Vacation rentals have long been a lucrative real estate investment choice, and the increasing popularity of short-term rentals has made it possible for more people to get started in this business. While cabins and beach houses are always going to be popular among tourists, travelers are also looking for homes and condos in locations that range from huge urban metro centers to small suburbs near local attractions. Investing in short-term rentals does require a certain level of knowledge about the general market, and knowing what to look for helps you begin the process of looking for homes for sale in Baton Rouge with a keen eye for what will turn the biggest profit.

Know the Three Main Types of Markets

The easiest way to view the short-term rental market is to divide it into three main types. The metro market includes homes in large urban areas that tend to be viewed more for traveling for work than general tourism. New York City, Los Angeles, and Nashville are a few examples of a metro market.

National vacation markets are areas where you expect tourists to fly to visit. For instance, tourists fly their families to Orlando, Florida, and many people are choosing short-term rentals over hotels for the comfort and amenities that they provide such as access to a kitchen.

Regional vacation markets are those where you can expect people to drive to, and these are becoming more popular because of people’s preference to avoid air travel during the pandemic. These tend to be smaller areas, and you can often take advantage of lower home prices to start turning a profit faster.

Analyze the Specifics of Your Preferred Market

You’ll also find that similar markets can still have major differences among them. Once you’ve narrowed down your options to one of the three markets, you’ll want to check into the specifics of different locations. For instance, the average occupancy rates throughout the year might be very different for a place such as Denver compared to Austin. There can also be significant differences in the average price per night and competition you might find in certain locations.

Remember to Factor In Market Resilience

The success of short-term rentals depends a great deal on the economy and general acceptance of them in the communities where they exist. Some suburban areas have strict HOA regulations against short-term rentals that you’ll want to check before you buy. However, many communities welcome them since they work well with other industries within the area. As more business travel opens up, you can expect short-term rentals in metro markets to increase in popularity as well as those in more touristy destinations where people want to explore an area with their friends and family.

Real estate investing does come with a few risks but they are easy to minimize when you know how to do your research. Searching for homes to use as short-term rentals requires a slightly different approach compared to buying a home for personal use. Making sure that the house is near common destinations and has the amenities that your target market needs makes it more likely that you’ll keep the rental booked for the majority of the year.