As with other cities in California, the San Diego housing market is a great option for real estate investors!
San Diego is a hidden gem within California. Thanks to the growing economy, many investors are now turning into the real estate investing business as it remains a low-risk with high-returns investment! Add in San Diego’s great weather and wonderful beaches, and you’ll have the recipe for success. In addition, many companies – frustrated with high housing costs in San Francisco and other big Californian cities – have chosen to relocate to San Diego for its favorable cost of living.
All of these factors (and more explained below) make the San Diego housing market profitable for both traditional investments AND Airbnb investments! Therefore, if you’re a real estate investor, you should definitely consider buying an investment property in San Diego real estate.
Related: San Diego Real Estate Market 2018: Why and Where to Invest
In this article, we’ll break down the main reasons why the San Diego housing market is one of the top places for traditional investments and Airbnb investments – respectively. But first, let’s take a look at the data regarding this real estate market.
San Diego Housing Market Statics
- Median Property Price: $823,342
- Traditional Rental Income: $2,669
- Airbnb Rental Income: $3,625
- Traditional Cash on Cash Return: 1.18%
- Airbnb Cash on Cash Return: 1.8%
- Traditional Cap Rate: 1.18%
- Airbnb Cap Rate: 1.8%
- Airbnb Occupancy Rate: 57.44%
Want to know how we got these numbers? Simply using Mashvisor’s investment property calculator – a real estate investing tool that will help you make faster and smarter investment decisions! Mashvisor uses comparative and predictive data to get projections of investment properties available for purchase in any city in the US real estate market. Then, after calculating the values for individual properties, metrics such as cash on cash return and cap rate are calculated to estimate the potential profitability of these properties and the city/neighborhood itself. Thus, with Mashvisor, a real estate investor can find an investment property quickly with the returns already calculated!
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What Makes The San Diego Housing Market Profitable for Traditional Investments
The Growing Economy
The first thing property investors look at in a real estate market is the economy as it affects real estate investments. San Diego real estate investors will be glad to know that the city continues to grow and enjoys a strong economy. The unemployment rate in San Diego is 3.1% – lower than the average unemployment rate in the State of California (4.3%) and the national average (3.9%).
This improving job market is a good sign for a real estate investor thinking of owning a traditional rental property. Why? Simply because a strong job market is accompanied by a growing population. This further means higher occupancy rates and demand for traditional rentals! Thus, if you’re investing in the San Diego housing market, you won’t have a problem finding a tenant for your rental property.
Affordable Investment Properties
The second factor that attracts property investors to a certain real estate market is the housing prices. While the San Diego housing market is not the cheapest in the country, its median property price of $823,342 is quite affordable compared to other major cities like San Francisco (median property price: $1,518,938). Additionally, you can find affordable investment properties in some parts of the city with the help of Mashvisor’s Heatmap.
Using this real estate investing tool makes finding investment properties much easier with visual cues. Using different filters, you can set your criteria to see which areas in the San Diego housing market have the highest/lowest values regarding listing price, cash on cash return, rental income, and occupancy rate. So, if you used our heatmap, you’d know that affordable investment properties in San Diego are located in the areas highlighted in red:
To learn more about finding rental properties using a heatmap, read “Be a Smart Real Estate Investor: Finding Income Properties Using a Heatmap”
Best Neighborhoods for Traditional Investments in the San Diego Housing Market
Gaslamp Quarter
- Median Property Price: $687,091
- Traditional Rental Income: $3,180
- Cash on Cash Return: 2.63%
- Cap Rate: 2.63%
East Village
- Median Property Price: $573,071
- Traditional Rental Income: $2,526
- Cash on Cash Return: 1.58%
- Cap Rate: 1.58%
Carmel Mountain
- Median Property Price: $692,164
- Traditional Rental Income: $2,611
- Cash on Cash Return: 1.42%
- Cap Rate: 1.42%
Miramar Ranch North
- Median Property Price: $787,513
- Traditional Rental Income: $2,998
- Cash on Cash Return: 1.32%
- Cap Rate: 1.32%
To start looking for and analyzing the best traditional investment properties in your neighborhood of choice, click here.
What Makes The San Diego Housing Market Profitable for Airbnb Investments
If you take another look at the San Diego real estate market statics, you’ll notice that investing in Airbnb rentals actually brings a higher return on investment than traditional rentals, making Airbnb the optimal rental strategy in the city for property investors! As a matter of fact, a study done by smartasset.com named San Diego as one of the most profitable cities for Airbnb investments in 2018.
One reason for the success of Airbnb rentals in the San Diego housing market is thanks to the city’s strong tourism industry. Tourists and travelers are increasing the demand for short-term rentals. Moreover, we should not forget that San Diego is one of the only four cities in the United States that have enacted a legal framework that is favorable to short-term rental owners, according to a report from AirDNA. As a result, Airbnb in San Diego housing market is both legal and profitable.
Best Neighborhoods for Airbnb Investments in the San Diego Housing Market
Pacific Beach
- Median Property Price: $1,037,345
- Airbnb Rental Income: $5,683
- Cash on Cash Return: 3.33%
- Cap Rate: 3.33%
- Airbnb Occupancy Rate: 68.67%
Hillcrest
- Median Property Price: $827,419
- Airbnb Rental Income: $4,151
- Cash on Cash Return: 2.5%
- Cap Rate: 2.5%
- Airbnb Occupancy Rate: 68.41%
Rancho Bernardo
- Median Property Price: $697,475
- Airbnb Rental Income: $2,885
- Cash on Cash Return: 1.44%
- Cap Rate: 1.44%
- Airbnb Occupancy Rate: 41.4%
Mission Valley East
- Median Property Price: $690,789
- Airbnb Rental Income: $3,362
- Cash on Cash Return: 1.23%
- Cap Rate: 1.23%
- Airbnb Occupancy Rate: 54.47%
Don’t think the cap rates in these neighborhoods are good? Read this: Forget Everything You’ve Heard About What is a Good Cap Rate.
Looking for an investment property in the San Diego housing market to rent out on Airbnb? You can easily do that with Mashvisor’s Property Finder Tool! This real estate investing tool allows you to find and analyze investment properties within minutes. All you have to do is pick a city, set your budget, rental strategy along with other filters to control your search results and find the properties that best match your criteria.
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