Is Rental Arbitrage Legal in San Diego, CA?
Licensed and capped. Every short-term rental needs a City of San Diego STRO license, and there are four tiers. Tier 1 covers 20 days or less a year and Tier 2 covers renting rooms while you live on site. Whole-home licenses outside Mission Beach (Tier 3) are capped at 1% of the city's housing units, and Mission Beach (Tier 4) is at its cap. A renter can be the host if they can show a legal right to occupy and sublet.
Can a renter do rental arbitrage here? Yes. A renter can license a unit they lease, with the permit or license this page describes.
Requirements
- Short-Term Residential Occupancy (STRO) license for the right tier, applied for in the city's online portal
- Tier 1 (20 days or less a year, host need not live on site): $33 application plus $193 license fee
- Tier 2 (home sharing, host lives on site, away up to 90 days a year): $33 application plus $284 license fee
- Tier 3 (whole home outside Mission Beach): $41 application plus $1,129 license fee; Tier 4 (Mission Beach whole home) has the same fees but is waitlist only
- Licenses last two years, and the renewal fees are the same as the first-year fees
- Transient Occupancy Tax certificate before you apply (no charge)
- Hosts who do not own the unit need a Business Tax Certificate and a Right to Occupy document, such as a lease with a short-term rental clause or a written statement from the owner
- Proof that the host lives on site for Tier 2, such as a utility bill or DMV registration
- Tier 3 and 4 licenses must be used at least 90 days a year to keep them
Restrictions
- Tier 3 whole-home licenses are capped at 1% of the city's housing units; the city reported 807 still available on September 25, 2026
- Tier 4 (Mission Beach) is at its cap of 30% of the community planning area and closed to new applications; it has a waitlist set by lottery
- A host may hold only one license and run only one unit at a time, and licenses cannot be transferred to another owner or unit
- Two-night minimum stay for Tier 3 and 4 licenses
- Accessory dwelling units and junior ADUs cannot be used, with a limited exception for companion units permitted before October 15, 2017
- RVs, campers and temporary structures cannot be used, and businesses such as events or classes at the rental break the rules
- Operating without a license has been unlawful since May 1, 2023 and can bar you from getting one later; hosts who miss the 90-day use rule on Tier 3 or 4 risk civil penalties and revocation
- Booking platforms cannot process transactions for a unit without a valid STRO license
Taxes and Fees
- Transient occupancy tax: 11.75%, 12.75% or 13.75% depending on the zone (since May 1, 2025)
- Tourism Marketing District assessment
- Rental Unit Business Tax is owed if you rent more than 6 days in a calendar year
Official permit or registration page
Next Step
Legal is one half of the decision. The other half is whether the deal earns enough to be worth the risk.
Run the numbers for San Diego, CA See the San Diego, CA market
Sources
Frequently Asked Questions
- Can a Renter Get a San Diego STRO License?
- Yes, if the lease allows subleasing for less than one month. Each host can hold only one license and run one unit at a time.
- Are Whole-Home Licenses Still Available?
- Outside Mission Beach, the city reported 807 Tier 3 licenses still available under the 1% cap on September 25, 2026. Mission Beach (Tier 4) is at its cap.
- What Are the Four STRO Tiers?
- Tier 1 covers rentals of 20 days a year or less, Tier 2 is home-sharing with the host on site, Tier 3 is whole-home rentals outside Mission Beach, and Tier 4 is whole-home rentals in Mission Beach.
- Is There a Minimum Stay?
- Yes. Tier 3 and Tier 4 rentals have a two-night minimum.
- Can an LLC Hold the License?
- No. The host must be a natural person with the legal right to occupy the unit.