Unlock the secrets to successful Airbnb investing with strategic property selection, savvy data analysis, and risk mitigation to boost your profits in the competitive short-term rental market.

Best Airbnb Investment Guide: Strategies & Opportunities

The key to success in Airbnb investing is strategically selecting your property. Conduct thorough market research to identify areas with high tourist traffic and find suitable properties for short-term rentals.

Utilize data tools to analyze market trends, occupancy rates, and rental income potential. Make informed decisions based on data to maximize your profitability.

Before investing in Airbnb, understand the potential risks, including regulatory uncertainties, market saturation, and property damage/liability issues. Develop strategies to mitigate these risks and safeguard your investment.

Investing in Airbnb properties mirrors the strategy of a Monopoly game: Acquiring the right properties on the right streets is key to maximizing your earnings. If you've saved up for an investment property, it's time to advance and reap the rewards.

However, Airbnb real estate investing isn't as straightforward as choosing a square on a board. It involves selecting the right property in the right location, often across diverse global markets.

While demand for Airbnbs continues to soar, entering the short-term rental (STR) market can feel overwhelming. With numerous potentially lucrative markets to consider, pinpointing the top Airbnb investment locations can be challenging. Yet, with the right strategy and data, success is within reach.

Gain insights into the revenue and occupancy trends in your market.

Airbnb investing is the practice of purchasing a property and renting it out to guests on a short-term basis through Airbnb, in contrast to renting long-term through a real estate agency. Investing in STRs works differently than conventional long-term rental properties and has unique benefits and risks.

Conducting market research is the first step towards making money from vacation rental properties. This involves identifying areas with high tourist and business traffic, then seeking out properties suitable for STRs in those locations. 

Next, ensure that STRs are permitted in that locality and comply with any relevant regulations. Now you’re ready to purchase! Chances are you’ll have to obtain a home loan.

Once the property is yours, you’ll want to:

Set up and furnish the property to meet the standards expected by Airbnb guests.

Arrange necessary services such as cleaning, maintenance, and guest support.

Create an attractive listing on Airbnb, highlighting the property's features and amenities.

Decide whether to host guests personally or hire a property management company to handle day-to-day operations.

The primary source of return on investment (ROI) stems from STR income, which covers the mortgage, interest, and operating costs, with the potential for profit. Investors may also benefit from the property's appreciation in value over time.

If you’re an Airbnb beginner creating your first Airbnb investment plan, don’t be afraid to start small. Investor Adam Nelson’s story is a great example of how you can work your way up.

At 22, Adam bought a condo and house-hacked it—in other words, he rented out the other rooms to cover his mortgage cost. Starting small in this way helped him lay the groundwork for a profitable portfolio.

“I needed to start with a primary residence and house-hacking, and then I needed to work up to … multi-family,” Adam said. “You just have to learn where you're at and see what you can pre-qualify for, and then you'll find your niche and what you actually enjoy doing.”

Airbnb Investment vs. Conventional Rental Property Investment

Think of a conventional rental property like a long-term relationship: tenants sign a lease, pay rent every month, and you enjoy a steady, predictable income stream. It's like the comfort food of real estate investing—reliable and stable.

Now, Airbnb investments? They're more like a whirlwind romance: fun, exciting, but also a bit more work. With STRs, you've got to stay on your toes, handling day-to-day tasks like cleaning and guest communication. The upside? Those short-term rentals can bring in some serious cash, often with higher profit margins than their long-term counterparts. 

Ultimately, the biggest differences between Airbnb investing and long-term rental property investing are your profits and risks, upfront costs, and level of involvement.

Airbnb investments generally have higher earning potential but a higher level of risk compared to a conventional rental property. 

The higher earning potential comes from the fact that the average daily rate (ADR) is higher for short-term rentals than it is for long-term rentals. The ADR is lingo for how much hosts typically charge guests per day.

The higher risk relates to the fact that your Airbnb property might only be booked half of the time (the exact percentage is referred to as your occupancy rate). You’ll need to account for your occupancy rate—and its fluctuations—when pricing your Airbnb.

