Unlock Profits: Best Places to Buy an Airbnb Property
According to USA Today, in 2023 alone, people booked over 200 million overnight stays in America's short-term rentals (STRs), such as Airbnb. The publication further noted that these STRs account for a $64 billion market share, and their average daily rates are around $300+.
All those figures should tell you how lucrative STR real estate investing can be. However, your earnings will largely depend on the property's location.
To that end, the team of property management experts at Luxury Cashflow in Scottsdale, AZ, put together this guide on the best places to buy an Airbnb property. Keep reading to discover the qualities that make for the top rental markets for STRs and how they can influence your potential income.
STRs Permitted
The last thing you want is to shell out money now only to find out later that you can't rent out your luxury Airbnb investments because of the law. For this reason, you must know that some municipalities in the U.S. heavily regulate STRs.
An example is New York City, NY. According to Investopedia, NYC law prohibits hosts from renting out entire homes or apartments to visitors for under 30 days. They can only rent portions of their properties to a maximum of two guests for 29 days or fewer, and they must stay in the rental with the guests.
Investopedia also noted that Santa Monica and San Francisco, CA, have similar regulations.
So, if you already have a few locations in mind, take the time to brush up on their STR laws before buying investment properties there. You should also follow the news to stay up-to-date on municipalities thinking of passing STR-related rules and restrictions.
High Visitor or Tourism Rates
Per TechReport, Airbnb has an estimated 150+ million users, with nearly a third, or 45 million users, in the United States. Most users book Airbnb places when they travel for vacations.
So, the best cities for Airbnb investments are those that get many visitors or tourists. Here are some examples.
Scottsdale, Arizona
According to the City of Scottsdale Economic Development, more than 11 million people visit the city yearly, bringing around $3.3 billion to the local economy.
With such high visitor rates, short-term rental investing in Scottsdale is a smart move. You'll also be happy to know that STRs are legal here, provided they comply with Scottsdale Ordinance 4566. For example, you must get the appropriate licenses and ensure your property satisfies all building, safety, and health codes.
Charleston, South Carolina
Situated along the Savannah River, Charleston is a beautiful coastal city known for its Southern hospitality, rich history, and incredible beaches. Unlike many other tourist-garnering places in the U.S., the average cost of residential real estate in The Holy City is within reach.
STRs are legal in Charleston as long they comply with the city's Short Term Rental Ordinance, including permitting.
Nashville, Tennessee
Nashville, TN, is the hometown of country and bluegrass music and has a booming pop and rock scene, hence its nickname "Music City." But music isn't the only thing it's famous for; it also has loads going for it in architecture, arts, food, history, culture, and activities for all ages. No wonder it draws in millions of people yearly; 16.8 million in 2023 alone!
Because of its popularity, Nashville, TN, is another of the best Airbnb investment locations. You also don't have to worry about the legality of STRs here. Per Nashville and Davidson County Code Chapter 6.28.030, you can rent out STRs, provided you obtain an STR permit (STRP).
Denver, Colorado
Denver, CO, is another excellent place to be an Airbnb investor, as the city's popularity among tourists continues to skyrocket. Per CBS News, the Mile High City broke tourism records in 2022 and again in 2023; in 2023, Denver welcomed 37.4 million domestic visitors, a 3% jump from the previous year. Tourists also shelled out more money in the city in 2023: a whopping $10.3 billion compared to the $9.4 billion they spent in 2022.
Per Denver City and County Zoning Code Section 11.12.7, short-term rentals are legal in the Mile High City. Under the law, STRs are properties rented out for less than 30 days per guest. They must be your (the property owner's) primary residence, and you also need to get a Lodger's Tax ID and STR License from the City of Denver.
Once you meet those requirements, you can list your Denver property on Airbnb.
Proximity to Local Attractions
Once you've decided on the city where you'll buy an Airbnb property, the next step is to look for areas close to the city's top attractions. Remember: vacationers have limited time, so they'd rather spend most of that holidaying, not commuting.
