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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.
I can honestly say that the location of your Airbnb truly matters!
It is incredibly important that you understand the rental market in your area. You need to look not only at supply and demand but also at legislation, the target market, and, of course, how familiar you are with the area.
In this Airbnb hosting and investing blog post, I will share my first-hand experience as a host. I want to help you decide where to 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! In fact, it may even be closer to home than you think!
QUICK LINK: Are you ready to create your new Airbnb listing? Click here to get started on Airbnb!
Getting Started on Airbnb
Are you in the very beginning stages of Airbnb hosting? Maybe you are just thinking about investment in a short term rental and want to know what it’s like.
First, read the honest truths I wish I had known before starting my first Airbnb! That said, over the years, I have learned to work smarter, not harder, and streamlined my Airbnb hosting strategies, and now I can self-manage my rentals from all over the world!
Then head over to my 5-Star Airbnb Hosting Guide, where you can choose topics such as Getting Started on Airbnb and Airbnb Buying Guides. Because even if you aren’t yet a host, they are full of valuable firsthand Airbnb hosting tips that can help you know what to expect!
I want to encourage you to take the leap because, seven years in, I can still say we made four great investments. But that is in part because we bought rental property in a high-demand, premium market that is popular almost year-round.
So, where should you buy your first Airbnb rental property?
Buying Your First Airbnb Rental 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 look at 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! That said, when you learn to set limits, such as communicating only through the Airbnb app, you can find ways to protect your peace and profits at the same time!
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 your firsthand involvement with your rental.
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!
So, in this post, I am going to assume you are buying a rental property to self-manage locally or remotely.
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 at a far-off vacation 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 lets you 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 be within two to three hours of your home or a short direct flight away.
Moreover, being nearby can enhance your hosting experience. Frequent personal visits allow you to stay up to date on the destination and experience it throughout the seasons. Plus, you can take advantage of quick shoulder-season visits and last-minute trips during open windows or gaps in your calendar.
Doing so allows you to experience the area as a guest over and over again. I can honestly say that one of the most important things that separate good Airbnb hosts from bad Airbnb hosts is how quickly they can provide recommendations and answer questions about the area!
#2 Local Short-Term Rental Rules and Regulations
Next, you should take an in-depth look at any current or proposed short-term rental regulations that may affect 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 Airbnb rental location 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 recently passed regulations making short-term rental businesses a thing of the past for most! A local real estate agent should be able to walk you through this and explain what real estate investing entails in that area. That said, you need to do your own research here!
Many real estate markets in larger cities have shifted toward long-term rental stays to provide affordable housing for residents. These conventional rental properties aren’t necessarily a bad idea, but they’re very different from short-term rental investments in terms of 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 away 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.
I can’t emphasize enough how important this is!
RELATED READ: Tax Considerations For Your Airbnb
#3 Local Expertise and Knowing What You’re Selling
Being a successful Airbnb host goes beyond just providing a comfortable space for guests. Your local expertise can set you apart and make the guest experience more enjoyable. I will go so far as to say that you must be able to answer all guest questions quickly and accurately.
If you read my Airbnb reviews, most of my guests mention how much they appreciated my custom local recommendations!
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 or if guests should rent a car on 30A. Owners should provide this information in their listings, Airbnb House Manuals, and to each guest who asks.
Consider the following tips to leverage your local knowledge. These are all areas where most real estate investors fall short when they focus only on the real estate market.
After all, most of these Airbnb properties are vacation rentals with people spending their hard-earned vacation budgets who truly appreciate helpful recommendations! You should also know about additional services you can recommend to your Airbnb guests.
Personalized Recommendations: 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. This can include bike rentals and similar.
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, Competition & Demand
I said these are in no particular order, but I honestly think this is most important. You can have a fantastic rental, but if no one is searching for or visiting that area, it’s still hard to rent it. On the other hand, you can have a standard baseline rental in a popular vacation destination that sees year-round demand.
RELATED POST: How to Price Your Airbnb for Maximum Profits
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 hotels as well? What are the going rates? Is there a need for Airbnb stays? What is the average length of stay? Which one would YOU prefer to stay in for a weeklong stay? What about a 3-night stay?
As a full-time travel creator who spends over 150 nights a year away from home, I can say that our short-term rentals aren’t always the best options.
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, maintenance, or to deep clean your Airbnb.
If your market has only a very short peak window, can you generate enough income during that period to sustain your investment for the year?
Competitive Pricing: Research similar properties in the area to help you predict competitive pricing for your Airbnb. Run actual searches on Airbnb as if you were a guest booking, and check various date ranges. How much do your potential competitors’ prices vary month to month?
I will say that offering the best value for the money can attract more guests. This will lead to positive reviews, contributing to the success of your investment. I have a post about how to price your rental for maximum profits.
Differentiation: What would set your Airbnb apart from others? Identify your property’s unique selling points. 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.
This is why I like to make some of my rentals baby-friendly. It truly helps me stay booked quite a bit during the shoulder seasons.
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!
And if you are ready to get started, here are 5 key things to do before you launch your new Airbnb!
Or, if you just published your brand new Airbnb listing, here is what to do next!
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! I share advice for every step of the Airbnb hosting journey, including everything from what you should be buying multiples of all the way to strategies for incorporating guest feedback!
It is organized in an easy-to-follow manner and full of firsthand knowledge and hard-earned lessons. My popular Airbnb Buying Guides will help you set up your place for success and ensure you remember all the Airbnb essentials, such as mattress protectors, my favorite Airbnb dishes, and smart TVs!
And don’t miss my FREE room-by-room Airbnb Setup Checklist!
Also, as an Airbnb host, you can even join my 5-Star Airbnb Hosting Group on Facebook. It’s a wonderful, safe place to mingle with other Airbnb hosts and share great feedback and conversation.
RELATED AIRBNB HOSTING TIPS:
- Best Airbnb Bedding
- Airbnb Guest Reviews
- Cancellation Policy Guide
- Kitchen Shopping List
- Setting a Cleaning Fee
- Blackout Curtains I Love
- Top Airbnb Couches
- Late Check-out Requests
- Handling Guest Damages
- My Favorite Airbnb Sheets
- Themed Rental Ideas
- Games for a Rental
- Buying Airbnb Furniture
- Top Airbnb Pillows
PIN: Where Should You Buy an Airbnb Investment Property?
