San Diego Vacation Rental ROI: What Owners Actually Earn

By Skye Management

Every San Diego owner asks the same question in a different form: “What will my home actually earn?” Market averages get quoted a lot. Screenshots of a great July get shared a lot. Neither one is ROI.

ROI — return on investment — is what is left after every cost of running the rental, compared with what you have put into the property. This guide shows you how to calculate it honestly for a San Diego vacation rental in 2026, what the current market data actually says, which expenses owners most often leave out, and how to tell a realistic projection from a sales pitch.

What the 2026 Market Data Says — and What It Does Not

Start with the market, not a single listing. According to AirDNA data updated October 13, 2026, San Diego had 18,004 active short-term rental listings, with an average annual revenue of $67,300, average occupancy of 66%, and an average daily rate (ADR) of $319 over the trailing twelve months through September 2026.

Those are useful context numbers. They are not a promise for your home, for three reasons:

• Averages hide a wide spread. A studio inland, a three-bedroom house in North County, and a Mission Beach whole home do not earn the same revenue, pay the same costs, or face the same licensing rules. Bedroom count, location, amenities, and how many nights you make the home available move the result more than the city average does.
• Gross revenue is not profit. The $67,300 figure is revenue before platform fees, cleaning, maintenance, utilities, insurance, taxes on the property, licensing, management, and any mortgage payment.
• Different data providers measure differently. Other trackers that count only listings inside the city limits, or only measurable listings, report lower medians. That does not make one source “wrong” — it means you should ask any manager which source, geography, and time period a projection is based on, and get the answer in writing.

Use market data to sanity-check a projection. If someone projects double the market average for an ordinary home with no explanation, ask why. If someone projects far below it, ask why, too.

The Only ROI Math That Matters

There are three numbers owners mix up. Keep them separate.

1. Gross revenue

Gross revenue is ADR multiplied by booked nights. A home at a $319 average daily rate booked 66% of 365 nights would gross roughly $76,900 on paper — which is already different from the $67,300 market average, because real calendars have owner stays, blocked nights, minimum-stay gaps, and seasonal pricing. That gap is the first lesson: simple multiplication overstates real calendars.

Your manager’s projection should be built month by month, with seasonal rates and realistic occupancy for your neighborhood — not one rate times one occupancy number times 365.

2. Net operating income (NOI)

NOI is gross revenue minus operating expenses, before any mortgage payment:

• Platform fees on Airbnb and Vrbo bookings
• Cleaning costs not fully covered by the guest cleaning fee
• Restocking, linens, and supplies
• Utilities, internet, trash, landscaping, and pool service if you have a pool
• Repairs and routine maintenance, plus a reserve for larger items
• Insurance, including any short-term rental coverage
• Property taxes
• Licensing and compliance costs — inside the City of San Diego, a Short-Term Residential Occupancy (STRO) license; transient occupancy tax (TOT) is normally collected from the guest and remitted, so it should pass through your statement rather than come out of your revenue — check that it does
• Management fee, if you use a manager

We break down what management itself costs in our 2026 guide to vacation rental management costs, and what each line should look like in our owner statements guide. If an expense category is missing from a projection, your ROI is overstated by exactly that amount.

3. Cap rate and cash-on-cash return

Two ratios turn NOI into ROI:

• Cap rate = NOI divided by the property’s value (or purchase price). It compares properties without factoring in financing.
• Cash-on-cash return = annual cash flow after the mortgage payment, divided by the cash you actually put in (down payment, closing costs, and furnishing/setup costs).

The same home can show a modest cap rate and a stronger cash-on-cash return if it is financed, or the reverse if you paid cash and carry high operating costs. Neither ratio is “the” ROI — they answer different questions. A good projection shows you both, with the assumptions visible.

A Worked Example — With the Assumptions Showing

This is an illustration, not a forecast for any specific home. It uses round numbers so you can follow the math and replace them with your own.

Imagine a San Diego County home that grosses $60,000 in a year — below the AirDNA market average above, because the owners use it themselves for several weeks.

Operating expenses for the year might include platform fees, cleaning shortfalls and supplies, utilities and services, repairs and a maintenance reserve, insurance, property taxes, licensing, and a management fee. Suppose those total $24,000. NOI is then $36,000.

• If the home is valued at $900,000, the cap rate is $36,000 ÷ $900,000 = 4.0%.
• If the owners put $250,000 of cash in (down payment, closing, and furnishing) and their mortgage payment leaves $18,000 of cash flow after debt service, cash-on-cash is $18,000 ÷ $250,000 = 7.2%.

Change any one assumption — occupancy, ADR, a roof repair, a higher insurance renewal — and both ratios move. That sensitivity is the point. Ask every manager: “Show me this table for my home, and show me what happens if occupancy is ten points lower.” The answer tells you more than the headline number.

