How to Buy an Investment Property or Airbnb in South Orange County (Legally & Profitably)

by Kai Steijn

How to Buy an Investment Property or Airbnb in South Orange County (Legally & Profitably)

Investor Guide to Short-Term Rentals, Local Regulations, and ROI Strategies

Presented by The Steijn Group
DRE# 02271922 | Broker: Kai Steijn
📍 Newport Beach & Mission Viejo
🌐 www.toursocalhomes.com | 📞 (949) 374-8847

💼 Why Invest in South Orange County?

Southern Orange County is one of California’s strongest real estate markets for both long-term appreciation and cash-flowing short-term rentals (STRs) — if you know where to look.

Top reasons investors choose South OC:

High tourist demand = strong short-term rental potential
Low inventory = long-term price appreciation
Coastal lifestyle and proximity to major airports
Tight STR supply in many cities boosts exclusivity and ROI

📍 South OC Short-Term Rental Rules by City (2025)

⚠️ STR regulations are enforced at the city level and change frequently. Always confirm with the city before buying.

City	STR Permitted?	Details
Dana Point	✅ Yes (limited)	Permits capped (115 coastal & 115 inland); city permit and TOT required; HOA approval may apply.
San Clemente	✅ Yes (limited)	Allowed only in specific zones; STR license (STLU) required; strict zoning enforcement.
Newport Beach	✅ Yes (restricted)	STRs allowed in designated districts like the Peninsula; permit + business license + TOT required.
Huntington Beach	✅ Yes (regulated)	Hosted STRs allowed citywide; unhosted STRs permitted only in certain zones; TOT and TBID taxes apply.
San Juan Capistrano	✅ Yes (limited)	STRs allowed only in Multi-Family and Very High-Density zones; not allowed in single-family areas.
Mission Viejo	✅ Yes (regulated)	Permit and business license required; 8% TOT; rules for occupancy, parking, and noise apply.
Lake Forest	✅ Yes (owner-occupied)	Only owner-occupied STRs allowed; entire-home unhosted rentals prohibited.
Laguna Beach	✅ Yes (restricted)	Only grandfathered or commercial-zone STRs are legal; no new permits for residential zones.
Costa Mesa	❌ No	STRs prohibited in residential zones per Ordinance 2021-17.
Tustin	❌ No	STRs under 30 days are classified as hotel use and prohibited in residential zones.
Laguna Niguel	❌ No	STRs prohibited by city ordinance in all residential neighborhoods.
Aliso Viejo	❌ No	STRs banned in all residential zones.
Irvine	❌ No	STRs fully banned in residential areas and HOA communities.

✅ Cities that permit STRs with regulation:
Dana Point, San Clemente, Newport Beach, Huntington Beach, San Juan Capistrano, Mission Viejo, Lake Forest (owner-occupied only)

🚫 Cities that prohibit STRs entirely:
Costa Mesa, Tustin, Laguna Niguel, Aliso Viejo, Irvine

📊 Property Tax Projections for Investment Properties

Thanks to Proposition 13, California property taxes are calculated at purchase price, not market value — and may only increase up to 2% per year unless the property is sold or substantially improved.

Purchase Price	Estimated Annual Property Tax (1.1%–1.25%)
$800,000	~$8,800–$10,000
$1,000,000	~$11,000–$12,500
$1,500,000	~$16,500–$18,750

Additional Costs to Factor In:

Transient Occupancy Tax (TOT): 8%–15%, varies by city
STR Permit Fees: Vary by city; $250–$3,000 annually
Platform Fees: Airbnb/VRBO service charges (~3–15%)
HOA Restrictions: Some HOAs prohibit or limit STRs, even in legal cities

📈 Example: San Clemente STR ROI Breakdown

Purchase Price: $1,200,000
Startup Costs (permits, furnishing, staging): $25,000
Monthly Revenue (avg): $9,500
Expenses (mortgage, taxes, utilities, mgmt): $6,800
Net Monthly Profit: $2,700
Estimated Annual ROI (pre-tax): ~10.8%

🧠 Legal Tips for Airbnb Investors

✔️ Confirm zoning before making an offer
✔️ Verify HOA policies (some supersede city law)
✔️ Check TOT registration and enforcement trends
✔️ Use dynamic pricing tools (e.g., AirDNA, PriceLabs)
✔️ Consider forming a California LLC for liability protection and tax efficiency

🔍 Top Areas for Legal STR or High ROI Rentals

Capistrano Beach (Dana Point) – Coastal zone eligible, high per-night revenue
Pier Bowl District (San Clemente) – Walkable beach area, STR zones apply
Balboa Peninsula (Newport Beach) – Iconic tourist destination with permit availability
Downtown Huntington Beach – Hosted STRs thriving with local surf tourism

🤝 How The Steijn Group Helps Investors Succeed

We help investors:

Identify STR-eligible properties in legal zones
Calculate cash flow & ROI projections
Navigate city and county permitting
Connect with local vendors for cleaning, furnishing, and management
Gain access to off-market and pre-STR properties

📩 Let’s Build Your Orange County Investment Portfolio

Whether you're local or out-of-state, we'll help you buy legally, profitably, and with confidence.

📞 Schedule a free consultation: (949) 374-8847
🌐 www.toursocalhomes.com
🏡 Trusted real estate guidance for investors & Airbnb buyers in South Orange County