Airbnb properties require a much higher upfront investment than conventional investment rental properties. 

You’ll have to cover the expenses that conventional investment homeowners pay for— like mortgage and interest, land taxes, and HOA fees.

You’ll also have to cover the cost of things that tenants would usually pay for—like water, utilities, toiletries, and subscription services.

In addition to normal homeowner’s insurance, hosts should consider specialized STR insurance coverage designed to safeguard property owners against unique risks associated with renting their homes or spaces temporarily.

Finally, you’ll have to pay to furnish and decorate the property, and ideally pay to professionally photograph the property before you list it on Airbnb. 

Managing Airbnb properties demands a higher level of involvement compared to conventional rentals. You'll be on the front lines checking guests in and out, engaging in ongoing communication with current and potential guests, and handling maintenance and repairs more frequently than in traditional rentals.

Pros and Cons of Having an Airbnb Investment Property

Investing in Airbnb properties poses several advantages and disadvantages. The pros and cons lists below can help you determine whether Airbnb investing is a good fit for you and your goals.

Passive income. You can potentially earn a passive income, especially if you hire an Airbnb host and/or a property manager to take care of daily operations for you.

Flexibility. You can stay at the property whenever you want. Block out dates when you want the property for yourself!

Potentially higher profits. If you have the right data to help you choose a lucrative destination and you set your prices according to industry rates, you can make more money than you would with a conventional rental property.

Assured payment. With Airbnb, guests pay before their stay. In contrast, long-term tenants may make late payments or fail to pay rent entirely.

Guests pay for cleaning and damage. Every booking includes a cleaning fee, and AirCover can reimburse damages that guests don’t cover. You have a security deposit with a long-term rental, but costs for damages in excess of that amount would require a complex and lengthy legal process to recover.

No need for a real estate agent. Airbnb properties are listed on Airbnb, so you don’t need to pay another company to advertise your property and secure tenants for you. That said, you may want to vet guests yourself and you’ll have to if you don’t have Instant Book turned on.

Less income security. Conventional rental properties are almost guaranteed to have long-term tenants. In contrast, an Airbnb property may sit empty during much of your region’s slow season.

Requires more active involvement. Airbnbs require a lot of involvement with setup, communication, checking guests in and out, attending to guests' needs, booking cleaners, and so on. If you do the bulk of the work yourself, your Airbnb could become a part-time or even full-time job.

Higher upfront costs. Airbnbs need to be furnished, decorated, and photographed before they can be offered for rent. In contrast, a conventional rental property simply needs to be insured and in good repair.

Higher operating costs. Airbnb properties have higher monthly costs than conventional rental properties—think toiletries, utilities, internet, TV subscriptions, furniture replacement, an on-site host, gardening services, and so on.

You’ve weighed the pros and cons and decided Airbnb investment is for you. Congratulations! A lucrative career may lie ahead. Now, follow these five steps to start investing in Airbnb real estate.

1. Identify the Best Places to Invest in Airbnbs

Identifying a great market to invest in an Airbnb requires:

Understanding STR regulations in your target markets

Some markets are more STR-friendly than others, which is why you might ultimately invest in one market over another, even if all else is equal. Certain cities have friendlier STR regulations than others. 

For example, the local government in Maui, Hawaii, strictly limits the number of actively listed STRs on the island. This may sound like a detractor for investors, but it’s not that simple. Investors who can manage to secure a licensed STR in Maui find themselves in an enviable position—low supply, high demand, and limited competition.

Do your research into each market to understand not only what their regulations are, but also if they have any special zoning laws, taxes, or occupancy limits that might cut into your profitability.

That said, learning how to research STR markets isn’t just about laws. There are also certain metrics specific to STRs that can help you uncover whether an investment will be as profitable as you hope. Statistics like capitalization rate can reflect both the level of risk of the investment and your potential return. Learning these figures can help you spot a great place to invest.

Keep in mind that a STR-friendly real estate agent with deep knowledge and expertise in the STR market can help inform your Airbnb investing strategy.

