How to Choose the Best Property for a Short-Term Rental Investment

Last Updated: September 17, 2025 by Michael Kahn. Published: September 17, 2025.

Short-term rentals can be goldmines. Or money pits. The difference is picking the right property from the start. What looks like an obvious winner on paper sometimes turns into a maintenance nightmare that bleeds money every month.  

Location Drives Everything

You want foot traffic, not tumbleweeds. Tourist hotspots work great, but don’t overlook business districts where corporate travelers need places to stay. Plenty of investors have done well near hospitals, since visiting families need accommodations, often for weeks at a time.

Check what’s already out there. Too many Airbnbs in one neighborhood means you’re fighting for scraps. But zero competition might signal local restrictions or just plain lack of demand.

The Right Type of Property

Condos make sense downtown where guests want security and easy access to restaurants. Houses work better for families or groups who need space to spread out. Each comes with trade-offs you can’t ignore.

That cute historic home might photograph beautifully, but old plumbing and heating systems will eat into your profits. Modern properties cost more upfront but save headaches later. You decide what you can handle.

Crunching the Real Numbers

Here’s where dreams meet reality. Your mortgage, insurance, cleaning, utilities, repairs, they all come out of rental income. Don’t forget vacancy periods between guests.

Research what similar places charge per night. Multiply by realistic occupancy rates, not wishful thinking. If you’re converting your current home, the correct way to do it involves several steps that affect your bottom line.

Most new investors underestimate expenses. Budget 20-30% of gross revenue for operating costs, minimum.

Amenities Guests Actually Want

Wi-Fi that actually works isn’t negotiable anymore. Guests will leave scathing reviews if they can’t stream Netflix or join video calls. Parking matters enormously in cities where street spots are rare or expensive.

Kitchens boost your appeal, especially for longer stays. Families don’t want to eat restaurant meals for a week straight. Basic cooking facilities let guests save money, which makes them happier with your rates.

Know Your Local Market

Beach towns boom in summer, but they struggle in winter. College areas get busy during graduation and football season. Business districts stay steady on weekdays but die on weekends.

Seasonal swings affect cash flow more than you might expect. Can you cover the mortgage payments during slow months? Some investors forget this part until it’s too late.

Regulations Can Make or Break You

Cities change rules constantly. What’s legal today might be banned next year. Some places limit the number of short-term rental permits. Others restrict how many days per year you can rent.

HOAs often have their own rules too. Read those documents carefully before buying. Getting surprised by a rental ban after purchase is expensive.

Competition and Differentiation

Count how many similar rentals operate nearby. If there are dozens, you need something special to stand out. Maybe it’s better photos, lower prices, or unique amenities.

Don’t assume you can charge premium rates just because your place is nice. Guests compare options ruthlessly. Your property needs clear advantages over alternatives.

Future Considerations

New developments, transportation projects, or major employers moving in can boost demand. But economic downturns hit short-term rentals hard when people cut travel budgets.

Think about exit strategies too. If the rental business doesn’t work out, could you sell easily? Would it make a good long-term rental instead?

So, What Should You Choose?

Successful short-term rental investing isn’t about finding the perfect property; it’s about finding the right property for your market and budget. Do your homework thoroughly. Visit neighborhoods at different times. Talk to other rental owners about their experiences.

The numbers have to work from day one. Don’t count on appreciation or future rate increases to make a marginal deal profitable. Good properties in good locations with realistic projections build wealth steadily. Everything else is just expensive gambling.