This post may contain affiliate links, meaning if you decide to make a purchase via my links, I may earn a commission at no additional cost to you. See my disclosures for more info.
I am a research fanatic and constantly hungry to learn more when it comes to things I’m passionate about. When I got into hosting on Airbnb and wanted to acquire new properties, I dove head first into understanding the best short term rental markets.
I devoured hundreds of article, podcasts, books and talked to experienced realtors. What I learned is that the approach to finding the best market isn’t necessarily what’s most popular amongst big time investors. I’ll dive in more below.
This post is all about the best short term rental markets.
Best Short Term Rental Markets
Almost every major real estate news source does a yearly analysis of various markets across the United States. These are the articles that you see titled “Best Short Term Rental Markets to Invest in [Insert Year]”, etc. Now, don’t get me wrong, I think it’s SUPER important to understand why these markets are so popular. If you’re a first time investor or have a small portfolio, I would strongly advise you not to follow the advice of the article, but rather read these articles to understand the trends. Read further to understand my secrets to finding the perfect market for your first or next investment.
Analyze for trends
As you digest the article, ask yourself these questions. What is it about these markets that make them hot spots for the coming year? Is it evoking something about changing traveler behavior that I could capitalize on? How can I take what was said and apply it to my investing journey? I’m assuming if you’re reading this article you’re a new host or have a handful of properties so I am speaking directly to you. DO NOT go out and buy property in these markets right away. Rather, take note of the trends and move on to the next step.
Where do I invest?
Now that I’ve told you to read these articles for trends, you’re probably wondering, “Ok but where do I actually invest?” I’ll dive into that question now.
1. Invest in a market you already understand
There’s so much that goes into setting up and managing an Airbnb, taking the guesswork out of understanding a new market is going to pay off. Whether it’s your home town, a market close to your city, the city you live in or somewhere you have frequently vacationed, chances are you understand things about this market that other institutional type investors can’t learn.
I have a couple properties that when I purchased I wasn’t thinking I was buying an airbnb property. But the more research I did to understand the market and talk to other friends that were investor’s locally, we discovered that there was a need for short term rental properties and ended up listing on Airbnb. The advantage here was I was first to the market and established an excellent review track record prior to other listings coming on Airbnb.
Another example would be a property I have in C-class neighborhood as a long term rental. While the neighborhood is not ideal, it’s safe and quiet. This house is located close to a major freeway, many hospitals and big businesses. I had heard through others that the big hospitals were understaffed and going to be bringing in travelers for the foreseeable future. I turned it into an Airbnb, got a couple stellar reviews and marketed to those longer term travelers. It’s been booked above a 75% occupancy rate for the last 3 years.
Are you looking for a good list of Airbnb essentials? Take a look at this article to learn more!
2. The classic vacation rental markets
Do you live in or next to a classic vacation rental market? Invest there first. In case you don’t know what I mean, a classic vacation rental market is one that has houses that have been used as vacation rentals for decades and the local economy depends on tourism. These markets have well developed regulations and are very seasoned in catering to tourists. The key to entering these markets is to be super clear on the regulations. Most likely, this information will be readily available on the town website but I’d encourage you to meet with the city to ensure you’re crystal clear.
Before purchasing, study the market and leverage tools like Airdna.co and Pricelabs.co have great market research tools. You do need to pay for them but well worth the investment before purchasing a property and not being able to rent it out. You can also do some basic research on Airbnb by looking at “Guest Favorite” listings, read the reviews, study the photos, etc. This will all give good insights into what travelers are looking for and what you should look for in a rental.
I highly recommend the Pricelabs.co Market Research tool, it pulls specific listings for your market and all the revenue data. You will get a CLEAR picture on what success looks like! Click here to learn more!
3. National Parks
Most national parks fall under the classic vacation rental market bucket because these are protected tourist areas by the government that won’t go away anytime soon. Another key factor is that the government posts visitor statistics every year, check it out here! There’s concrete data on national park areas that are growing and how many visitors go to the park each year.
4. Coastal areas
The beaches are not going anywhere and most people do a beach vacation at some point every year. These areas naturally depend on tourism and most major beach cities have regulations around vacation rentals making it a pretty safe investment.
I have a couple listings in a coastal county but my properties are about 20 minutes inland from the beach. Now, there are many other tourist attractions in the area but what this has taught me is I can still attract those beach tourists through lower prices and since I’m in a city that’s not considered coastal, I get around a lot of the regulations. So something to consider when buying in a coastal market is that you don’t have to be beach front to be successful.
5. Big cities
Large metropolitan areas are also great areas for Airbnb properties. The many visitors and residence that could have friends or families visiting makes for a great array of guests to cater your listing too. Only a few large cities have completely restricted Airbnb properties and many have regulations or taxes associated with renting out a short term rental. So like with all the advice above, do your research to understand the regulatory implications.
Airdna.co is a great tool to understand Airbnb occupancy rate by city along with what amenities and OTA platforms are most common for tourists to book through. Definitely leverage this tool to understand these key factors for your big city market.
6. Charming getaway towns close to big cities
Every big city has small secondary vacation markets right outside of the main city. Whether it’s the closest mountain town nearby or a quaint rural getaway, it wouldn’t be classified as a main destination city and only locals to that big city will really know the hidden gems of these areas.
For example, I live in San Diego and a favorite day trip or weekend getaway is a little town called Julian, CA. It’s known for the quaint downtown and lots of apple picking opportunities in the fall. EVERYONE from San Diego makes a trip up there at some point and most go during fall for apple picking. These are great markets because you are catering to the same type of tourist and can easily build a reputation as a coveted vacation rental.
7. Mountain and ski towns
While there are main destination ski resort towns throughout the US and the world, there are many secondary ski towns with small resorts that cater to the locals of that larger area, county or state. The best part about investing in a ski town is that it truly is a year round destination with activities for every season and the infrastructure is in place to cater to tourists in snowy weather.
8. Amusement parks or other tourist attractions
Disneyland, Disney World, Six Flags, Hurricane Harbor, Lego Land, Sea World, Zoos! All of these amusement parks attract tourists year round and that flow of traffic is a great thing for Airbnb hosts. Think about local tourist attractions or amusement parks in a market close to you that you could leverage to get guests to book your listing.
Buying Airbnb property
Buying airbnb property doesn’t have to be in the latest hot market in order to be super successful. Rather, it’s important to understand why those markets are attracting the most tourists and see how you can leverage that information into making your next purchase in an area that you already know and understand. The most important thing is to actually get started and believe that you can figure it out as you go. So many people wait on the sidelines and say they’ll get in the game one day and I want to encourage you to jump in now! Happy investing!
This post was all about the best short term rental markets.
This post may contain affiliate links, meaning if you decide to make a purchase via my links, I may earn a commission at no additional cost to you. See my disclosures for more info.
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