What are the best neighborhoods in San Diego 2018 for owning a rental property?
If you’re looking to purchase a rental property in San Diego this year, then you should definitely consider these areas that are considered to be the best neighborhoods in San Diego 2018.
The list below includes 5 of the best neighborhoods in San Diego 2018 for owning a rental property according to Mashvisor’s data. The list is based mainly on each neighborhood’s average cap rate for both Airbnb and traditional rental properties, and it includes neighborhoods that show a good projected cap rate for both rental strategies.
Related: Real Estate Investing: Traditional vs. Airbnb Investments
Before getting into the list of the best neighborhoods in San Diego 2018, it is important to also be aware of the Airbnb laws and regulations that might affect your investment in order to decide which rental strategy is most suitable for you.
San Diego: Airbnb Laws and Regulations
Generally speaking, Airbnb rentals are considered legal in San Diego, and there are few laws & regulations that can limit the performance of your Airbnb rental property and its profitability.
However, if you’re looking to invest in an Airbnb rental property, there are a few codes that you should be aware of and that will be used to define your property and decide on the laws and regulations that apply to it:
- Bed and Breakfast Establishments
- Dwelling Unit
- Commercial Services
- Boarder and Lodger Accommodations
- Guest Quarters
- Hotel
- Visitor Accommodations
- Guest Room
Since owning a rental property in any area requires certain licenses and registrations, it is important to understand which of these codes apply to your property in order to know the licensing that you need to run and operate your short-term rental.
Make sure to seek the advice of an attorney or consult with the zoning requirements before listing your property.
Additionally, in San Diego, you must follow the Housing Standards regulations that are set by the city. These should include the minimum design, maintenance, and construction standards that you must meet, and they also include the regulations for safety, health, and habitability. You can read Chapter 9 & 14 of the Municipal Code which covers this in more detail.
Also, if you plan on owning and renting out a property in San Diego for less than 30 days at a time, you will need to acquire a Transient Occupancy Registration Certificate. The city also imposts a Transient Occupancy Tax (TOT) and a Tourism Marketing District Assessment (TMD) on properties that are rented out on Airbnb for less than 30 days.
The tax is collected by Airbnb and remitted to the city. You can learn more about the process here.
All rental properties, except for owner-occupied rentals, are also required to pay the Rental Unit Business Tax.
Best Neighborhoods in San Diego 2018 – Golden Hill
Median Property Price: $199,500
Median Traditional Rental Income: $1,345
Median Airbnb Rental Income: $2,159
Average Traditional Cap Rate: 3.61%
Average Airbnb Cap Rate: 7.63%
Average Airbnb Occupancy Rate: 62.9%
Kicking off this list; the Golden Hill neighborhood in San Diego is the #1 top neighborhoods for investing in real estate in the city.
The median property price in the Golden Hill is extremely low, especially when compared with the city’s and the state’s average prices. This resulted in properties having high cap rates, and Airbnb rentals, in particular, have shown very high cap rates that are above 7%.
Related: Best Places to Invest in Real Estate Based on Cap Rate
Best Neighborhoods in San Diego 2018 – North Park
Median Property Price: $469,500
Median Traditional Rental Income: $2,114
Median Airbnb Rental Income: $3,744
Average Traditional Cap Rate: 2.19%
Average Airbnb Cap Rate: 5.34%
Average Airbnb Occupancy Rate: 62.5%
North Park is another great entry on this list. Although the median property price might seem high at first, it is still among the cheapest neighborhoods for purchasing an investment property in San Diego.
Airbnb rentals, in particular, have a very high potential for profits in North Park.
To start looking for and analyzing the best investment properties in your city and neighborhood of choice, click here.
Best Neighborhoods in San Diego 2018 – East Village
Median Property Price: $554,900
Median Traditional Rental Income: $2,417
Median Airbnb Rental Income: $2,694
Average Traditional Cap Rate: 1.91%
Average Airbnb Cap Rate: 2.34%
Average Airbnb Occupancy Rate: 54.4%
Similar to North Park, the median property price in East Village is above the nation’s average, but it is far below the state’s and the city’s averages.
East Village is an all-around balanced neighborhood, and both traditional, as well as Airbnb rentals, have good and balanced performance stats, according to our data.
Best Neighborhoods in San Diego 2018 – La Jolla
Median Property Price: $1,095,000
Median Traditional Rental Income: $5,471
Median Airbnb Rental Income: $5,488
Average Traditional Cap Rate: 1.89%
Average Airbnb Cap Rate: 2.06%
Average Airbnb Occupancy Rate: 67%
Although La Jolla has the highest median property price on this list, the neighborhood has been known for operating and running Airbnb rentals, and the area has a very high demand for this type of property.
This can be easily seen from looking at the neighborhood’s average Airbnb occupancy rate, which is much higher than the average, and it is sitting at 67%.
Related: Airbnb Reviews: Top Influencers Affecting Your Occupancy Rate
Best Neighborhoods in San Diego 2018 – Hillcrest
Median Property Price: $695,000
Median Traditional Rental Income: $2,812
Median Airbnb Rental Income: $3,563
Average Traditional Cap Rate: 1.8%
Average Airbnb Cap Rate: 2.93%
Average Airbnb Occupancy Rate: 67.4%
Finally, Hillcrest is another neighborhood in San Diego that has shown very high potential for Airbnb rentals in particular, and the average occupancy rate for Airbnb rentals in the area have surpassed even La Jolla, which was known to be the most popular neighborhood in San Diego for Airbnb and short-term rentals.
Best Neighborhoods in San Diego 2018 – Conclusion
All in all, investing in rental properties in San Diego is generally a very good and profitable venture.
If you’ve decided on the best neighborhoods in San Diego 2018 for owning a rental property, but are still trying to decide between short-term or traditional rentals, feel free to visit our website and use our tools to determine the optimal rental strategy to use in each neighborhood and for each investment property that you want to analyze.
To get access to our real estate investment tools, sign up for a 7-day free trial of Mashvisor today, followed by 15% off for life.
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