The Ultimate Guide to Investing in Real Estate on California's Central Coast

Dated: June 28 2022

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Investment Properties in SLO County

We are glad you found us! She Helps Homeowners are the experts on investing in California’s brilliant Central Coast real estate market. 

Each city, county, incorporated vs. unincorporated area and neighborhood has very different rules and regulations. We are here to keep you informed and supported on your investments and also to help make it a bit easier to decide where, how and what to invest in.

So that we have some common language on how we identify some of the various types of investment properties as well as various investment strategies, let’s start with some definitions:

DEFINITIONS

Short Term Rental (STR):  This type of rental is a fully furnished rental that leases for less than 30 days at a time. This is a very highly sought after type of investment and as such, many cities and counties have made very strict rules and regulations that govern the licensing of these home-based businesses.

Mid Term Rental (MTR): This type of rental is also fully furnished and rents for 30 days minimum on a month to month basis. A typical stay is 30-90 days. Oftentimes, the utilities are included in the rental and are an additional expense for the property owner. Sites such as Furnished Finders, Airbnb or VRBO are where you will find these MTR properties listed. The MTR has a lot less restrictions and is not usually required to also be mostly owner occupied.

Long Term Rental (LTR): This type of rental has a 12 month or more lease and can be rented furnished or unfurnished.

Accessory Dwelling Unit (ADU): An ADU is a separate liveable unit on the same property as a primary residence that has a full kitchen, bathroom and can be rented furnished or unfurnished.  There are restrictions in some areas regarding ADU’s and if they are allowed for STR/MTR. These restrictions are mainly in areas where affordable housing is at an all time low, sensitive coastal habitats or where water is a community issue.

SLO COUNTY OVERVIEW

San Luis Obispo sits just about halfway between Los Angeles and San Francisco on the beautiful central coast of California. The county consists of 7 cities and many unincorporated communities. Let’s get really clear on the difference. A city is governed by a local government of elected and non-elected officials, whereas an unincorporated area does not have a local government and is overseen by the county government and its set of policies.

Cities have their own public services and unincorporated areas utilize county public services. Within San Luis Obispo County sprawling agriculture and tourism centered unincorporated areas allow for a broader range of investment opportunities oftentimes offering less restrictions than the incorporated cities.

The area truly has something to offer everyone. Year round tourism that is centered around food, viticulture, amazing state parks, hiking, biking, surfing and so much more makes SLO County a powerful real estate investment market.  

Once you have identified a property of interest the first step is to understand what the rental options are and/or if you can add units to the property.

UNINCORPORATED COASTAL

San Simeon

Cambria

Cayucos

Los Osos

Avila Beach

INCORPORATED CITIES

City of Paso Robles

City of Atasacadero

City of San Luis Obispo

City of Morro Bay

City of Arroyo Grande

City of Grover Beach

City of Pismo Beach

UNINCORPORATED ZONES

SLO County Building Department ( Regulate areas outside of city limits)

Templeton 

Oceano 

Nipomo

Creston

Santa Margarita/Pozo

Shandon

San Miguel


COASTAL INVESTMENT

AVILA BEACH | LOS OSOS | CAYUCOS | CAMBRIA | SAN SIMEON


These 5 unincorporated areas are all located right on the beautiful coastline halfway between Santa Barbara and San Francisco.  As you are driving north on HWY 101 from Santa Barbara the first community you will come across is Avila Beach, followed by Los Osos, then Cayucos which is off HWY 1 onto Cambria and lastly San Simeon. Each of these very popular tourist locations have their own charm and unique feel.

AVILA BEACH

A small seaside beach town with loads of charm, Avila Beach is tucked away in the coastal cove of San Luis Obispo Bay. With beautiful beaches, a new camping spot (Flying Flags Avila), wine tasting, boutique shops and delicious dining options. Avila beach is a year round tourist haven. Avila Barn or Sea Canyon offer tourists a peek into the world of local agriculture, soak in natural hot springs at either Sycamore Mineral Hot Springs or Avila Hot Springs. A Central Coast must see! 

