In this day and age, running an Airbnb vacation rental business seems a surefire way to generate revenue and a lucrative business to focus on full time. The trick however, lies predominantly in choosing the right markets to invest in when you start a vacation rental property management business in order to make it profitable.
Investing in properties of your own requires significant research into market demand for locations, seasons and other factors that will draw a steady flow of guests and ensure you get a fair price on the property.
If you want a seasonal business that sees slower months during which you can catch your breath and work on business strategy, you could consider remote locations that have more appeal during certain times of the year. If on the other hand, you prefer a venture that churns a consistent profit all year round, you’re going to want to open your doors in an urban location or an evergreen vacation resort that draws guests from January to December.
The cities that have a booming economy will naturally attract more tourists. There will be a large number of business travelers as well. It implies the number of Airbnb guests will be high all the time. The demand for short-term rental homes will be constant in these locations. The Rate of Occupancy will be high in these developing cities of the US. Making an Airbnb investment in a location with a high occupancy rate will result in high profits for most of the year.
A business succeeds when the return on investment is high. Cities that have a high return on investment will have occupancy rates much above the average. You can also have high nightly charges for houses in such cities. One popular way to measure the return on investment is the capitalization rate. Using this rate, you can compare the rental properties in different markets and choose the best one.
The average daily rate of rental properties is different in different US cities. The higher the average daily rate in a location, the better will be the rental income. A high average daily rate combined with a high occupancy rate will make for a profitable business.
With Airbnbs becoming popular in various cities across the world, multiple strict rules and regulations have been imposed on short-term rental businesses to avoid the downfall of the local housing market. An Airbnb business has a greater chance of succeeding in locations with few or no restrictions on the rental business. These cities have tourists and business people coming in from all over the world which increases the occupancy rates of Airbnb homes.
If you are based in the United States, let’s explore the Top 6 Markets you might want to focus your attention on in 2022.
Arizona is a sought-after location to secure a versatile vacation spot, so you’ll rarely go wrong in Arizona. With 18,000 new home sales and 95,830 resales in the last year alone, the country’s 6th largest city is seeing a boom in just about every way. Phoenix is seeing a lot of demographic changes and with more space available and cheaper real estate, it could be the next valley to experience its own tech boom.
Two of the most important things you need to know before you dive into the Phoenix vacation rental market are:
If you’re a property manager in Phoenix looking to move or to upgrade, this could be the year to make your sale. Last year was a strong year for home appreciation in the area and prices only continue to increase.
There are lots of exciting changes coming to Phoenix that are going to change the value of homes. With Apple now producing in the region, Phoenix is seeing amazing changes to the life of its arts, culture, and entertainment industries by proximity. This rising tide is lifting a whole lot of boats. Whether you’re buying or selling, it’s a great time to be involved in the housing market. As we know from the last decade or so, big changes can come in an instant so it’s important to keep your eyes on the Airbnb market.
A mountain-lake-ski town offering beauty, serenity, adventure, and nightlife, it is no surprise that Lake Tahoe has been recognized as one of the best lake towns, ski destinations, and overall travel destinations in the US and the world. Visitors can hike mountain trails in Tahoe City, bask on the beautiful beaches in South Lake Tahoe, ski down the slopes of Squaw Valley, shop for unique souvenirs in Truckee, or sample gourmet cuisine in Incline Village. There are also water sports including jet-skiing, parasailing, boating, and rafting during the summer months as well as cycling, bungee jumping, and hang gliding.
Lake Tahoe occupies a large area even without accounting for the size of the lake. In keeping with its broad offering to visitors through the seasons, its neighborhoods have their own distinctive vibe and scenery. According to AirDNA, the world’s leading provider of vacation rental data and analytics, South Lake Tahoe is one of the top 10 large US cities to invest in a vacation rental with an annual earning potential of $62,187 when listed on Airbnb.
Lake Tahoe is also easily accessible to residents in California and Nevada, offering them a different experience from the rest of their state, and provides tourists from further afar easy access to big cities like Los Angeles, San Francisco, and Las Vegas while based in Lake Tahoe. It is an attractive destination to couples, families, and friend groups who seek an Airbnb vacation rental in Lake Tahoe.
Charleston is the largest city in the U.S. state of South Carolina, the county seat of Charleston County, and the principal city in the Charleston–North Charleston metropolitan area. If you ask any local or anyone who has ever visited Charleston South Carolina, you are likely to hear about time spent at Charleston’s beaches.
No matter where you go in the Charleston area, you’re never really more than 20 minutes from the water and beautiful, sandy shores. With four main beaches, there’s a convenient way to get your toes in the sand from just about any part of town.
