Where Can You Operate a Short Term Rental in San Luis Obispo County? Permits, Opportunities & Hotspots

Short Term Rentals (STRs) have become a hot topic across California, and San Luis Obispo County is no exception. If you’re dreaming of owning an Airbnb or VRBO in this beautiful slice of the Central Coast, you’ll want to know exactly where you can operate legally—and where new permits are still available. Let’s break it down city by city, so you can find the best opportunities for your investment or vacation home!

What Are Short Term Rentals?

First, a quick refresher: Short Term Rentals are typically defined as rentals of residential properties for periods of less than 30 days. They’re popular with tourists and travelers seeking a home-away-from-home experience. But, with popularity comes regulation—especially in sought-after areas like San Luis Obispo County, located midway between major metropolitan areas in the San Francisco Bay Area and Los Angeles. The intersection of the PCH, Highway 1 as well as the 101 Freeway also make it a high travel location with convenient access to wine county and beach paradises alike. 

Cities in San Luis Obispo County That Allow Short Term Rentals

• San Luis Obispo (City): STRs are allowed, but the city has strict regulations and a cap on the number of permits. Most neighborhoods only allow hosted rentals (where the owner lives onsite), while non-hosted rentals are limited.
• Pismo Beach: STRs are permitted, and this beach town is a favorite for vacationers. However, there are limits on the number of permits issued, and certain neighborhoods have restrictions.
• Morro Bay: STRs are allowed, but the city has a lottery system and a cap on total permits. The city regularly reviews its STR ordinance, so rules may change.
• Arroyo Grande: STRs are permitted with a business license and transient occupancy tax registration. There are restrictions on proximity to other STRs.
• Grover Beach: STRs are allowed with a permit, but there are limits on the number and location of rentals.
• Cayucos (Unincorporated SLO County): STRs are allowed, but the county has a cap on the number of permits and specific rules for coastal communities.
• Avila Beach (Unincorporated SLO County): STRs are permitted with a county-issued license, but permits are limited.

Where Are Permits Still Available for New Owners?

The availability of new permits changes frequently, but here’s the latest snapshot:

• San Luis Obispo (City): Most non-hosted permits are at capacity, but hosted permits may still be available. Check with the city for current openings.
• Pismo Beach: The city periodically opens up new permits as properties drop off the list. Availability is limited and competitive.
• Morro Bay: The city’s lottery system means new permits occasionally become available. Prospective owners should join the waitlist.
• Arroyo Grande: As of now, permits are still available, but there are location-based restrictions. Act quickly if you’re interested!
• Grover Beach: New permits are sometimes available, especially in certain zones. Contact the city for the most up-to-date information.
• Cayucos & Avila Beach (Unincorporated Areas): The county maintains a waitlist for new STR permits. Some neighborhoods are at capacity, while others may have openings.

Tips for Prospective STR Owners

• Always check with the city or county planning department for the most current permit status.
• Be prepared for a waitlist in popular areas.
• Consider hosted rentals if non-hosted permits are full—these are often easier to obtain.
• Stay up to date with local meetings and ordinance changes, as STR rules can shift quickly.

How I can Help

• I can guide you through the process of determining which locations in SLO County might fit your "Buy Box"
• I can also assist you to determine which specific properties might qualify based on a location jurisdiction's requirements
• I can provide projections based on a specific property to determine the financial viability of a purchase
• I can also assist in envisioning the logistics of running the property, from design, installation, renovation to property management

San Luis Obispo County is a fantastic place to host visitors, but the rules can be complex and ever-changing. If you’re ready to dive in, do your homework, reach out to local officials, and act fast when opportunities arise. Happy hosting!

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