Buying a rental or investment property? Short-term rental licenses, California's rent cap and just-cause rules, FHA house hacking, ADUs and 1031 basics, from official sources.
In the City of San Diego, any stay under one month needs a short-term residential occupancy (STRO) license, and licenses to rent a whole home more than 20 days a year are capped. As of October 9, 2026, the City listed 802 Tier 3 licenses remaining and none in Mission Beach (check the current count on sandiego.gov). Licenses don't transfer to a buyer, and ADUs can't be short-term rentals in the City, except some older companion units. Plan on a long-term rental unless you've confirmed a license path.
Long-term rentals generally fall under California's statewide rent cap, with some exemptions. For San Diego County, the Attorney General lists 8.2% as the maximum for increases that start between August 1, 2026 and July 31, 2027. Inside City limits, the City's own just-cause rules apply. If you'll live in one unit, an FHA loan can finance 2 to 4 units.
General information only, not legal, tax or lending advice.
Karina Somenzari, REALTOR®, helps clients buy rental property in San Diego County, from homes with an ADU to small multi-unit buildings. She also helps owners sell rentals and helps tenants and landlords find and lease homes. She works in English or Portuguese; contracts and escrow documents are in English. She doesn't manage rentals or project rents, returns or prices.
Common rental types are single-family homes, condos and townhomes, homes with an ADU, and small buildings with 2 to 4 units (a duplex, triplex or fourplex).
House hacking means buying 2 to 4 units, or a home with an ADU, living in one unit and renting out the rest. HUD's Handbook 4000.1 (last revised August 12, 2026) sets the FHA rules:
HUD's 2026 FHA loan limits for San Diego County are $1,413,350 for 2 units, $1,708,400 for 3 and $2,123,100 for 4 (case numbers assigned on or after January 1, 2026). The first-time buyer page has the full table and down payment rules. A VA purchase loan can also buy up to 4 units if you live there. These are HUD and VA program rules, not a loan offer. Lenders set their own terms.
Since May 1, 2023, the City of San Diego has required a short-term residential occupancy (STRO) license to rent a home, or part of one, for less than one month, such as on Airbnb or Vrbo. The rules apply in every zone, but only inside the City's nine Council Districts.
| License | What it allows | Cap | Licenses as of October 9, 2026 |
|---|---|---|---|
| Tier 1 | Home share or whole home, 20 days or less per calendar year | No cap | 135 issued |
| Tier 2 | Home share for more than 20 days a year in the host's primary residence, where the host lives at least 275 days a year (or 75% of the days owned or rented, if less than a full year) | No cap | 2,336 issued |
| Tier 3 | Whole home for more than 20 days a year, outside Mission Beach | 1% of the City's housing units outside Mission Beach | 4,859 issued, 802 remaining |
| Tier 4 | Whole home for more than 20 days a year, in the Mission Beach Community Planning Area | 30% of the housing units in Mission Beach | 1,099 issued, 0 remaining |
Counts change often, so check the current count on sandiego.gov. Applications for Tiers 1, 2 and 3 are open. Tier 4 applications are closed, and its waitlist had 113 applications on September 15, 2026.
Whole-home rules. Tiers 3 and 4 require a two-night minimum stay, at least 90 days of use a year (the City says there are no exceptions) and quarterly reports. So a whole-home rental of 21 to 89 days a year doesn't fit those tiers. The City's FAQ says a Tier 2 license could still allow some whole-home rental if the home is your primary residence and you live there at least 275 days a year. Confirm with the STRO office.
Buying a licensed home. Licenses don't transfer, so a buyer applies for their own. The City's FAQ says you can apply while buying, but you must attach proof that you're the new owner, such as the deed, so don't count on having a license at closing. A Tier 3 license may not be available. Before you write an offer that depends on a license, check with the STRO office (stro@sandiego.gov, 619-615-6120).
The host. The host must be a natural person (not an LLC), at least 18, with the legal right to occupy the home. A host can hold one license and run one STRO unit at a time, so each unit needs its own eligible host. Before applying, the host needs an active City transient occupancy tax (TOT) certificate and a paid Rental Unit Business Tax account. TOT rates vary by tax zone.
House hacks. The City's FAQ says home share may include duplex to fourplex properties when the host lives on site. But the ordinance allows Tier 2 home share only in the host's primary residence, and FHA loans bar rentals under 30 days. Check with the STRO office and your lender before you count on short-term renting the other units.
Other cities set their own short-term rental rules and collect their own TOT. Read the official page before you buy:
For any other city, check its website. The San Diego County areas guide lists the county's cities and unincorporated communities.
California's Tenant Protection Act (AB 1482) took effect January 1, 2020, and SB 567 strengthened it on April 1, 2024. Over any 12-month period, rent can rise no more than 5% plus the change in the cost of living, or 10%, whichever is lower (Civil Code 1947.12). For San Diego County, the Attorney General lists 8.2% as the maximum for increases that start between August 1, 2026 and July 31, 2027. It changes every August 1, so check the current chart. When a tenant moves out, the landlord can set the new starting rent. The cap applies inside the City of San Diego too.
As of October 14, 2026, the Attorney General's chart of local rent caps lists no city or county in San Diego County. That chart covers rent caps only, not other local tenant rules.
