Is Davis, California Good for Airbnb Investment?

To start an Airbnb in Davis, California, begin by researching the city's short-term rental regulations, which require hosts to obtain a Transient Occupancy Registration Certificate from the City of Davis and comply with zoning restrictions that typically limit rentals to 30 days or less with specific occupancy limits. Contact Davis Planning and Building Services to understand current permit requirements, as regulations were updated around 2019-2020, and ensure your property meets safety standards including smoke detectors, carbon monoxide detectors, and emergency exit plans. Find a suitable property by purchasing or leasing in residential zones where short-term rentals are permitted, avoiding areas with HOA restrictions, and consider proximity to UC Davis campus for higher demand. Furnish the space with essential amenities including quality bedding, kitchen supplies, WiFi, parking access, and local guidebooks, while ensuring ADA compliance where applicable. Create your listing on Airbnb and other platforms like VRBO with professional photos, detailed descriptions highlighting Davis attractions like the UC Davis Arboretum and downtown farmers market, and competitive pricing based on local market rates of $80-150 per night depending on property size and location. Manage your property by establishing check-in procedures, maintaining cleanliness standards, responding promptly to guest communications, collecting and remitting the required Transient Occupancy Tax (currently around 12% in Davis), and keeping detailed records for tax purposes while building positive reviews to increase bookings.

To identify profitable short-term rental properties in Davis, California, focus on locations within 1-2 miles of UC Davis campus, downtown areas near restaurants and shops, and neighborhoods with easy highway access for Sacramento commuters. Target 2-4 bedroom single-family homes or condos built after 1980 with dedicated parking, outdoor spaces, and modern amenities that appeal to visiting academics, parents, and business travelers. Analyze pricing using AirDNA and Mashvisor to benchmark against comparable properties, aiming for properties under $600,000 that can generate $150-200 per night during peak university periods (September-May) and $100-130 during summer months. Research competition by studying existing Airbnb and VRBO listings within a 3-mile radius, identifying gaps in amenities or pricing, and monitoring occupancy rates of similar properties using tools like AllTheRooms and Transparent. Utilize Davis-specific resources including the City of Davis planning department for zoning regulations, UC Davis academic calendar for demand forecasting, Yolo County property records through the assessor's office, and local real estate agents familiar with investment properties, while monitoring Davis Enterprise newspaper for market trends and connecting with the Davis Chamber of Commerce for business insights.

To obtain an Airbnb/STR permit in Davis, California, you must apply through the City of Davis Community Development Department located at 23 Russell Boulevard. Required documents include a completed short-term rental application, proof of property ownership or authorization letter from owner, site plan showing parking spaces, floor plan indicating maximum occupancy, proof of liability insurance (minimum $1 million), contact information for a local responsible party within 30 minutes of the property, and a good neighbor agreement. The application fee is approximately $500 with an annual renewal fee of $300. Davis requires STRs to be owner-occupied (hosted rentals only), limits occupancy to 2 guests per bedroom plus 2 additional guests maximum, mandates at least one parking space per rental, prohibits rentals in multi-family zones, and requires the responsible party to respond to complaints within 30 minutes. The approval process typically takes 4-6 weeks after submitting a complete application, and you must also register with the city for transient occupancy tax collection at 12% of gross receipts. Properties must comply with all building, fire, and health codes, and neighbors within 300 feet must be notified of the application.

Short-term rentals (STRs) are legal in Davis, California, but operate under strict regulations implemented in 2019-2020. The city requires STR operators to obtain a business license and conditional use permit, with applications subject to neighborhood notification and public hearing processes. Davis limits STRs to owner-occupied properties only (hosted rentals), prohibiting entire-home rentals where the owner is not present, and restricts rentals to a maximum of 14 days per month. The regulations include parking requirements, noise restrictions, occupancy limits based on bedrooms, and mandatory posting of house rules and contact information. STRs are prohibited in certain residential zones and must maintain a 300-foot separation from other permitted STRs. Recent enforcement has focused on unpermitted operations, with the city actively monitoring platforms like Airbnb and VRBO for compliance, and violations can result in fines up to $1,000 per day. The regulations were developed in response to community concerns about housing availability and neighborhood impacts in this university town.

The best Airbnb investment areas in Davis, California include the Downtown Core near UC Davis campus, which attracts visiting parents, prospective students, and university-related business travelers year-round, particularly during graduation ceremonies, orientation weeks, and academic conferences. The Olive Drive neighborhood offers excellent proximity to both the university and downtown amenities while maintaining lower property costs, making it ideal for budget-conscious visitors attending campus events or Mondavi Center performances. The South Davis area near Cowell Boulevard provides easy freeway access for business travelers visiting local biotech companies like Novozymes and Marrone Bio Innovations, while also serving families attending youth sports tournaments at the numerous recreational facilities. The Central Park vicinity attracts visitors during the popular Davis Farmers Market, Picnic Day (UC Davis's annual open house drawing 50,000+ visitors), and various community festivals, while offering walkable access to restaurants and shops that enhance the guest experience.

