The importance of location is one thing that does not change in real estate investing regardless of the investment strategy. Some locations are favorable and yield higher profits for short rental properties. As a real estate investor, your job is to make sure that your short rental property is going to create a cash flow and generate a return if you decide to sell it one day. It’s your job to study and analyse the market in order to determine which location is optimal.

You have to look at factors like the area’s desirability, affordability, Booking.com and Airbnb occupancy rate, short-term rental rates, and potential Return on Investment.

Desirable locations are location with high rate and demand for short rental properties. Locations with plenty of tourist attractions and amenities, such as restaurants & shops, leisure, sports, outdoor and cultural activities, beaches, mountains, or a national park are typically the first choice for short rental investors. Also, availability of transportation – train, tram, bus and distance to the International Airport.

However, before buying a property you need to check if the area has positive investment potentials. To achieve that, you should invest money in a property in a popular tourist area, but make sure that it does not have too much competition from short rentals and hotels.

You should aim for an area that has a steady flow of visitors all over the year. Look at home prices, demographics, and rents in the real estate market, if you want to own a profitable investment property. Places that have plenty of tourist attractions are London, Paris, New York. But because they are too expensive short rental investors may not get a good enough return on investment there. While major cities attract a lot of tourists and business travelers, you should not ignore smaller towns. Some cities that appear to be great tourist spots can be duds if home prices are too high or the city has a relatively large supply of hotel rooms at affordable prices.

Whatever your city of choice is, you’ will also need to find a profitable neighborhood. The key to choosing a location is finding the best combination of demand for short-term housing and profitability.

It is a good idea to buy your first rental property close to your local area. Go over and see the property first-hand. Pictures can be deceiving. Walk the property, drive through the neighborhood, and figure out if you’re close to features of interest in the community.

In order to choose the best places to invest, let us leveraging the following three metrics to gauge the updated investment potential.

1. Rental Demand: Rental Demand is how often rentals are booked throughout the year. A combination of annual occupancy and listing growth rates, shows the relative demand in each market.

2. Revenue Growth: Compare current month earning with the same month last year. This is calculated by looking at the change in year-over-year.

3. Invest ability: Compares the cost of buying homes using Zillow home value data to the average income of full-time short rentals. The cost of housing is a big part of the equation.


You have to use special tools that are available on line to help you check the listing price, rental income, occupancy rate, and cash on cash return of both traditional and short rentals in different neighborhoods.

свернуть