A Comprehensive Guide to Purchasing a Short-Term Rental Investment Property

Investing in a short-term rental property can be a lucrative venture if approached strategically. This guide will walk you through the essential steps, from identifying the best markets to buying in, connecting with specialized real estate agents, securing insurance, managing the property, furnishing it to maximize revenue, obtaining permits, and using tools to calculate projected revenue.

Identifying the Best Markets for Short-Term Rental Investment

Choosing the right market is crucial for maximizing your return on investment. Here are the top 5 markets in the United States with specific statistics to guide your decision:

1. Orlando, Florida

• Average Home Price: $300,000
• Average ADR (Average Daily Rate): $160
• Occupancy Rates: 75%
• Famous Events: Walt Disney World events, Epcot International Food & Wine Festival
• Average Yearly Revenue: $45,000

2. Austin, Texas

• Average Home Price: $400,000
• Average ADR: $200
• Occupancy Rates: 70%
• Famous Events: SXSW, Austin City Limits Music Festival
• Average Yearly Revenue: $50,000

3. Nashville, Tennessee

• Average Home Price: $350,000
• Average ADR: $180
• Occupancy Rates: 72%
• Famous Events: CMA Music Festival, Nashville Film Festival
• Average Yearly Revenue: $48,000

4. San Diego, California

• Average Home Price: $700,000
• Average ADR: $220
• Occupancy Rates: 68%
• Famous Events: Comic-Con International, San Diego County Fair
• Average Yearly Revenue: $55,000

5. Savannah, Georgia

• Average Home Price: $280,000
• Average ADR: $150
• Occupancy Rates: 73%
• Famous Events: Savannah Music Festival, St. Patrick's Day Parade
• Average Yearly Revenue: $42,000

Connecting with a Real Estate Agent Specializing in Short-Term Rentals

Finding the right property requires expertise in the short-term rental market. Here are steps to connect with a specialized real estate agent:

1. Research Local Experts: Look for agents who have experience in the short-term rental market in your desired location. Websites like Zillow and Realtor.com offer directories of agents with reviews and ratings. You can also check out the Short Term Shop.
2. Join Real Estate Investment Groups: Platforms like BiggerPockets offer forums and networking opportunities with agents who specialize in investment properties.
3. Consult with Property Management Companies: Many property management companies, such as Awning and RedAwning, have in-house real estate experts who can assist with purchasing investment properties.

Obtaining a Permit for Short-Term Rentals

Before you can start renting out your property, you must ensure that you comply with local regulations. Here’s a guide to obtaining the necessary permits:

1. Research Local Regulations: Different cities and states have varying regulations for short-term rentals. Visit your local government’s website or contact the relevant department to understand the requirements.
2. Submit an Application: Most municipalities require you to submit an application for a short-term rental permit. This may include providing details about your property, proof of ownership, and a fee.
3. Safety Inspections: Some areas require a safety inspection to ensure your property meets local health and safety standards. Be prepared to schedule and pass these inspections.
4. Follow Zoning Laws: Ensure your property is in a zone that permits short-term rentals. Some areas have specific zoning laws that restrict where short-term rentals can operate.
5. Pay Any Required Taxes: Understand and comply with local tax laws, which may include transient occupancy taxes or other fees related to short-term rentals.

Securing Insurance for Your Short-Term Rental

Insurance is a critical aspect of protecting your investment. Here are a few players to consider:

1. Proper Insurance: Specializes in vacation rental insurance, offering comprehensive coverage tailored to short-term rentals.
2. Obie: Provides policies that cover property damage, liability, and loss of rental income.
3. Nationwide Vacation Rental Insurance: Offers customizable insurance solutions for short-term rental properties.

Managing Your Short-Term Rental

DIY Management vs. Professional Management

• DIY Management: This option allows for greater control and cost savings but requires significant time and effort. Tools like Airbnb, VRBO, and Guesty can help streamline the process.
• Professional Management: Hiring a professional property management company can save time and ensure a higher level of service. Companies like Awning, TurnKey Vacation Rentals, and Evolve offer comprehensive management services, including marketing, guest communication, and maintenance.

Furnishing and Designing Your Short-Term Rental

A well-furnished and designed property can significantly boost your rental income. Here are some recommendations:

1. Wayfair Professional: Offers a wide range of furniture and decor items with discounts for business accounts.
2. Furnishr: Provides turnkey furnishing solutions, including design services and installation.
3. Awning: Specializes in short term rental furnishings, limited to decor and furnishing only.
4. STR Cribs: Specializes in short term rental renovations and furnishings, focused on high ROI renovations and furnishings. 

Design Tips for Maximizing Revenue

• Focus on Comfort: Invest in high-quality mattresses, bedding, and seating to ensure guest comfort.
• Add Local Flair: Incorporate local art and decor to give your property a unique touch.
• Provide Amenities: Offer amenities like high-speed Wi-Fi, streaming services, and kitchen essentials to enhance the guest experience.

Conclusion

Investing in a short-term rental property can be highly profitable if done correctly. By choosing the right market, connecting with specialized real estate agents, securing appropriate insurance, effectively managing your property, furnishing it to attract guests, obtaining necessary permits, and using the right tools to calculate projected revenue, you can maximize your revenue and ensure a successful investment.

For more information on managing short-term rentals and finding the best markets, visit Airbnb and VRBO. For insurance options, check out Proper Insurance. If you need professional management services, explore Awning. To calculate potential earnings, consider using tools like Airbnb Estimator, Rabbu, and AirDNA.

By following this guide and leveraging the right resources, you can make informed decisions and optimize your short-term rental investment for maximum profitability.

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