Airbnb has exploded in popularity across the world, especially in the US. Thousands of people are turning their investment eye to properties purely for Airbnb purposes. It makes perfect sense, more and more people are vacationing within the US, the investment yields can be extremely lucrative, and investing in property is (for the most part) a relatively safe investment.

Best Cities for Airbnb Investment: What You Should Know

Before getting involved in any investment it’s important that you properly educate yourself on all of the processes involved as well as all of the risks that any investment has. The purchase process and the usual risks of purchasing a property aside, there are additional risks and admin associated with running an Airbnb. You are, effectively, running a business. That means you’ll need to treat it as such, keeping an eye on accounts, taxes, maintenance, and more. These reasons, among others, contribute to many people using a management company to look after the day-to-day running of their Airbnb investment.

Factors to Consider When Selecting a City for Airbnb Investment

Picking the perfect city for your Airbnb isn’t too dissimilar to picking a city for you to live in, but you have to remove the personal element and, instead, focus on what it is that your guests would most appreciate. If you purchase the right property for your guests you are far more likely to have happy customers and a high occupancy rate.

The Seasons

Some cities are massively affected by various times of the year. What is incredibly busy one month can be a ghost town the next. These cities are typically set in tourist hotspots, such as coastal towns or winter sports towns. It’s a choice of whether you’d prefer to run a seasonal business or go for a location that appeals the whole year round.

There are pros and cons to both, but generally speaking, seasonal Airbnbs can charge a premium but are quieter off-season and may not be occupied. Whereas so-called evergreen Airbnbs can’t charge as much but have a steadier flow of income.#

Occupancy

The percentage of how often your Airbnb is occupied is a huge determiner of how profitable your investment will be. Consider the type of city or town that you’re purchasing in. If it has a growing and sustainable economy, chances are people will be visiting either as tourists or for work. That means the short-term rental market will be booming and Airbnb occupancy will be high. Quieter, less busy towns that rely on tourism alone tend to have lower occupancy.

Return On Investment

The quicker you can see a return on your investment the better, meaning you’ll need to have a high occupancy rate at a good rental price. You also want to remember that you’ve invested in the property itself, aim to invest in an area that will at least hold its value.

The Rules

Some cities have begun to apply stricter regulations on Airbnb owners and the short-term rental market as a whole. Some cities simply make it easier to run an Airbnb than others, always check the regulations before purchasing.

The 4 Top Cities for Airbnb Investment in the US

Lake Tahoe, California/Nevada

At first glance, you might think that Lake Tahoe is going to exclusively appeal to those interested in seasonal rentals. Consider, however, that there are activities for all times of the year. There’s hiking around Tahoe City in the stunning mountain landscape, skiing in the wonderful Squaw Valley, and relaxing beaches around South Lake Tahoe. The adventure sports are endless and see an influx of tourists year-round. Airbnb investment is popular across the areas, but South Lake Tahoe specifically is where the best annual earning potential ($62,187) can be found.

Savannah, Georgia

A jewel of the South, Savannah has a huge amount to offer tourists who visit, making it a popular Airbnb investment town. With expansive period properties, manicured parks, and grand oak trees covered with Spanish moss, it’s a real getaway town. It might seem ideal for an investment, but it’s important to take note of the local regulations. Savannah has a strict policy that allows a maximum of 20% vacation rentals per ward. In order to become an Airbnb host you’ll need to complete your certification process, and then pay appropriate taxes and license fees. That said, the high occupancy rates, great rental prices, and ever-increasing property prices make it worth the hassle.

Phoenix, Arizona

Phoenix is booming. America’s 6th largest city is seeing a huge swathe of improvements to its infrastructure, entertainment options, and is welcoming more and more businesses. In fact, wth giants like Apple opening up production plants near Phoenix, there’s a chance we’ll see it become the next Silicon Valley. That means a huge influx of jobs, temporary workers on contract, and an increase in tourism. All great for Airbnb owners. Consider also that house prices in Phoenix are climbing rapidly too, so investing in a property is likely a sound choice.

Kauai, Hawaii

If you’re already a regular visitor to Kauai then this makes sense, otherwise, you might have to rely on a management company to deal with issues on a day-to-day basis. Let’s be honest, who wouldn’t want to own an investment property in Hawaii? Consider that you’ll be able to visit it yourself too! There are ample accommodation types to suit a variety of budgets. If you can afford the popular beach-front properties then your occupancy rate will be incredibly high, but you won’t see that much of a lower rate within the towns themselves. Pay attention to the Visitor Destination Area regulations, these are the only areas where short-term renting is allowed.

Key Takeaways

Being an Airbnb host isn’t a walk in the park. By taking the time to read through investment information such as this above, and arming yourself with an Airbnb hosting guide, you’ll stand the best chance of success. Remember to consider what works for you personally as well as your investment, but try and make sure that you keep this as a business process. If you’re in love with Savannah’s shady streets, the beaches of Kauai, the ski slopes of Lake Tahoe, or the booming Phoenix, remind yourself this is an investment. That doesn’t mean you can’t love it!

• The occupancy rate is key to your return on investment.
• Pick between evergreen or seasonal to fit your requirements.
• Take heed of regulations before making any purchase.