  • ZIP CODES:  93424

  • ADU: To really understand what can be built in this coastal community, a thorough discussion of an individual property is a must. Reach out to the SLO County building department 

  • RV Pads: Thinking of adding an RV pad to rent out, check out the  Municode  to determine what you can do. 

  • STR’s: Take a look at the local rules and regulations for vacation rental in Avila Beach

  • More Information / Links: Avila Beach Community Plan can be found here with loads of info on this sweet beach town.

LOS OSOS

Los Osos is a small beach community with amazing state park access, hiking, beautiful beaches and an overall small town feel.  There has recently been a boom with an influx of families moving in and locally owned businesses opening up. This is a true small town with a community running strong and thriving together. The investment property potential is high here, the tricky part is that the properties for sale are few and far between so when an opportunity pops up buyers need to move quickly. 

  • ZIP CODES: 93402

  • ADU: Currently due to water supply concerns and being part of a sensitive coastal habitat new ADU construction is not allowed, but JADU (guesthouse) are allowed! You can find all the specifics here and here details on guesthouse guidelines here.

  • RV Pads: Thinking of adding an RV pad to rent out , take a look at the county RV Ordinance to determine what you can do. 

  • STR’s: All the details you need in one place to get started earning income on your short term rental.  Also check here for coastal vacation rental zoning clearance details. 

  • More Information / Links: AirDNA - Look at local rental rates to determine your best plan

CAYUCOS

Cayucos is really a small town gem on the Central Coast of California.  With its grand 4th of July celebration, Holiday parades, Polar Bear Plunge and main downtown strip bursting with locally owned business and restaurants. 

CAMBRIA

Cambria is just south of San Simeon along the coast with beautiful evergreens and housing communities nestled in the rolling hills. Filled with small mom and pop shops and restaurants the potential for investments here is quite high. Great small town atmosphere with access to beautiful beaches and hiking trails. 

  • ZIP CODES: 93428

  • Vacation Rental /STR: Primary factor determining eligibility is the property’s proximity to other existing licensed rentals. Check the zoning map

  • If a property already has an existing permit, it is possible to “transfer” the permit once a new owner is established, applies for their own permit and the seller “transfers” the permit to the newly established entity. 

  • May not be possible if there are existing rentals within the 150’ radius (ordinance) of the subject property. You can apply for a minor use permit (MUP)  to permit a vacation rental. This is a discretionary permit, which means it could be approved or denied. It takes 6-8 months to get an answer and the costs start at $6,000.

  • Some important steps must be taken including:

    • Notifying neighbors of an ownership change or intent to establish an STR

    • Posting of contact information on the exterior of the property in case neighbors need to report violations

  • There are limitations on the number of bookings that a single property can have within a specific time period. In Cambria, there is a maximum of one booking within a seven day period, or what is elsewhere described as “no more than four bookings per month.” 

  • Currently ADU’s cannot be build in the Coastal Zone in Cambria however a guest house or Junior ADU could be possible check in here for more details and with the county building department here


INVESTING WITHIN A CITY BOUNDARY

SAN LUIS OBISPO | PASO ROBLES | ATASCADERO | ARROYO GRANDE | MORRO BAY | GROVER BEACH | PISMO BEACH


There are 7 cities within SLO County each has its own government body making policy on ADU’s and STR and many are updating their policy currently. Several of the below cities are working together to create building plans that work together as these communities are not far in distance and have many of the same environmental and population concerns. As experts in the ADU and STR Central Coast market we will continue to update our detailed information as it changes.  

There is a grant program through the California Housing Finance Agency that offers up to $40,000 in grant funds to low to moderate incomes to offset pre-development costs to provide an incentive to build ADUs in order to increase affordable housing within communities.  In most cases ADU’s are not allowed as STR, but as a MTR or LTR only. Please see the income limitations here for the grant opportunity. 

SAN LUIS OBISPO

San Luis Obispo is an amazing city with locally owned shops, award winning restaurants, home to Cal Poly, activities such as wine tasting, hiking, biking  are plenty and the beautiful tree lined streets and historic homes are sure to appeal to the investor in you. 

