San Diego is one of the most visited cities in the country, but buying a house there to run as a whole-home Airbnb is harder than it looks. The city licenses short-term rentals in tiers, caps whole-home licenses and hands them out by lottery, so the license matters more than the house.
In short: LendingStreet finances San Diego County short-term rentals with DSCR loans that, on some programs, qualify on projected nightly revenue instead of a long-term lease. Loans start at $150,000 with no stated maximum, purchases go up to 80% LTV, the minimum credit score is 620 and LLC borrowers are standard. Inside the City of San Diego, whole-home STRs need a capped Tier 3 or Tier 4 license, so many investors look to other cities or unincorporated areas where whole-home rentals are allowed, after checking local rules.
The City of San Diego's short-term residential occupancy ordinance sorts rentals into tiers. Tier 1 covers part-time rentals of a home for less than 20 days a year. Tier 2 covers home sharing, where the host lives on site. Tier 3 covers whole-home rentals outside Mission Beach, and Tier 4 covers whole-home rentals in Mission Beach.
Tier 3 licenses are capped at roughly 1% of the city's housing units, and Tier 4 licenses are capped at a share of Mission Beach's units. Licenses are issued for a set term, are not transferable to a new owner and have been allocated by lottery when demand exceeds the cap. Buying a home that currently operates as an STR does not mean you can keep operating it.
Outside the city limits, each coastal city sets its own rules. Oceanside, Carlsbad, Encinitas, Solana Beach and Del Mar all regulate short-term rentals with permits, and several limit where whole-home rentals can operate or how many permits are issued. Coronado generally does not allow short stays in its residential zones.
Rules in these cities have changed often over the past decade, and coastal permits can involve the California Coastal Commission. Confirm the current rules for the specific parcel with the city before you write an offer.
Many San Diego investors look inland. Julian, in the mountains, draws apple-season and snow-day visitors. Borrego Springs, in the Anza-Borrego desert, draws winter visitors and wildflower crowds. Ramona and Alpine see wine country and weekend traffic. These are in unincorporated San Diego County, where STR rules have historically been lighter than in the cities.
The county has studied short-term rental regulation, so check the current rules before you buy. Backcountry homes also face wildfire insurance challenges, well and septic systems and longer drives for cleaners and repairs, all of which affect your operating costs.
This example is illustrative and not a quote. An investor buys a three-bedroom cabin near Julian for $640,000. A third-party projection estimates $62,400 a year, about $5,200 a month. Prop 13 taxes on the purchase price are about $587 a month, and an STR policy with wildfire coverage costs $330.
At 70% LTV the loan is $448,000, estimated principal and interest is about $3,056 and the total payment about $3,973. The DSCR is about 1.31x on the full projection, but with the projection cut by 20% it falls to about 1.05x. At 65% LTV, the reduced-revenue case improves to about 1.11x, which is where a cautious investor might land.
| Item | 70% LTV, full projection | 70% LTV, cut 20% | 65% LTV, cut 20% |
|---|---|---|---|
| Loan amount | $448,000 | $448,000 | $416,000 |
| Monthly revenue used | $5,200 | $4,160 | $4,160 |
| Estimated principal and interest | $3,056 | $3,056 | $2,838 |
| Taxes and insurance | $917 | $917 | $917 |
| Total monthly payment | $3,973 | $3,973 | $3,755 |
| DSCR | About 1.31x | About 1.05x | About 1.11x |
California taxes are based on a 1% base levy on assessed value plus local bonds and assessments, and the assessed value resets to your purchase price when you buy. The seller's bill is not a guide to yours.
Many newer communities in Chula Vista, Otay Ranch, San Marcos and other parts of the county carry Mello-Roos special taxes that can add meaningfully to the bill. Look for them on the county tax record.
Insurers have pulled back from parts of California, especially in wildfire areas. Backcountry homes in Julian, Alpine and Ramona may end up on the California FAIR Plan with a separate policy for other coverage, which raises costs. STR use adds another layer, because many landlord policies exclude nightly guests. Get a quote that names STR use early in escrow.
Coastal San Diego is strongest in summer, with Comic-Con, the county fair in Del Mar and beach season, though mild weather keeps demand going much of the year. Julian peaks in fall apple season and on snow days. Borrego Springs peaks in winter and early spring and slows sharply in the summer heat.
Budget on a full-year average and keep reserves for the slow months. If the projection comes in low, our guide to low projections explains your options.
Where whole-home STR licenses are out of reach, furnished rentals of 30 days or more are an option in many areas. Traveling nurses at the region's large hospitals, military families in transition and visiting researchers book monthly stays. Those are typically underwritten as long-term rentals on most programs, and the City of San Diego's tenant protections may apply.
Send the address, price, license or permit status, projected revenue and operating plan. The team runs the ratio on full and reduced revenue and tells you which programs fit. Use the form below or call (877) 298-1001.
Only with a Tier 3 license, or Tier 4 in Mission Beach. Both are capped and have been allocated by lottery, and licenses generally do not transfer with a sale.
Generally no. City licenses are not transferable to a new owner, so plan as if you will need to obtain your own.
Some North County cities and unincorporated areas allow whole-home rentals with permits or under lighter rules. Check the specific parcel.
On some programs, yes. The loan can qualify on a third-party revenue projection instead of a lease.
Prop 13 resets assessed value to your purchase price. Add any Mello-Roos or special assessments.
Up to 80% LTV on a purchase, subject to the ratio. High prices often make 65% to 70% a better fit.
Yes. LLC borrowers are standard, and you sign for the loan personally.
No. Our investor loans are business-purpose loans on non-owner-occupied property.
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