Starting an Airbnb Business: Choosing the Right Short Term Rental Property
4 minute read
June 18, 2024


Choosing the right short term rental (STR) property can be a game-changer for your real estate portfolio. With the booming popularity of platforms like Airbnb and VRBO, picking the perfect property involves strategic decision-making and a keen understanding of market dynamics. In this guide, we’ll cover the criteria for selecting properties, the critical role of location, and what to look for in an ideal STR investment.

What Makes a Good Short Term Rental Property?

A good STR property is one that consistently attracts guests, generates high occupancy rates, and provides a solid return on investment. Here are the key attributes to consider:

1. Demand: Look for properties in areas with high tourist or business travel demand. Properties near attractions, business districts, or natural beauty spots often do well.

2. Amenities: Guests often seek properties with modern amenities such as Wi-Fi, fully equipped kitchens, comfortable furnishings, and outdoor spaces. Properties offering unique features, like a hot tub or scenic views, can command higher rates.

3. Condition and Maintenance: Well-maintained properties with updated appliances and fixtures are more appealing. They require less immediate investment and are less likely to generate negative reviews due to maintenance issues.

4. Flexibility: Properties that allow flexibility in terms of guest stays, such as self-check-in/check-out, are increasingly preferred. This feature can enhance guest satisfaction and increase booking rates.

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How Does Location Impact Success?

Location is arguably the most critical factor in determining the success of an STR property. Here’s why:

1. Proximity to Attractions: Properties close to popular tourist attractions, beaches, ski resorts, or urban centers tend to have higher occupancy rates. Guests prefer convenience, and being close to the action is a significant selling point.

2. Accessibility: Easy access to transportation hubs like airports, train stations, and major highways can enhance a property’s attractiveness. Properties that are easy to reach will appeal to a broader audience.

3. Safety and Neighborhood Quality: The safety of the neighborhood is paramount. Guests want to feel secure, so properties in well-lit, low-crime areas are more desirable. Additionally, the general appeal of the neighborhood, including cleanliness, local amenities, and community feel, plays a role.

4. Seasonality: Understand the seasonal demand for your property’s location. Ski resorts may have high occupancy during winter, while beach properties thrive in summer. Plan for these fluctuations to maximize profitability year-round.

What Should You Look For When Choosing The Right Short Term Rental Property?

When evaluating potential STR properties, consider the following factors:

1. Local Regulations: Ensure the property complies with local zoning laws and short-term rental regulations. Some areas have restrictions on STR operations, so it’s crucial to verify legality before purchasing.

2. Market Trends: Use market analysis tools and real estate trend reports to gauge the performance of STR properties in your chosen area. Look for trends in occupancy rates, average nightly rates, and overall profitability.

3. Financial Metrics: Analyze the financials, including potential revenue, operating costs, and net income. Tools like Airbnb’s revenue calculator can provide valuable insights into expected earnings.

4. Property Management: Decide whether you’ll manage the property yourself or hire a property management company. Professional management can enhance guest experience and streamline operations, albeit at an additional cost.

5. Guest Experience Potential: Consider how the property can deliver an exceptional guest experience. Properties with unique charm, modern comforts, and thoughtful touches can differentiate themselves in a crowded market.

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Choosing the right short term rental property requires a blend of strategic location selection, thorough market analysis, and a focus on guest experience. By understanding what makes a good property, recognizing the importance of location, and knowing what to look for, you can make informed decisions that set you up for success in the short term rental market.

What does your ideal STR property look like? Share your vision or current investments with us in the comments below. Your insights can inspire and help fellow investors on their journey to choosing the right short term rental property.

Our advise is based on experience in the mortgage industry and we are dedicated to helping you achieve your goal of owning a home. We may receive compensation from partner banks when you view mortgage rates listed on our website.


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