Owning a successful short-term rental home is more than just finding a great property. Choosing a home to invest in is the only aspect of the investment, the area is just as important. Just as you would before opening a store or restaurant, careful analysis should take place to determine the opportunities an area offers. Here are a few key factors to consider:
- Local Demand and Tourism – The best locations have some kind of independent demand, such as amusement parks, beaches or mountains, or other popular vacation destinations. For example, Visit Houston for Houston tourism.
- Amenities – People enjoy pools, parks, and shopping while vacationing. Consider what activities and amenities are available to renters.
- Local Regulations – Carefully investigate the local laws and regulations governing short-term rentals. Some communities only allow 30+ day rentals or even longer (if at all). You can refer to Nolo’s guide on Airbnb
- Competition – Review existing short-term rentals in the area and check pricing. Spot check a few of the most appealing for availability to learn about vacancy rates. Make sure the prices and availability fit with your cost model. Websites like AirDNA can provide valuable data on vacation rental markets.
- Seasonality – Consider whether the area has peak seasons with slower months in between. Understand the trends and plan for lower occupancy and pricing during the low season.
- Growth and Development – Understand the future development plans in the community. Planned improvements may offer increased desirability for the rentals. Check out local planning resources like Houston Planning and Development for upcoming projects.
A short-term rental can be a powerful addition to your investment portfolio. Carefully selected and managed, these rentals can offer significant income while appreciating in value over time. Before choosing a home, ensure success by carefully considering the location. The desirability of the area is one of the most crucial factors in a successful short-term rental business.