For example, suppose you're looking into buying a luxury Airbnb in Scottsdale, AZ. It's a wise choice, considering the city attracts many high-end vacationers who holiday there to golf. So, if they're your target market, consider investing in a property close to the top golf courses in the area, such as TPC Scottsdale and Troon North Golf Club.
Close to Dining and Shopping Establishments
Many people choose Airbnb properties because, compared to other accommodations like hotels, they have home amenities, such as full kitchens. Even if they don't plan to cook every meal daily, they still want the convenience and comfort of having a fridge, microwave, and oven to make breakfast or late snacks.
For those reasons, the most profitable Airbnb spots are conveniently located and have nearby shopping and dining establishments. Such a feature makes it easy for guests to have varied meal options throughout their vacation, adding to their memorable experiences.
Safe Neighborhoods
The best places to buy an Airbnb are cities and neighborhoods with low crime rates. They typically cost more because the demand for properties in safe places is high. However, their higher price is worth it since:
You can have peace of mind knowing your property is at a lower risk of vandalism and burglary
Your potential guests can feel safer and more at ease, knowing they have low risks of being a crime victim
Properties in safer neighborhoods typically cost less to insure
The neighborhood where you buy an Airbnb property can also make or break its reputation and future earning potential. Remember, guests can leave reviews not only on your Airbnb and property profiles but in many other places on the Web. If they become victims of a crime within your neighborhood or property, they'll likely leave a lashing review, damaging your reputation.
Besides, the last thing you want is to spend hundreds of thousands on a property in an area with a high crime risk, as crimes can further lower its value. So, please do your due diligence and review your prospective neighborhoods' crime rates. You should be able to find these details via the city's local police website or state and municipal websites.
Accessible Neighborhoods
As mentioned above, the ideal Airbnb properties are close to local attractions and dining and shopping establishments. However, you must not only factor in their actual distance in miles. It may just be a few miles on paper, but if the traffic congestion is horrible, a commute that would otherwise take 10 minutes may always take 30 minutes.
So, please ensure you assess your prospective neighborhoods' local accessibility, or its access to local destinations, with the following factors in mind:
The area's state of traffic
Pedestrian infrastructure
Street network connectivity
Public transportation options
Walkability and bikeable amenities
Ideally, you want your Airbnb properties to be within but no more than a 20-minute commute to essential services and local amenities.
Availability of Property Management Services
We've already established that being a short-term rental or Airbnb host can be lucrative, but it's not as passive an income generator as it sounds. You'd have to ensure your property meets state and local codes and likely need to apply for permits and licenses. Then, you'd have to:
Market your property, such as by taking professional photographs and creating descriptive listings
Answer potential guest inquiries
Manage check-ins and check-outs
Ensure your property is always guest-ready
Conduct regular property inspections, maintenance, and repairs
Stay on top of your rental accounting and financial chores
All those tasks can make managing your Airbnb or STRs more challenging, so it's wise to consider property management services.
For example, if you plan to invest in an Airbnb in Scottsdale, AZ, our full-service property management company, Luxury Cashflow, can take over all the above tasks. And if you ever decide to turn your STR into a long-term rental, we'll be with you every step of the way, too.
Time to Explore the Best Places to Buy an Airbnb
The best places to buy an Airbnb allow STRs and have booming tourism industries, such as Scottsdale, Arizona. They're also close to local attractions and amenities, have low crime rates, and are accessible. Considering these factors should help you make more educated real estate investment decisions.
Luxury Cashflow is your go-to for all things real estate in Greater Phoenix, from Scottsdale to Paradise Valley. Our founder, Ross Greenberg, founded the company in 2019 and has helped clients generate up to $450,000 in revenue yearly.
If you're ready to explore profitable investment properties in Scottsdale, speak with us today! We look forward to discussing how our boutique property management services can help with your real estate investing goals.