Exempt units. The Act doesn't cover housing with a certificate of occupancy issued within the past 15 years (a rolling timeline), or some properties where the owner lives on site, such as certain two-unit buildings. Single-family homes and condos not owned by a REIT, a corporation or an LLC with a corporate member are exempt only if the lease gives the exact notice the law requires. Inside the City, these state exemptions still decide whether the rent cap applies. The City's own exemptions cover only its just-cause rules (see below), and its lease notice is worded differently. For the full list, see the Attorney General's landlord-tenant page and Civil Code 1946.2 and 1947.12, and have an attorney check your unit and which notice your lease needs.
Other landlord rules:
Just cause means you need a reason the law allows to end a tenancy. A property can't be under both the state rules and a local just-cause ordinance, so location decides which apply.
| Rule | Outside the City of San Diego (state rules, unless the city has its own ordinance) | Inside the City of San Diego (City ordinance) |
|---|---|---|
| When protection starts | After the tenant has lived there 12 months (24 months in some cases when an adult tenant is added) | From the start of the tenancy. Fixed-term leases of three months or less aren't covered. |
| No-fault reasons | Owner or close relative move-in, demolition or substantial remodel, leaving the rental market, or a government order | The City's own list, which the City Council says is narrower |
| Relocation pay for a no-fault termination | One month's rent, paid or waived | Two months of actual rent, or three months if the tenant is 62 or older or disabled, paid or waived |
| Owner move-in | The owner or relative must move in within 90 days after the tenant leaves and live there at least 12 consecutive months | The same 90 days and 12 continuous months |
The City's Residential Tenant Protections ordinance (San Diego Municipal Code Chapter 9, Article 8, Division 7) took effect June 24, 2023 and was amended effective March 28, 2024. Its exemptions differ from the state's in places, and its single-family and condo exemption needs the City's own notice in the lease for a tenancy that began or renewed on or after January 1, 2024. Covered landlords must also give tenants a written notice of their rights. Talk to a landlord-tenant attorney before you serve any notice.
California bars HOA rules that prohibit or unreasonably restrict renting a unit, an ADU or a JADU, and at least 25% of the units must be allowed to be rented (Civil Code 4741). An HOA may still ban rentals of 30 days or less, so read the CC&Rs before you buy.
For building costs, see the San Diego ADU pricing guide.
A 1031 like-kind exchange lets an owner defer tax on the gain from selling real property held for business or investment by buying like-kind replacement property. Plan it with a qualified intermediary and a CPA before you sell. For the sale itself, see selling a house in San Diego.
Living outside the US? FHA and VA loans and the City's Tier 2 license all require you to live in the home. For taxes, see US and California tax on rent for nonresident owners (see "If you rent the home before selling"), Brazilian tax on US rent, and loans by residency status. Anyone you pay to lease or manage the home generally needs a California license (below).
In California, leasing or renting property for others for pay, including finding tenants or collecting rent, needs a real estate license (Business and Professions Code 10131(b)). There is no separate "property manager" license, and a salesperson can do this work only under their broker's supervision. Owners managing their own property don't need one, and section 10131.01 exempts a few others, such as an apartment building's resident manager. Check anyone you hire on the DRE public license lookup.
In the City of San Diego, only with a short-term residential occupancy (STRO) license. A whole home rented more than 20 days a year generally needs a capped Tier 3 license, or Tier 4 in Mission Beach, where applications may be closed. Check sandiego.gov for how many are left. Tiers 3 and 4 must be used at least 90 days a year. The City's FAQ says a Tier 2 license could also allow some whole-home rental if it's your primary residence and you live there at least 275 days a year. Other cities set their own rules.
No. City of San Diego STRO licenses don't transfer. A buyer applies for their own with proof of ownership, such as the deed, and a Tier 3 license may not be available. Check with the City's STRO office before you make an offer that depends on one.
Only one you'll live in. FHA covers 1 to 4 units that are your principal residence, not investment properties. A borrower must move in within 60 days of signing and plan to stay at least one year. With 2 to 4 units or an ADU, you agree not to rent any part for less than 30 days while the FHA loan is outstanding. These are HUD program rules, not a loan offer.
Under California's Tenant Protection Act, no more than 5% plus the change in the cost of living, or 10%, whichever is lower, over any 12-month period. The Attorney General lists 8.2% for San Diego County increases that start between August 1, 2026 and July 31, 2027. Some units are exempt.
The statewide rent cap applies, with some exemptions: the Attorney General lists 8.2% for San Diego County increases that start between August 1, 2026 and July 31, 2027. As of October 14, 2026, its chart of local rent caps lists no city or county in San Diego County. The City of San Diego has its own just-cause rules, and other cities may have their own tenant rules.
Identify the replacement property in writing within 45 days after you transfer the property you're giving up. Receive it within 180 days or by your tax return's due date (including extensions), whichever is earlier. Use a qualified intermediary and a CPA; your real estate agent can't be your qualified intermediary.
Karina offers a free, no-pressure conversation in English or Portuguese about the rental you want and the rules where you're looking. Prefer email? Write to karinahomes@outlook.com.