Best Airbnb Investment Opportunities in 2024

Growth can be a great indicator of a worthwhile investment.

With that in mind, the top 10 STR markets in 2024 are:

For a better understanding of the markets with the most growth, tap into AirDNA’s latest Best Places to Invest report. It reveals the top 25 Airbnb locations in the country, along with revenue potential for STR investments in each destination.

2. Analyze Airbnb investments and real estate data in each market

Once you’ve picked a location, it’s time to dive deeper into its neighborhoods, zip codes, and adjacent markets. Even after you’ve chosen a city, it’s important to analyze the factors within that city that can make your investment soar: competition, zoning laws, ADR, and more. 

Though you can find some of these figures manually, you can also use tools like the AirDNA app to quickly generate the data you need. 

Virtually all markets have high and low seasons—and that’s especially true for destination markets like lakeside retreats, ski towns, and beach towns. 

Take a look at monthly and daily RevPAR (revenue per available rental, calculated by dividing the total revenue earned by the number of available listings). These metrics can show you when to expect revenue growth, historical travel trends, and booking windows each month of the year. 

Remember: If you’re in a highly seasonal market, you’ll want to factor that into your pricing strategy. 

Tools like the AirDNA app can show you future demand for up to six months so you can get a sense of booking windows, booked rates, year-over-year comparisons, and occupancy rates in your markets. AirDNA also allows you to compare your markets with average historical rates and market projections to estimate your Airbnb income potential. 

While some markets are flooded with vacation rentals, others are hidden gems with high occupancy rates. You can compare the number of active listings with quarterly rental growth, annual revenue trends, occupancy rates per city, and types of amenities to know which property types will fit your portfolio and local competition.

3. Compare Airbnb investment opportunities in multiple markets

Comparing markets is the best way to find a city and a property that meets your investment goals. The simplest way to do this is with the AirDNA app.

If you haven’t settled on a city or zip code to invest in, you can enter up to four locations at a time to compare Airbnb revenue, occupancy, and rate growth. But even after you’ve picked a city, you can drill down on top-performing zip codes and property sizes to maximize revenue and make a profitable investment. 

Be sure to toggle between zip codes and neighborhoods, bedroom counts, and the number of guests the property can accommodate. Don’t forget to compare trend lines for revenue, occupancy, and year-over-year ADR to choose the most profitable combination. 

4. Estimate your Airbnb investment income

Once you've chosen your target market and property size, you’re ready to research rentals for sale. 

Zillow is a great place to start looking for listings that fit your criteria. Start by browsing listings and filtering by budget and desired property attributes. Note down addresses of interest.

Then, use the AirDNA app to calculate projected income based on factors like property type, location, and demand trends.

Input property addresses into AirDNA for rental potential data.

Compare income potential to similar listings in the area.

Consider seasonal variations in demand and pricing.

Estimate operating expenses for net income calculation.

Assess risks like regulations and market saturation.

Pricing your Airbnb strategically is crucial to maximize profitability and attract guests. While there's no one-size-fits-all rate, adjusting your daily rate based on factors like day of the week, seasonality, and market demand can significantly impact your investment's success.

Consider the following strategies to optimize your Airbnb pricing:

Dynamic pricing: Implement dynamic pricing strategies that automatically adjust your rates based on real-time market demand, competitor pricing, and other relevant factors

Seasonal adjustments: Tailor your pricing to reflect seasonal fluctuations in demand. During peak seasons and holidays, you can increase your rates to capitalize on higher demand. On the flip side, you can offer discounts or promotions during off-peak periods to attract guests.

Weekday vs. weekend rates: Recognize that weekdays and weekends may attract different types of guests and have varying demand levels. Adjust your rates accordingly, with higher prices for weekends and lower rates for weekdays to encourage midweek bookings.

Length of stay discounts: Encourage longer bookings by offering discounts for extended stays. Consider implementing tiered pricing structures where guests receive progressively higher discounts for longer durations.

