San Diego’s multifamily market has become one of the most attractive investment segments in California, and for good reason. Over the past decade, limited housing supply, consistent population growth, and strong demand for rentals have fueled long-term appreciation. While single-family homes remain competitive, multifamily properties—especially small apartment buildings and mid-sized complexes—offer investors both scalability and stability. In fact, average San Diego apartment rents have increased steadily, with year-over-year rent growth averaging around 3–5%, and certain submarkets seeing even higher gains. For investors, this translates into reliable cash flow and steady appreciation.
The numbers are compelling. San Diego’s multifamily vacancy rate has hovered around 3–4%, well below the national average, showing just how tight the rental market remains. With rent-growth caps allowing annual increases of up to CPI + 5% (roughly 8% in 2024–25), income potential is strong for both stabilized assets and value-add properties. For those looking at larger multifamily deals, cap rates in San Diego typically range from 4.5% to 5.5%, offering a balance between steady cash flow and equity growth over time. Add in San Diego’s high barriers to entry for new construction, and existing properties become even more valuable as demand continues to outpace supply.
Spotlight: Pacific Beach
One of the hottest submarkets for multifamily investors is Pacific Beach, where I proudly serve as the top producing realtor in the 92109 zip code. Pacific Beach offers a unique combo of lifestyle demand, proximity to the water, and strong rental performance. Here, investors can capitalize on both long-term tenants and lucrative short-term rental demand. Multifamily properties in PB consistently achieve above-average rental rates, with duplexes, triplexes, and small apartment buildings commanding strong cash flow and appreciation potential thanks to limited inventory and high tenant demand. It’s one of the rare areas where lifestyle and investment value align perfectly.
Another advantage of multifamily investing is diversification and resilience. With multiple units under one roof, rental income is spread across tenants, reducing risk compared to single-tenant properties. Multifamily assets also lend themselves to flexible strategies—ranging from traditional long-term rentals to hybrid models that incorporate short-term or medium-term leasing for boosted returns. Additionally, running STR’s in a multi-unit building pushes the cap rate into the 7% range in areas like PB. This adaptability makes them especially appealing in dynamic, high-demand neighborhoods like Pacific Beach.
Interested in exploring multifamily opportunities?
Whether you’re just starting out with a duplex or four-plex, or you’re a seasoned investor looking to scale into larger apartment buildings, I’d love to help. As the top realtor in Pacific Beach, I know the local multifamily market inside and out. Let’s connect to identify the right property for your goals and map out a strategy to build lasting wealth through San Diego real estate.
