What Owners Should Know About Demand, Regulations & Profitability
Pacific Beach remains one of San Diego’s most sought-after destinations for short-term rentals, thanks to its vibrant coastal lifestyle and year-round attractiveness to travelers. Across Pacific Beach, Airbnb hosts are seeing median annual revenues of $73,938—figures reflecting strong short-term rental (STR) performance in 2025, with occupancy rates as high as 65%, emphasizing the profitability potential in well-managed listings.
Demand in Pacific Beach is particularly powerful. Gross revenue in the area averages $5,000/mo for 1BR, $8,000/mo for 2BR, and $12,500/mo for 3BR - substantially higher than much of San Diego County. Proximity to the beach often adds a 25–40% premium to rental rates, generating exceptional cash flow and strong appreciation. We typically allocate 40% towards management, cleanings, and utilities.
However, operating a short-term rental here requires navigating a tightly regulated environment. San Diego’s STR rules limit whole-home rentals to just 1% of the city's housing inventory, translating to approximately 5,400 permitted properties. In certain hotspots like Mission Beach, that cap increases to 30%—though PB falls under the city-wide limitation. Licenses are tiered: Tier 3 or 4 is required for whole-home rentals beyond 20 days annually, and in high-demand areas, these permits are often allocated via lottery. Moreover, hosts are restricted to one permit per individual, and must display the license number on platforms like Airbnb or VRBO.
Tax obligations also play a key role: hosts must collect and remit the Transient Occupancy Tax (TOT)—currently over 10%—along with other applicable tourism and business taxes. On the upside, many operational costs—such as mortgage interest, maintenance, utilities, management fees, depreciation, and supplies—are tax-deductible, helping offset taxable income from rental operations.
Bottom Line
Pacific Beach STRs offer compelling income opportunities—higher-than-average rental rates and strong demand—especially when properties are close to the ocean. But because of strict licensing caps, competitive permitting, and ongoing tax obligations, success depends on navigating regulations skillfully, strategic pricing, and possibly partnering with experienced property managers. To ease your decision in choosing the right partner, we are now partnered with Tide rentals, and are offering professional short and long term rental management services.
Would you like to explore how to optimize occupancy by leveraging seasonality trends, or dive into ROI comparisons between long-term, short-term, and hybrid rental strategies for PB properties?