  • ZIP CODE: 93401

  • ADU: The city of SLO is currently revising its ADU Ordinance check back here for updates. Details on adding a tiny home on wheels in the City of SLO can be found here.

  • RV Pads: There is a 7 day max parking limit on an RV in a private driveway within the city of SLO.  The RV can not be plugged into utility services and may be used for housing guests of onsite residence.  Detailed code policy can be found here.

  • STR’s: Short Term Rentals within the City of San Luis Obispo require a Homestay Permit which can be found here. One of the requirements of the Homestay Permit is that the home must be owner occupied for a majority of the year. We highly recommended calling the city to verify if the property is a good candidate for a Homestay Permit and they can be reached at 805-781-7170. Owners must also collect the Transient Occupancy Tax (TOT, also called "bed tax" or "hotel tax") and other required assessments from their guests.

PASO ROBLES

Paso Robles is known for its wineries and olive groves. It is close to the coastal beaches, has an amazing quaint downtown with locally owned stores and award winning restaurants. With so much to see and do including the yearly Midstate Fair and the annual wine harvest and crush, tourism is thriving in Paso Robles. 

  • ZIP CODE: 93446

  • ADU: Must apply through the city and pay the fees based on the zone the property falls in.

  • RV Pads: Owners within the city can apply for a 72 RV parking permit here. The RV can not be connected to city utilities and may not have overnight guests. 

  • STR’s: No-Host Short Term Rentals in the city limits are at capacity with 325 total permits.  There is an option to be placed on a waiting list. Please call 805-237-3970 for details.  A Homeshare option is available for STR’s when the owner is occupying the residence at the same time as the short term renter. This can include an ADU where the owner is in the primary residence or can be absent for no longer than 30 days during any calendar year with an authorized agent named.  Applications can be found here.

  • More Information / Links: https://www.prcity.com/211/Planning 

ATASCADERO

Downtown A-town is really on the up and up. Shopping, restaurants and pop up events are really gaining traction. Close to local wineries and a short 17 miles north of SLO and 10 miles south of Paso Robles, Atasacadero is a great place when the coast is cool and foggy to warm up over dinner on the patio. 

  • ZIP CODE: 93422

  • ADU: Atascadero is currently in the process of creating an ADU Ordinance based on the unique needs of the Atascadero community. Some updates to the local code include:

    • A 1-acre minimum lot size would be required for properties with a septic system.

    • Properties in Fire Hazard Zones will require additional analysis from the Fire Chief.

    • ADUs are not allowed as short-term rentals unless they have existed as short-term rentals prior to January 2020.

    • Otherwise, Atascadero will be following the guidelines as set by the State. Those guidelines can be viewed in the California Department of Housing and Community Development ADU Guidebook, found here.

  • RV Pads: Details for RV use /storage within the city limits can be found on the code site here.
  • STR’s: The city of Atasacadero allows STRs with a business license and in permitted spaces. More info is available here.

  • Best Points of Contact: Office of the Planning - David Muehlhausen, Deputy Director/Chief Building Official 805-461-5035

ARROYO GRANDE

Arroyo Grande has beautiful rolling hills and is close to the beach towns spanning HWY 101 and downtown SLO and wineries.  Downtown has a great historic feel, with locally owned shops, antique shops and restaurants. A great place to stay with quick access to the entire Central Coast.

  • ZIP CODES: 93420

  • ADU: Several Central Coast cities are working together to build protocol for a Pre-Approved ADU Plan to simplify and streamline the process. Arroyo Grande is included in this and the details can be found here, along with grant info for up to $40,000 in pre-development costs for low to moderate income families wanting to add an ADU for MTR or LTR. 

  • RV Pads: All info can be found in the municode

  • STR’s: STR are allowed with a Minor Use Permit and by following the process which is outlined here on the city page.

