Are Short-Term Rentals in Newport Beach a Smart Investment?

By Danae Aballi

Danae Aballi is a long-time real estate industry veteran. She has worked in various positions in the industry having grown from an independent real estate agent to running a team of 5 top producing agents.

Newport Beach is a premier coastal destination, attracting tourists year-round with its stunning beaches, luxury lifestyle, and vibrant vacation scene. With the rise of short-term rental platforms like Airbnb and VRBO, many investors see Newport Beach as a prime opportunity for vacation rental income. But is it a good place to invest in short-term rentals? Let’s take a closer look at the factors that can impact your investment.

1. Strict city regulations. Newport Beach has stringent rules governing short-term rentals, making it essential for investors to understand zoning and permit requirements before purchasing a property. Not all homes qualify for short-term rental use. Residential areas zoned R1 (single-family neighborhoods) do not allow vacation rentals, while R2-zoned properties (typically condos or duplexes) are more likely to be permitted. Checking the city’s zoning map is a crucial first step in determining if your target property is eligible.

2. Limited permit availability. Newport Beach enforces a cap on short-term rental permits, currently set at 1,550 permits, with over 670 properties already on the waiting list. This means that obtaining a new permit can take months or even years. If you’re serious about investing in short-term rentals in Newport Beach, the best strategy is to purchase a property with a transferable short-term rental permit, allowing you to bypass the waiting list and start renting immediately.

3. High demand, strong revenue potential. Despite regulatory hurdles, Newport Beach remains a highly desirable location for vacation rentals. The city’s luxury appeal, year-round tourist traffic, and high occupancy rates make it one of the strongest short-term rental markets in California. Researching market data through platforms like AirDNA.co can help you estimate expected nightly rates and annual revenue. While upfront costs may be higher than in other markets, the potential for strong returns exists for well-positioned properties.

4. Competitive market & property prices. Newport Beach’s real estate market is competitive, with home prices on the higher end. Investors should factor in acquisition costs, property taxes, and maintenance expenses to determine whether a short-term rental will yield the desired return on investment. In such a high-cost market, selecting a property in the right location and understanding demand trends is crucial for profitability.

Investing in short-term rentals in Newport Beach can be profitable, but only for those who do their homework. The key to success lies in securing a property with the right zoning, an existing permit, and strong rental demand. If you’re considering investing in a Newport Beach vacation rental, you can call or text me at (714) 709-6558 or email danae@danaeaballi.com. I can help you find the right property and guide you through the permitting process