In Davis, California, Airbnb hosts are subject to multiple lodging taxes including the city's Transient Occupancy Tax (TOT) of 12% on gross rental receipts for stays under 30 days, which applies to all short-term rentals and is collected by Airbnb directly from guests and remitted to the city monthly under their voluntary collection agreement established around 2018. Additionally, hosts must pay California state sales tax of 7.25% plus Yolo County's additional sales tax, bringing the total state and local sales tax to approximately 8.75%, though this is typically included in Airbnb's tax collection services. The city requires hosts to register for a business license and TOT certificate, with properties used exclusively as primary residences potentially qualifying for certain exemptions, while stays of 30 days or longer are generally exempt from TOT but may still be subject to other local taxes. Hosts who collect taxes independently must file monthly returns with the city by the 15th of the following month, though most rely on Airbnb's automated collection system which handles both city TOT and applicable state taxes, with the platform providing quarterly reports to hosts for their records.

Starting an Airbnb in Davis, California requires approximately $850,000-$950,000 in total initial investment. Property purchase represents the largest expense at $750,000-$800,000 based on Davis's median home prices as of 2023-2024. Furnishing costs typically range $15,000-$25,000 for a complete 2-3 bedroom home including furniture, appliances, linens, and décor to create an attractive rental space. Initial setup costs including professional photography, listing creation, and marketing materials add $2,000-$3,000. Permits and fees in Davis include business license ($100-$200), transient occupancy tax registration ($50-$100), and potential HOA approval processes ($200-$500). Insurance costs approximately $2,000-$3,000 annually for short-term rental coverage beyond standard homeowner's insurance. Utility setup and deposits for electricity, gas, water, internet, and cable services total $1,500-$2,500. First six months of operating costs including utilities ($300-$400 monthly), cleaning services ($100-$150 per turnover), supplies and maintenance ($200-$300 monthly), platform fees (3% of bookings), and property management if outsourced (20-30% of revenue) can range $8,000-$15,000 depending on occupancy rates and seasonal demand in the Davis market near UC Davis campus.

Airbnb properties in Davis, California typically generate annual revenues of $18,000-$35,000 for single-family homes and $12,000-$22,000 for private rooms, with average daily rates ranging from $85-$150 depending on proximity to UC Davis campus and property amenities. Operating expenses generally consume 40-60% of gross revenue, including cleaning fees ($30-50 per turnover), property management (10-20% of revenue), utilities ($150-300 monthly), insurance ($1,200-2,000 annually), and maintenance costs averaging $2,000-4,000 yearly. Net profit margins typically range from 15-35% for well-managed properties, with higher margins achieved by hosts who self-manage and maintain high occupancy rates of 65-80% during the academic year. Success factors include strategic location within 2-3 miles of campus, professional photography, competitive pricing during peak periods (September-May), and catering to visiting parents, prospective students, and business travelers. Properties near downtown Davis or with unique amenities like pools or large group capacity tend to outperform, with some hosts reporting annual profits of $8,000-$15,000 on properties valued at $600,000-$800,000, though market saturation since 2019 has increased competition and reduced average occupancy rates by approximately 10-15% compared to earlier years.

Airbnb investments in Davis, California typically generate annual ROI of 8-12% due to consistent demand from UC Davis students, visiting academics, and parents during university events. Cash-on-cash returns generally range from 6-10% annually, with properties near campus commanding higher rates of $80-120 per night compared to $60-90 for properties further from the university. Most investors achieve profitability within 18-24 months, with peak earning periods during the academic year (September-May) and graduation ceremonies. Properties within 2 miles of UC Davis campus tend to maintain 70-85% occupancy rates, while those in downtown Davis average 60-75% occupancy. The market benefits from limited hotel inventory and steady year-round demand, though summer months typically see 20-30% lower occupancy when students are away. Initial investment recovery typically occurs within 3-4 years for well-located properties, with annual gross yields averaging $25,000-40,000 for 2-3 bedroom units depending on proximity to campus and property condition.

STRSearch is a national platform that specializes in identifying profitable short-term rental properties for investors in Davis, California. Local real estate agents like Coldwell Banker Residential Brokerage Davis, RE/MAX Gold Davis, and Lyon Real Estate Davis have agents experienced in investment properties and vacation rentals. National services include Awning (formerly RedAwning), which provides Airbnb investment analysis, and BiggerPockets, which offers investment property resources and networking. Mashvisor provides rental property analytics and market data for Davis properties. Local property management companies like Vacasa and RedAwning offer full-service Airbnb management, while AirDNA provides short-term rental market data and analytics. Real estate investment firms such as Roofstock and Fundrise focus on rental properties, and local mortgage brokers like First Republic Bank and Wells Fargo have investment property lending specialists. Additionally, local property managers like Davis Property Management and University Town Properties understand the UC Davis rental market dynamics that can benefit short-term rental investors.