  • Best Points of Contact: Community Development Department at (805) 473-5420

  • More Information / Links: https://www.arroyogrande.org/ 

MORRO BAY

Morro Bay is an incredibly scenic tourist town with The Rock (ancient volcanic mound at the end of Morro Rock Beach) as the landmark which sits within Morro Bay State Park. The State Park is full of lagoons, bird watching and thriving with ocean life. Full home non-owner occupied STR are at cap and there is a waiting list of over 130 homes.  Homeshares and MTR or LTR are the options available for investments in this year round tourist town.

  • ZIP CODES: 93442, 93443

  • ADU: City of Morro Bay ADU Law update 2020 and more info can be found by calling Scot Graham at the planning department at 805-772-6291  or municode here

  • RV Pads: All details can be found here in regard to rules and regulations to RV storage and use municode 

  • STR’s: Morro Bay is currently at its 175 which is the cap amount allowed for  full home or non-owner occupied STR’s. There is a waiting list of over 100 homes. 

  • Best Points of Contact: Scot Graham at the planning department at 805-772-6291

  • More Information / Links: https://www.morro-bay.ca.us/207/Building-Division

GROVER BEACH

Grover Beach is located 92 miles north of Santa Barbara and 150 miles south from Monterey along the beautiful Central Coast of California coastline. This beach town offers great outdoor adventures on the dunes, annual monarch butterfly migration, locally owned restaurants and shops. Tourism is also a year round event in Grover Beach as some of the nicest months are October-December.  

PISMO BEACH

Pismo Beach has year round tourism. The Pier was just redone bringing a revitalized feel to the center of town, with food trucks weekly and art events throughout. The annual Clam Festival brings folks from all around to visit this beautiful beach town. Annual monarch butterfly migration is simply stunning. There is a more laid back feel, with fish and chip restaurants a plenty and souvenir shops on street corners. 

  • ZIP CODES: 93448, 93449

  • ADU: An ADU in the city of Pismo Beach can not be rented as a short term rental. All detailed information on the construction of an ADU within the city limits of Pismo Beach can be found here.  

  • STR’s: On Aug 2, 2022 the city council adopted and urgency ordinance to imposing a moratorium on short term rental permits until further notice. No new permits will be issued at this time.  You can find all the details, rules and regulations here.

  • More Information / Links: Pismo Beach Building Department


INVESTING WITHIN THE COUNTY BOUNDARY

TEMPLETON | OCEANO | NIPOMO | CRESTON | SANTA MARGARITA/POZO | SHANDON | SAN MIGUEL


TEMPLETON

Templeton takes you back to slower days and simpler ways! Downtown has a historic feel to it with a contemporary flair. The old grain and feed store is still operating which adds a very agricultural feel. Award winning wineries are speckled throughout the beautiful countryside. Year round tourism and mainstreet 4th of July festivities are a very popular attraction. 

  • ZIP CODES: 93465

  • ADU: Details regarding water and ADU construction in Templeton and other water municode . To inquire about building a unit or having a tiny home wheels on a property you are interested in please contact the county planning department with the parcel number to determine the land use options for the parcel. 

  • STR’s: Templeton is subject to county of San Luis Obispo rules and regulations on short term rentals which can be found here.  Basically you will need to obtain a business license, a planning department land use authorization and a vacation rental license will be the end result if all steps are approved.

OCEANO

Home to the only beach in the whole entire state that you can drive on! Many flock to Oceano to enjoy the dunes on ATV, dune buggies or horseback. The 18 mile long dune complex is the longest in the state. Casual dining, bonfires and a very relaxed feel are what make Oceano a must stop along the California Central Coast.

  • ZIP CODES: 93445, 93475

  • ADU: To inquire about building a unit or having a tiny home wheels on a property you are interested in please contact the county planning department with the parcel number to determine the land use options for the parcel. 

  • STR’s: The Oceano Advisory Council will introduce an ordinance that bans new vacation rentals in the inland area of the town located north and east of Highway 1 and caps the number of coastal rentals at 100 in total.Under the proposed ordinance, existing vacation rentals will be grandfathered in, allowing them to remain open, but will lose their permits when they are sold.

