I talk about short term rentals a lot on this blog.
It’s no secret that they’re one of my big investments for the year of 2017.
But today, instead of talking about my goals for 2017, I’m going to clue you in on how you can get started on your own short term rental empire.
Today’s blog post is all about finding the best city for an Airbnb investment.
You can be an Airbnb host even if you only own one property. As long as you have some extra room, you can get started.
That’s great for a small stream of income, but there’s even more opportunity out there.
Have you ever wondered how much an Airbnb host can make off of renting a nice one-bedroom apartment in a popular city? What about a two-bedroom?
In cities with a high occupancy rate — think places like New York, where there are always tourists coming in town — you could make thousands of dollars a month off of one property.
An Airbnb investment is just too good a deal to pass up.
Why Invest In Short Term Rentals?
Short term rentals, or STRs, are the best way to make a decent profit in real estate FAST.
And I’ve put my money where my mouth is on that claim.
If you’ve been following this blog, you know that my goal for 2017 is to run 50 STRs by the end of the year.
I get closer to that goal every day, and earn a pretty penny while doing so!
Here are just a few benefits to creating your own short-term rental empire:
- Grows your network — you never know who you’ll meet!
- Lets you hone business skills, whether that’s customer service or closing your first deal
- And, of course, a fantastic return on investment.
Simply put, short-term rentals are where it’s at in real estate if you want to maximize your profit.
And as far as STRs go, an Airbnb investment is by far the best way to get potential tenants.
The name recognition and network are both already there. Plus, Airbnb is mostly used by tourists…who are traveling with the intention of spending money.
So now that we’ve established why you should look into making an Airbnb investment, where should you buy property?
I’ve curated a list of the best cities for STR entrepreneurs, just for you.
Best Domestic Airbnb Investment Cities
Of course, you can always start your short term rental journey close to home if you want. Bonus if your home base is in or near one of the cities in the list below!
However, if you really want to maximize the profit of your new Airbnb investment, turn your eye to these four cities.
Nashville is like the perfect storm for Airbnb owners.
It’s just touristy enough that it has a relatively steady stream of visitors — thanks, country music! But since the cost of living is much lower than in a city like New York or Boston, you won’t have to pay as much in initial startup costs.
Plus, it actually has a legal framework in place that lays a foundation for short term rental owners.
Cheers to that!
Las Vegas, NV
Vegas is infamous for many reasons. It’s a tourist magnet for people both in and out of the United States.
Imagine the money that could be made off of an Airbnb investment that catered to international tourists, for example. Or a group of friends who want a place bigger than a hotel room.
The high earning potential cancels out the transient lodging tax that hosts are required to pay. In the grand scheme of things, the tax is a small price to pay for your increased income.
Airbnb is wildly popular in Austin — so popular, actually, that hotel revenues dropped nearly 10% in 2015.
You won’t have a shortage of guests in Austin, that’s for sure. Especially since it’s becoming a trendy millennial city. (Three guesses who the biggest Airbnb users are!)
There are regulations in place — you have to apply for a license and abide by the city ordinances. But you shouldn’t let that stop you from cashing in.
You have the green light on an Airbnb investment in Austin, at least until 2022.
Even if you’re not a baseball fan, you probably heard about the Chicago Cubs’ historic 2016 World Series win.
What you may not know is that Chicago Airbnb hosts collectively made $2.6 million over just one weekend of the World Series!
Aside from its general popularity with tourists, Chicago is an especially busy place to be during events like Lollapalooza.
There are some city ordinances about short term rentals, but they’re generally favorable towards owners.
You may have noticed that some notable cities are not on the above list. That’s either because the price to buy property in the first place is high enough to potentially neutralize your ROI, or because the city has banned STRs.
Atlanta and New Orleans are two examples of cities where STRs are a no-go.
Best Foreign Airbnb Investment Cities
Sometimes, to find the best investments you have to think outside the box. The low cost of living in some countries, compared to the amount of money tourists spend using Airbnb rentals, can translate to huge returns on investment for you.
Of course, you’ll have to make sure that you’re in compliance with the laws of your chosen country and city. Everyone has different policies regarding short-term rentals, and the last thing you want to do is lose your investment on a legal technicality.
Where do you want to go? Asia? Maybe Europe?
The possibilities are endless.
It is legal to invest in real estate as a foreigner in the cities listed below. Take a look at some of the cities that could be home to your next Airbnb investment.
Auckland, New Zealand
Hosting is so popular in Auckland that now there are businesses centered around Airbnb hosts!
This is great for you, of course — it means that it will be easy to find someone to manage the property if you have no intention of staying in New Zealand.
Another obvious perk is that everyone in New Zealand speaks English. If you’re not fluent in another language, or you don’t want to pay a translator to talk to a real estate agent, you’re good to go here.
The median price to rent an Airbnb apartment in Auckland is about $130 a day. People will pay this in a heartbeat, which puts money in your pocket.
By Western standards, the cost of living here is dirt cheap.
Locals live on less than $500 a month. The monthly cost of a one-bedroom apartment in the center is only $375.
If you’re looking for a place where a little would go a long way, look no further. It doesn’t take much for an Airbnb investment to turn a significant profit.
Think about it — for the price of what your rental deposit would be in the U.S., you could buy a property, fix it up, and hire someone to manage it for you when you’re gone.
People in Bali also super friendly to foreigners, so no worry on that front.
What if you were thinking of something more European?
Depending on where you are, the cost of living in Europe can be roughly the same or higher as it is here in the States. I wouldn’t recommend trying to buy property on the cheap in London, for example.
Costs of living in Porto, though, are low. Even buying a house wouldn’t break the bank.
Although they (obviously) speak Portuguese in Portugal, many people speak English as well, which should be a relief.
Most Airbnb properties here are available for rent 10-12 months out of the year, and nearly a fifth of all properties are rented at leat seven months of the year.
Seoul, South Korea
There are thousands of people in Seoul already taking advantage of Airbnb investment properties.
Prices in Seoul tend to start looking a little more like they do in the U.S., depending on where you live. Local cost of living is around $1200/month, while a one-bedroom in the center of the city is $970/month.
You’ll forget about that once you see how much money per month you can earn as a host.
No matter what, being an Airbnb host allows you to capitalize on tourism…and all of the recent college grads coming to visit their friend ‘teaching English for a year’ in South Korea.
So What Next?
First things first — if you really want to take the plunge into short-term rental entrepreneurship, you’re going to have to act fast.
Here in the U.S., there’s some opposition to properties being used solely for Airbnb. A few cities are passing regulations against it.
It’s not going to cripple the entire STR industry, but you’ll want to hop on this trend before it gets harder to do so.
Figure out what your goals are and what’s best for you before you rush into anything.