Do not copy this example’s expense total to your home. Pool homes, larger homes, and homes in the City of San Diego’s higher TOT zones carry different costs, and TOT itself is guest-paid and remitted — inside the city it is a 10.5% base plus a Measure C zone addition of 1.25%, 2.25%, or 3.25% (totalling 11.75% to 13.75% since May 1, 2025), and in unincorporated San Diego County it is 8%. Your statement should show TOT collected and remitted as its own lines, as we explain in the owner statements guide.

The Expenses Owners Most Often Forget

Projections go wrong in predictable places:

• Furnishing and setup, amortized. Beds, sofas, kitchen gear, linens, photos, and smart locks cost money up front and wear out. Treat furnishing as part of your cash invested, and budget for refreshes — our upcoming furnishing guide will cover which items pay back fastest.
• Vacancy that is really owner use. Every owner stay is a night that cannot be sold, often in the best season. That is a legitimate choice — just count it.
• Turnover wear. Short-term rentals are used harder than long-term rentals. Paint, appliances, and outdoor furniture cycle faster.
• Licensing limits. Inside the City of San Diego, whole-home STRO tiers are capped, a host may hold only one license at a time (Source: City STRO ordinance summary via BNBCalc county guide, 2026), and licenses do not transfer at sale. A home that cannot be licensed as you intend has a different ROI from the same home on paper. Our 2026 STRO licensing guide explains the tiers.
• Minimum stays and gaps. A pricing strategy that protects weekends and holidays earns more per booked night, but it must be modelled — see how we handle seasonal minimums in our holiday rental prep checklist.

Gross Yield Is a Screening Tool, Not a Decision

You will see “gross yield” quoted online: annual gross revenue divided by home value. Using the AirDNA average as an illustration, $67,300 ÷ a $985,000 home value would be about 6.8% gross — before a single expense. Gross yield is fine for a first sort between neighborhoods. It is not ROI, and any pitch that presents it as your return is skipping the expense half of the business.

For a real comparison, put two or three homes — or two or three managers’ projections for the same home — into the same NOI table. Our checklist for choosing a vacation rental manager includes the exact projection questions to ask, and our guide to what a full-service manager actually does defines the work those expenses are paying for.

How Good Management Moves ROI (Without Magic)

Management does not change your location or your mortgage. It moves the inputs:

• Pricing: dynamic pricing and seasonal minimum stays raise ADR without simply discounting to fill nights.
• Occupancy quality: guest screening reduces damage, party risk, and bad reviews that suppress future bookings.
• Cost control: catching a leak, a failing water heater, or an insurance gap early is cheaper than the emergency version.
• Compliance: keeping the STRO license and TOT handling correct protects the revenue itself — an unlicensed home earns nothing while it is shut down.

None of that guarantees a number. It explains why two identical homes on the same street can finish the year with very different statements.

The Bottom Line

San Diego vacation rental ROI in 2026 is real, but it is earned line by line: realistic gross revenue for your specific home, every operating expense counted, and the ratio — cap rate or cash-on-cash — named clearly with its assumptions showing. Market averages like AirDNA’s $67,300 average revenue, 66% occupancy, and $319 ADR are a starting point for the conversation, not the answer to it.

Skye Management is a family-owned vacation rental management company doing full-service Airbnb and Vrbo management across San Diego County since 2012, with a 5.0-star rating on Google. If you want ROI math for your actual home — month-by-month revenue, a full expense table, and a downside case — we will build it with you and show our work.

Ready to run your numbers? Call Skye Management at (858) 775-5904 — we will walk through a projection for your specific home, show you a sample owner statement, and explain every assumption. You can also reach us through our contact page.

Frequently Asked Questions

What is a good ROI for a San Diego vacation rental?

There is no single good number, because cap rate and cash-on-cash return measure different things and every home’s costs differ. Compare a home’s NOI-based cap rate and its cash-on-cash return — with all expenses counted — against your alternatives for the same cash, and insist on seeing the assumptions behind any projection.

How much do San Diego vacation rentals earn on average?

According to AirDNA data updated October 13, 2026, San Diego’s 18,004 active listings averaged $67,300 in annual revenue, 66% occupancy, and a $319 average daily rate over the trailing twelve months through September 2026. That is gross revenue before expenses, and individual homes vary widely by location, size, and availability.

Is gross revenue the same as profit?

No. Gross revenue is what bookings produce before platform fees, cleaning, utilities, maintenance, insurance, property taxes, licensing, and management. Net operating income — gross revenue minus operating expenses — is the figure ROI should be built on.

Does transient occupancy tax (TOT) reduce my ROI?

TOT is normally collected from the guest and remitted to the city or county, so it should pass through your owner statement rather than reduce your revenue. Inside the City of San Diego the total is 11.75% to 13.75% depending on zone; in unincorporated San Diego County it is 8%. Problems arise only when TOT is handled incorrectly — your statement should show it collected and remitted as separate lines.

What is the difference between cap rate and cash-on-cash return?

Cap rate is net operating income divided by the property’s value, ignoring financing. Cash-on-cash return is annual cash flow after the mortgage payment, divided by the cash you actually invested. The same home can have different cap rate and cash-on-cash figures — a complete projection shows both.