Average daily rate (ADR): The average nightly rate guests pay.
• Seasonality: How revenue and demand fluctuate throughout the year.
• Comparable rentals: How similar properties in the surrounding area perform.

Visit AirDNA's San Diego market overview to explore local market data.

Keep in mind that revenue projections are estimates, not guarantees. The actual performance of a property will depend on its location, size, amenities, condition, availability, pricing strategy, guest reviews, and competition.

2. Airbnb & VRBO: Research Your Competition

Data platforms are a helpful starting point, but I also recommend looking directly at the properties competing for the same guests.

Search Airbnb and VRBO for properties in the neighborhood you're considering. Narrow your search to homes with similar bedroom and bathroom counts, guest capacity, amenities, and proximity to beaches, attractions, or other demand drivers.

Pay attention to:

• Nightly rates during peak and off-peak seasons.
• The quality of listing photography and overall presentation.
• Guest reviews and recurring feedback.
• Amenities that appear to influence booking appeal.
• Minimum-night requirements and availability patterns.

Don't assume that a calendar showing unavailable dates means a property is fully booked. Dates may be blocked by the owner, reserved for personal use, or unavailable for other reasons. Similarly, advertised nightly rates don't necessarily reflect the final price guests pay.

The goal is to understand the competitive landscape and identify what could make your property stand out.

3. Build a Realistic Revenue & Expense Projection

Projected gross revenue is only one part of the investment equation. Before purchasing, you'll want to estimate the expenses required to operate the property and determine how much income might remain.

Potential operating expenses include:

• Mortgage principal and interest, if financed.
• Property taxes and insurance.
• Utilities, internet, and supplies.
• Cleaning and laundry.
• Repairs, maintenance, and replacement of furnishings.
• Airbnb and VRBO platform fees.
• Property management fees, if applicable.
• Licensing, compliance, and applicable taxes.
• HOA dues and special assessments, where applicable.

Consider creating conservative, moderate, and optimistic revenue scenarios rather than relying on one projection. This can help you understand how the investment might perform if occupancy or nightly rates are lower than expected.

It's also important to distinguish between gross rental revenue, net operating income, and actual cash flow. Net operating income generally reflects revenue minus operating expenses, before mortgage payments and certain other costs. Cash flow takes financing and other applicable cash expenses into account.

4. Research San Diego's Short-Term Rental Licensing Requirements

A property that looks promising financially may not be eligible to operate as a short-term rental under the rules that apply to its location.

San Diego has specific Short-Term Residential Occupancy (STRO) licensing requirements, and the applicable rules can vary by license tier. Other cities and communities within San Diego County may have their own regulations, permit requirements, zoning restrictions, and tax obligations.

Start with the City of San Diego's official STRO licensing resource if you're considering a property within the City of San Diego.

Before making an offer, verify:

• Whether short-term rentals are permitted at the property.
• Which license or permit would apply.
• Whether a license is available and whether the buyer would qualify.
• Whether the property must meet primary-residence or other eligibility requirements.
• Whether HOA rules, deed restrictions, or other limitations apply.

Do not assume that a property's existing short-term rental operation or a seller's license automatically means you can continue operating it after closing. Confirm the requirements with the relevant city or jurisdiction before relying on projected rental income.

5. Compare Different Property Types & Investment Strategies

A detached beach house isn't the only way to enter the short-term rental market. Depending on your goals, budget, and the applicable regulations, it may be worth evaluating other property types.

For example, a duplex may offer the opportunity to occupy one unit while renting the other, subject to financing, zoning, licensing, and occupancy requirements. Other buyers may prefer a second home that they use personally while renting it when they're away.

When comparing properties, consider both the income potential and the overall ownership experience. A property with higher projected revenue may also come with higher acquisition costs, operating expenses, maintenance needs, or regulatory complexity.

The best investment isn't necessarily the property with the highest estimated gross revenue. It's the one that fits your financial goals, risk tolerance, intended use, and ability to manage the operation.

6. Work With Someone Who Understands Short-Term Rental Operations

Online tools can help you narrow down opportunities, but interpreting the data requires context. Two properties in the same neighborhood can perform very differently depending on their layout, condition, amenities, guest appeal, and operating strategy.

I own and operate a short-term rental in Mission Beach, so I understand the investment process from both the real estate and hosting perspectives. When helping buyers evaluate potential investments, I look beyond the purchase price to consider projected income, comparable rentals, licensing requirements, operating expenses, and the practical realities of managing a vacation rental.

My goal is to help buyers ask the right questions before they commit to a property, rather than discover important limitations after closing.

Start Researching Your San Diego Short-Term Rental Investment

If you're considering purchasing an Airbnb, VRBO, or vacation rental in San Diego, start by researching comparable properties, reviewing revenue and occupancy estimates, building an expense projection, and confirming the applicable licensing requirements.

You don't have to figure it all out on your own. With the right information, you can evaluate opportunities more confidently and determine which properties deserve a closer look.

Interested in purchasing a short-term rental or investment property in San Diego? Contact me to discuss your goals and explore opportunities that may fit your investment strategy.

Revenue projections are estimates for informational purposes only and are not guarantees of future performance. Buyers should independently verify rental regulations, licensing eligibility, expenses, and financial assumptions before purchasing.

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