Competitive analysis: Stay informed about pricing trends in your market by conducting regular competitive analysis. Monitor the rates of similar properties in your area and adjust your prices to remain competitive while maximizing profitability.

Value-added services: Enhance the perceived value of your listing by offering additional services or amenities, such as complimentary breakfast, Wi-Fi, or parking. Adjust your pricing to reflect the added value provided to guests.

Guest reviews and feedback: Monitor guest reviews and feedback to gauge the perceived value of your listing compared to competitors. Use this information to fine-tune your pricing strategy and address any areas for improvement.


AirDNA’s vacation rental pricing tool uses data-driven recommendations to propose the best daily rates.

Excel at Airbnb Investing with a Data Tool

Here’s the truth: Finding the perfect property and then pricing it competitively can be challenging and tedious without the right tools. But it doesn’t have to be, whether you’re a first-time investor or simply looking to add to your portfolio. The AirDNA app makes Airbnb real estate investing easy.

With AirDNA, you’ll have the tools, data, and confidence you need to operate a successful STR business at your fingertips. Don’t just take our word for it—jump into AirDNA today and see how easy it is to hit the ground running and watch your Airbnb investment revenue grow.

1. Is having an Airbnb a good investment? 

Investing in Airbnbs can be a great way to expand your income opportunities. Though there is risk involved in Airbnb real estate investments, there are also sizable returns. Many investors see a return of 40% or more, which is far higher than the average percentage yield on a U.S. savings account of just 0.07%. 

Doing your research, making strategic investments, and continually optimizing your listing with the right data can help increase the return on your investments.

Whether or not your Airbnb is profitable depends on several factors. Though many investors do see a solid return on their Airbnb real estate, there is no silver bullet to making a profit as a host. 

Location may be at the top of the list of all the factors that can impact your profitability. 

Destination properties may see a greater return than those in metropolitan areas. Metropolitan areas, however, are often immune to the high and low seasons that affect destination properties. Choosing a market that can sustain your income goals is the first step in paving the way toward profitability.

There is no one answer to “How profitable is owning an Airbnb?” Airbnb investors' earnings vary based on several factors, including property location, size, seasonality, and occupancy rates. 

On average, Airbnb hosts can expect to earn anywhere from a few hundred to several thousand dollars per month in rental income. 

However, keep in mind that individual earnings may fluctuate significantly based on market conditions and how effectively each host prices and markets their STR.

4. What are the risks of investing in Airbnb?

One significant risk of investing in Airbnb is regulatory uncertainty, as many cities and municipalities have imposed restrictions or outright bans on short-term rentals. Violating these regulations can result in fines, legal issues, and even the forced closure of your Airbnb property. Additionally, market saturation in popular tourist destinations can lead to increased competition and lower occupancy rates, affecting your rental income potential.

Another risk to be mindful of is the potential for property damage and liability issues. Hosting short-term guests increases the likelihood of accidents, damages, and disputes, which could result in costly repairs, insurance claims, and legal liabilities. Relying on Airbnb as your sole source of income can be risky, especially during economic downturns or periods of low demand that cause rental income to fluctuate unpredictably.

AirDNA’s powerful yet easy-to-use tools make hosting and investing a breeze. This means having every insight you need, all in one place, always up-to-date.

5. Do I need to live near my Airbnb investment property?

No, you don’t need to live near your Airbnb investment. However, living near your Airbnb offers benefits like easier management and quicker responses to guest needs. 

Being nearby allows for hands-on property oversight and quicker resolution of issues, enhancing the guest experience. Of course, with professional property management services and technology, remote management is feasible. Outsourcing tasks, utilizing apps, and leveraging smart home devices like smart locks empowers you to manage your property from afar. 

Ultimately, whether to live near your Airbnb property depends on personal preferences and resources.

Ready to carve out your slice of the Airbnb investment pie? Dive into our guide for insider strategies and data-driven tips.

Airbnb vs. Conventional Rental Investment

5-Step Guide to Airbnb Investment - Strategies & Opportunities

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