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Are you thinking about purchasing a short-term rental or Airbnb investment property? As someone who has invested in multiple investment properties, I can tell you that it has been 100% life-changing for us. As a top-rated Airbnb host, I have used my passions and our family’s savings to create a consistent income stream and profitable cash flow.
That said, owning Airbnb rentals is not passive income. If you choose to self-manage your rental property, you need to fully understand what it’s like before you start. In turn, this will help you determine the best place to buy a short-term rental.
In this Airbnb hosting and investing blog post, I will share my first-hand experience as a host. I want to help you determine where you should buy your short-term rental property.
And, spoiler alert, the best Airbnb property investment for you is most likely not in your favorite vacation destination!
Buying Your First Airbnb Investment Property
Investing in income-producing property can offer both financial gains and give you the chance to create memorable experiences for fellow travel lovers. However, before you start, it’s crucial to consider a few key location-based factors to ensure the success of your Airbnb investment.
Let’s explore the four primary considerations that can significantly impact your decision-making process when deciding where to buy your first rental.
- Proximity and Accessibility
- Rules and Regulations
- First Hand Knowledge
- Inventory and Competition
However, for my advice to make the most sense, you must understand what it’s like to self-manage your rental as an Airbnb host. Because there is never a dull moment!
What’s It Like Being An Airbnb Host?
First, read my blog post titled 8 Important Truths I Wish I Knew Before Becoming an Airbnb Host.
Then, read my post about Becoming an Airbnb Superhost.
After reading both of those, you will have a good understanding of what the day-to-day life of a top-rated Airbnb host is like. That will help you better set yourself up for success. Additionally, you will understand why having your property easy to get to and knowing your destination inside and out is so important!
How To Choose Where To Buy An Airbnb Investment Property
Let’s jump in!
These considerations are in no particular order, and I actually consider them to be weighed equally. This advice is based on you being involved with your rental first-hand. These aren’t as important if you simply want to invest money somewhere and use a property management company. But, you may be leaving all of your profits on the table.
READ: Should You Self-Manage or Use A Property Manager?
#1 Frequency of Visits: Balancing Proximity and Accessibility
One of the first things to consider when selecting the location for your Airbnb investment property is how often you can personally visit. This is why I don’t recommend looking in a far-off destination you love to visit once or twice a year.
The proximity of the property to your primary residence is a key factor. The ability to set foot in your Airbnb regularly allows you to keep a close eye on the property, address any issues promptly, and ensure it remains in top-notch condition. For this reason, I recommend your first rental being within two hours of your home or a very short direct flight.
Moreover, being nearby can enhance your hosting experience. Frequent personal visits allow you to keep up with the destination and experience it throughout the various seasons. Plus, you can take advantage of quick shoulder reasons visits and last-minute trips during open windows or gaps in your calendar.
#2 Navigating Local Rules and Regulations
Next, you should take an in-depth look at any current or proposed short term rental regulations affecting your potential purchase.
Understanding and complying with local rules and regulations regarding short-term rentals is crucial for the success of your Airbnb investment. Each locality may have different laws governing short-term rentals. Failure to adhere to these regulations could result in fines or legal issues. For example, New York City passed new regulations making short term rental business a thing of the past for most! A local real estate agent should be able to walk you through this and what real estate investing entails in that area.
Many real estate markets in larger cities have shifted to long term real estate investments to provide affordable hosting options to residents. These conventional rental properties aren’t necessarily a bad idea, but very different than short term rental property investments when it comes to profits.
Furthermore, homeowners and condo associations (like ours on 30A) may have additional bylaws. For example, some neighborhoods in Key West, Florida, have a 30-day minimum for rental properties, whereas a property a block over may only have a 7-day minimum for short term rentals.
Research zoning laws, licensing requirements, and any restrictions on short-term rentals in the area you are considering. Some locations may limit the total number of days a property can be rented, while others may require specific permits. Stay informed and ensure your investment aligns with local guidelines to avoid potential legal complications.
RELATED READ: Tax Considerations For Your Airbnb
#3 Leveraging Local Expertise and Know What You’re Selling
Being a successful Airbnb host goes beyond just providing a comfortable space for guests. Your local expertise about the area can set you apart and make the guest experience more enjoyable. I will go as far as saying that you must be able to answer all guest questions quickly and accurately.
I am always shocked when I hear about visitors on 30A who need help finding where to access the 30A beaches! Or others who can’t seem to figure out where golf carts are allowed on 30A. Owners should be providing this information in their housemanuals and to each and every guest that asks.
Consider the following tips to leverage your local knowledge. These are all areas where most real estate investors fall short when only focusing on the real estate market. After all, most of these Airbnb properties are vacation rentals.
Personalized Reccomendations: Respond promptly to guest inquiries and offer customized recommendations based on their interests and preferences. A friendly and responsive host can contribute to positive reviews and repeat bookings.
Local Guides: Compile a comprehensive guide with local recommendations for restaurants, attractions, and activities. This thoughtful touch can enhance the overall guest experience.
Unique Experiences: Organize local experiences or collaborate with nearby businesses to provide exclusive discounts or promotions for your guests.
Helpful Tips: Preemptively offer tips and advice to ensure your guest has the best possible stay.
RELATED READ: The Ultimate Airbnb House Manual Guide
#4 Analyzing Short-Term Rental Inventory and Competition
Before finalizing your Airbnb investment property purchase, assess the short-term rental inventory in the chosen location and analyze the level of competition. Understanding the market dynamics can help you identify rental income opportunities and occupancy rate challenges.
Accommodation Options: Is the area predominantly rental homes and condos, or are there also hotels? What are the going rates? Which one would YOU prefer to stay in? Is there a need for Airbnbs?
READ: Choosing Between Hotels or An Airbnb
Demand and Seasonality: Evaluate the demand for short-term rentals throughout the year. Make sure to consider any seasonal fluctuations. This analysis can guide your pricing strategy and help you make informed decisions about when to block off dates for personal use or maintenance.
Competitive Pricing: Research similar properties in the area to help you predict competitive pricing for your Airbnb. Offering the best value for the money can attract more guests. This will lead to positive reviews, contributing to the success of your investment.
Differentiation: What would set your Airbnb apart from others? Identify unique selling points for your property. Whether it’s a stunning view, exceptional amenities, or a prime location. Having special amenities and highlighting them can set your Airbnb apart and help you attract a steady stream of guests.
Investing In Your First Airbnb Rental Property
Once you have found a place that checks all the Airbnb rental property boxes, go for it!
Investing in an Airbnb property can be a very lucrative venture when approached with careful consideration and strategic planning. Remember, it’s actually not about you! It’s all about the guest and what overall experience you can provide them as an Airbnb host.
By factoring in how often you can visit, keeping up with local regulations, becoming a destination expert, and analyzing the market and competition, you can make informed decisions that contribute to the success of your first Airbnb investment.
Remember, the importance of your Airbnb investment lies not only in the property itself but also in your ability to adapt and cater to your guests’ unique needs and expectations. Happy hosting!
Getting Started on Airbnb: Hosting Tips and More
Read my 5-Star Airbnb Hosting Guide once you are ready to take the next step, or even now, if you want to look ahead!
It is organized in an easy-to-follow manner and full of first-hand knowledge and hard lessons learned. My popular Airbnb Buying Guides will help you set your place up for success and ensure you remember all Airbnb essentials!
And, as an Airbnb host, you can even join my 5-Star Airbnb Hosting Group on Facebook. It’s a wonderful and safe place to mingle with other Airbnb hosts and help each other with great feedback and conversation.
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