NIPOMO

Nipomo is an unincorporated town in San Luis Obispo County. Just north on HWY 101 from Santa Maria, Ca. With plenty of parks, beach access and open spaces, Nipono has plenty to offer everyone. Families and young professionals live in Nipomo, great schools, restaurants and home to some of the best agriculture in the county. Citrus, avocados, strawberries, lush vineyards and flower fields make the drive along Hwy 1 through Nipomo a must see.

  • ADU: Nipomo Water Service District details on ADU’s . To inquire about building a unit or having tiny home wheels on a property you are interested in please contact the county planning department with the parcel number to determine the land use options for the parcel. 

  • STR’s: Follows county guidance and policy of San Luis Obispo rules and regulations on short term rentals which can be found here.  Basically you will need to obtain a business license, a planning department land use authorization and a vacation rental license will be the end result if all steps are approved.

  • Best Points of Contact : Map and contacts list can be found here

CRESTON

Creston is a rural town in unincorporated San Luis Obispo County.  Crestons claim to fame was that it was home to Cardiff Stud Farm (Creston Farms), a place once owned by Canadian-American television personality Alex Trebek, and where a number of retired American thoroughbred racehorses were taken care of. Cardiff Stud Farm was sold in 2008 and is now an event center called Windfall Farms.  Rolling hills and open spaces make up this small quaint town. 

  • ZIP CODES: 93432

  • ADU: Mostly the county guidance will be your main source for rules and regulation, but you can look here for details about Creston. 

  • STR’s: Follows county guidance and policy of San Luis Obispo rules and regulations on short term rentals which can be found here.  Basically you will need to obtain a business license, a planning department land use authorization and a vacation rental license will be the end result if all steps are approved.

  • Best Points of Contact: Map and contacts list can be found here

SANTA MARGARITA /POZO

Santa Margarita and Pozo are located just north of San Luis Obispo off of HWY 101.  Known as the land of adventure and refined taste by the locals. Farm to table dining, world class wineries, and the famous Carrizo Plain National Monument known for its annual wildflower blooms. Home to the tranquil waters of Santa  Margarita lake and recreation area, there is truly something for everyone to enjoy. 

  • ZIP CODES: 93453

  • ADU: To inquire about building a unit or having tiny home wheels on a property you are interested in please contact the county planning department with the parcel number to determine the land use options for the parcel. 

  • STR’s: Inland Unincorporated area Guidelines

  • Best Points of Contact: Map and contacts list can be found here

SHANDON

Shandon is a small unincorporated town in San Luis Obispo County with a population of 1,054. Living in Shandon offers residents a rural feel and most residents own their homes. Find out about the history of Shandon when you take a trip to James Dean Memorial Junction. Make some time to visit the monuments while you're in the area. 

  • ZIP CODES: 93461

  • ADU: To inquire about building a unit or having tiny home wheels on a property you are interested in please contact the county planning department with the parcel number to determine the land use options for the parcel. 

  • STR’s: Inland Unincorporated area Guidelines

  • Best Points of Contact: Map and contacts list can be found here

SAN MIGUEL

San Miguel is a town just north of Paso Robles on Hwy 101 with a population of 2,536. San Miguel is one of many San Luis Obispo County unincorporated areas. Living in San Miguel offers residents a rural feel and most residents own their homes. Home Mission San Miguel, where visitors today can see beautifully restored and reconstructed buildings and untouched interior murals provide a unique opportunity to view a piece of California history. 

  • ZIP CODES: 93451

  • ADU: To inquire about building a unit or having tiny home wheels on a property you are interested in please contact the county planning department with the parcel number to determine the land use options for the parcel. 

  • STR’s: Inland Unincorporated area Guidelines

  • Best Points of Contact: Map and contacts list can be found here

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Janelle K. Eagle

 Born and raised in the SF Bay Area, a student in Orange County, a long-time resident of Los Angeles and then a transplant to the Central Coast - I am a passionate ambassador for the beautiful st....

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