Visitors are attracted to Charleston, S.C. during all seasons, for every motivation imaginable. The variety of things to do and see in Charleston keeps these first timers coming back to the Holy City, ranging from antebellum historic sites such as Patriot's Point or Fort Sumter, where the first shots of the Civil War were fired, to the modern and inspiring new Children's Museum of the Lowcountry and the South Carolina Aquarium. You can't miss exploring the several beaches in the Charleston area while in town, like Folly Beach or Sullivan's Island, no matter the time of year.
Savannah, Georgia is a charming Southern escape where art, period architecture, trendy boutiques and ghost stories are all set under a veil of Spanish moss. It is a place where cuisine comes straight from the coast and cocktails are served at every meal.
Consistently named one of the “world’s friendliest cities” by Condé Nast Traveler readers, this coastal town has a world-class reputation for hospitality and grace. Savannah allows short term rentals, although there are several zoning ordinances in place and owners should research their individual requirements based on the district and ward their property is located in. The latest ordinance passed in 2017, established a certification process, a 20% ward cap (which limits the number of approved vacation rentals to 20% of the parcels in a ward in residential zoning districts) and a method for taxing and licensing the rentals.
Savannah is widely known as the most haunted city in America. Walk into any historic building or cemetery in Savannah and you may catch sight of ghostly presences surrounding you. Whether your guest is a ghost hunter or a lover of ghost stories, tell them they need to visit 6 of the most haunted places in Savannah to experience some serious paranormal activity, a benefit your vacation rental in Savannah can actually offer.
Myrtle Beach offers picturesque properties for anyone looking for a beachy vacation, welcoming over 14 million tourists annually. A much loved vacation spot that combines thrills, sights, and relaxation, this family-friendly destination is excellent for owning a vacation rental property due to its 60 miles of pristine coast encompassing white-sand beaches, a subtropical climate, world-class golf courses, and tantalizing seafood restaurants that make Myrtle Beach one of the top vacation rental destinations in the U.S.A. There is something for everyone in this paradise, including water parks, amusement parks, and shops galore for retail therapy not forgetting its 14 unique communities!
If you are thinking about buying a vacation rental in the Myrtle beach area, a major draw is its low cost of living compared to other states. Even so, all facilities & services are still completely available. Housing prices are temptingly low in Myrtle Beach. The total housing cost of Myrtle Beach is 30% lower than the national average cost. Property prices are lower in Myrtle Beach compared to other neighboring states.
Buying a Myrtle Beach vacation rental in South Carolina, you'll have an enormous opportunity to generate income during the busy spring and summer months when it's a popular vacation spot with crowds in the millions. Statistically, tourists flock to beaches, and they want to stay in accommodations that offer all the comforts of home.
Pro Tip: You are more likely to be able to get a higher rent rate if you buy a beautiful oceanfront home.
Other than that, here are some general benefits of getting a vacation rental property in Myrtle Beach:
Located in the Sangre de Cristo foothills, Santa Fe is the capital of New Mexico and home to historic architecture, unique dining, year-round outdoor adventure, world-renowned art, and so much more. Coined as “The City Different,” Santa Fe is truly like no other place on earth. Santa Fe is home to Pueblo-style residences, Native American ruins, eclectic art markets, and traditional New Mexican restaurants.
Nestled in the northern New Mexican mountains, this small town packs a punch in culture. Ranked by Travel + Leisure Magazine at number three among the top American cities in its 2020 World’s Best awards, Santa Fe has something for everyone.
Outdoor enthusiasts will delight in the city’s abundance of hiking trails, and foodies are in for a treat with endless choices to eat and drink. Its art scene is not to be overlooked: Santa Fe hosts the country's third-largest art market, boasting more than 250 galleries and more than a dozen different museum facilities. Not to mention the world-renowned local art collective, Meow Wolf.
Santa Fe’s Pecos real estate market is made up of a limited number of single-family homes, many with riverfront views. The homes in Pecos are beautifully updated, affordable and immaculately maintained and guests will love the easy access to nearby Pecos Wilderness and fly fishing locations.
When looking at a vacation rental property on Kauai as an investment it's important to think about what people on vacation want.
Oceanfront/ Ocean View Privacy Walk-Ability to Restaurants and to the Beach Number of Bedrooms (more bedrooms = higher nightly rental rate) Sunset Views The Condition of the Property
Whether your budget and tastes take you to a vacation rental on Hanalei bay, or a condo in Poipu, owning a vacation rental property on Kauai can be both financially rewarding and a lot of fun! Kauai has designated areas where short-term or “vacation renting” is allowed, known as the Visitor Destination Area (VDA). The purpose of having a designated VDA is to preserve residential housing for local residents, which is currently at a shortage. These designated VDA areas are based where resorts and hotels are also located, along with shopping and restaurants.