After All Costs, San Diego's Airbnb Premium Shrinks Sharply

San Diego's gross short-term rental premium of 83% on a 3-bed house looks compelling on the headline, but the picture tightens once Airbnb fees, transient occupancy tax, insurance, maintenance and property tax are stripped out. This article runs the after-costs maths on both a 3-bed house and a 2-bed apartment in San Diego (San Diego County), because the cost stacks differ: apartments enter at a much lower price but carry HOA dues that houses don't.

San Diego sits firmly in premium-market territory. With a median 3-bed house at $949,340, well above the California median of $687,000 and roughly four times the national median of $242,500, the local thesis leans on long-run appreciation and lifestyle demand rather than current cash flow. The cost lines below show why.

3-Bed House: Net Yield Lands at 1.3% for Short-Term, 1.2% for Long-Term

Note: rates above are for Airbnb. Other platforms charge differently (Vrbo around 5%, Booking.com around 15%), and a direct-booking channel avoids the host fee entirely. The table assumes self-management for both rental modes.

What Eats the House Premium

Three line items absorb most of the gross uplift on a San Diego house. Airbnb host fees of $9,490 take the first slice off short-term gross. Transient occupancy tax of $7,347 (San Diego's local rate sits inside California's typical 10-14% TOT band) takes the second. And short-term insurance and maintenance run higher than their long-term equivalents because of guest-facing wear, furnishing replacement and the higher-coverage policies short-term operators need: insurance steps up from $1,899 to $3,399, and maintenance from $9,256 to $12,799.

Property tax of $10,917 hits both columns equally. California's Proposition 13 resets to roughly 1.15% on a new purchase, and on a $949,340 house that line alone is the single biggest cost in either column. The result: a gross short-term premium of 83% compresses sharply by the time net income is calculated, with short-term net at $12,496 versus long-term net at $11,324.

2-Bed Apartment: Lower Entry Price, but HOA Dues Eat Into the Gap

HOA dues sit in both columns because they are a property-level cost: the homeowner association charges them regardless of whether the unit is rented short-term, long-term, or owner-occupied. In San Diego condominium buildings, HOA covers building insurance, common-area maintenance, often water and trash, and reserve contributions, and the run rate of $4,677 is structurally absent from the house table.

House vs Apartment: The Cost Comparison

The apartment entry price of $476,090 is roughly half the house median of $949,340, which means a far smaller deposit, smaller mortgage, and lower property-tax base ($5,475 versus $10,917). On the cost side though, the apartment carries HOA of $4,677 a year that houses simply don't pay, and apartment short-term gross is also lower because nightly rates and bedroom count are lower (a 2-bed apartment at $202 per night versus a 3-bed house at $368).

Net of all costs, the apartment lands at a short-term net yield of 0.2% versus the house at 1.3%, and a long-term net yield of 1.9% versus the house at 1.2%. Capital outlay is much smaller for the apartment, so absolute net income is lower in dollars, but yield-on-price is the cleaner basis of comparison and tells investors which dollar of capital is working harder. Suburb-level dispersion matters too: top-ranked San Diego (92115) runs a gross yield of 6.0% versus the county median of 3.5%, and individual ZIPs across the 114 in San Diego County diverge significantly.

View San Diego in the dashboard → Free preview · every bedroom count and property type

Short-Term Only Breaks Even Versus Long-Term at 28% Occupancy

The 3-bed house breaks even (gross short-term equals gross long-term rent) at occupancy of 28%, which is the floor, not the target. Anything below that and short-term grosses less than simply leasing the property to a long-term tenant, before short-term's higher cost stack is even considered. The market median sits at 50%, comfortably above the gross break-even but well below saturation, and individual properties in coastal or Mission Beach micro-markets run higher.

San Diego's regulatory backdrop matters here. Short-term rentals heavily restricted in San Diego. Investment properties generally not permitted; may require owner occupancy, specific zoning, or other conditions (permit required, $1000). San Diego's 2022 ordinance restricts whole-home short-term rentals to primary residences in most zones. Mission Beach has a grandfathered tier. Investment property short-term rentals phased out. Investors targeting whole-home short-term rental in the city proper face a permit and primary-residence environment that effectively excludes most non-owner-occupied investment plays outside the grandfathered Mission Beach tier. Unincorporated county areas and surrounding cities operate under their own rules.

Hiring a Professional Manager Compresses the Net Further

The tables above assume self-management. For a 3-bed San Diego house, hiring a short-term rental manager typically adds around $14,082 a year (roughly 23% of gross revenue, though individual managers price differently), which would drop net yield from 1.3% to -0.2%. That drops net yield by roughly 1.5 points and pushes a market that is already a thin-margin operation closer to break-even.

For long-term rental, an agent typically charges around 10% of rent collected, adding roughly $3,305 a year and dropping long-term net yield from 1.2% to 0.8%. Self-management is feasible for both modes if the owner is local and has time, but short-term self-management in particular requires real labour: turnover coordination, guest communication, dynamic pricing, and channel management.

Tax Implications Improve the Cash Picture

The cost tables above are pre-tax operating views. For US investors, a residential rental property qualifies for 70% building allocation depreciation over 27.5 years (Schedule E), giving an annual depreciation deduction of approximately $24,165 on a depreciable base of $664,538 for the 3-bed house. This is a non-cash deduction that shelters rental income for federal tax purposes; California adds state income tax on top. Mortgage interest, property tax, insurance, repairs and management fees are all deductible against rental income.

After-tax cash flow including depreciation, mortgage interest deduction and the relevant federal and state brackets is where the picture often inverts: a property that looks weak on operating yield can look stronger on after-tax cash plus appreciation. As a California premium market, San Diego's investment thesis leans more on the appreciation side of that equation than on operating cash flow.

These are county-level medians. Individual ZIPs across the 114 in San Diego County diverge significantly, with top-ranked San Diego (92115) at a gross yield of 6.0% and bottom-ranked coastal ZIPs running lower. The dashboard shows ZIP-level data for every bedroom count and property type. Explore rental data in the dashboard, or review the underlying methodology for market score and data sources.

For peer-market comparisons, After All Costs, Oakland's Airbnb Premium Shrinks Sharply covers a similar after-costs analysis for a comparable California metro, and California Rental Investment Insights works through the same maths for another high-priced US coastal market.

Data reflects market conditions as of May 2026.

This information is for educational purposes only and should not be considered financial or legal advice. Regulations and market conditions change frequently. Verify current rules with local authorities before making investment decisions.