Summary: What is the best market for investing in a short-term rental in 2023? That’s the burning question for many who are looking to break into the market with their first purchase or for those looking to grow their portfolios. We know there are a lot of lists out there and none are perfect for selecting the best market. What we like to do when selecting a market is to triangulate the data from multiple sources to inform our decision. Our market list is different from some of the other lists because we developed it based on where the members of our community have chosen to invest and insights from them about what is actually happening in the market.
Over the last two years, short-term rentals, have been booming!
There are many reasons for this, a lot of it was related to the COVID lock-down and then the post-COVID travel boom.
For our community, the increase in interest was probably largely driven by the short-term rental tax loophole. When the community saw that this was a way to shelter their high W2 incomes while continuing to work full time, it was a no brainer for many to add short-term rentals to their portfolio.
This prompted us to develop a short-term rental course because we were concerned that many were diving into short-term rentals without properly assessing the risk and putting in measures to mitigate that risk. A big part of that is choosing the right market.
Two years later, we now have members of our community who have gone out and bought over 400 short-term rentals and counting!
Given the large numbers, we thought it would be useful to analyze the data to give us insights about where they chose to invest.
We hope these insights help you when choosing your market!
[Editor’s note: If you are planning a trip to any of the markets where our students own short-term rentals, consider staying at one of their rentals! If you book directly with them, you can often get a discount. CLICK HERE to see a list of our community member’s short-term rentals]
Top Markets
The methodology we used to identify top markets was based on a combination of quantitative and qualitative data.
The quantitative data largely looked at where members of our community are investing but was also supplemented with publicly available data sources.
The qualitative data was based on interviews with our students to gain insights into what is actually happening in the market. I asked questions like, how has occupancy changed over 6 months? What has happened to prices? Have you noticed an increase in competition? How has that changed the market?
Here are the top markets, listed alphabetically.
Broken Bow, Oklahoma
This is known as a vacation spot, not for Oklahomans but for Texans. This makes sense, it’s only about a 3 hour drive from Dallas, one of the busiest metropolitan areas in the U.S. It’s a popular destination year round, which is an important consideration for short-term rental owners because any type of seasonality can really kill your bottom line. Having a location that is popular year round is a dream for short-term rental owners. If you’re buying in Broken Bow, chances are you’ll be buying a cabin. According to our students, a hot tub, fire pit and great home entertainment options (e.g., games, pool table) are musts.
Blue Ridge, Georgia
Similar to Fredericksburg, this pick is less about the town of Blue Ridge but more about the Blue Ridge Mountains. This is another winner because the Blue Ridge Mountains are close to the booming Atlanta metro area (1.5 hours). Like Broken Bow, you’ll find a lot of cabins and the you’ll want to stock your place with the same type of amenities (hot tub, home entertainment). Similar to the other picks on this list, this is also a year round destination.
Fredericksburg, Texas
This is less about Fredericksburg and more about Texas Hill Country. Texas Hill Country is a vast area in Central and South Texas that many of our students chose for their market. The nice thing about Fredericksburg because it’s fairly close to BOTH Austin and San Antonio. Two major metropolitan areas. Fredericksburg is also known for its wineries, great restaurants and shopping, making it a very popular destination. This is also a year-round destination, another important consideration for short-term rental investors.
Gulf Shores, Alabama
This has been an under-the-radar destination compared to the beach towns of 30A (for those who don’t know, this is a 20 mile stretch of highway along the Florida panhandle coastline). Of course, 30A is extremely popular among our community members BUT it didn’t make the list because it is TOO popular and generally over-priced. On the other hand Gulf Shores is more affordable with essentially the same, beautiful beaches as 30A.
Greater Palm Springs, California
This one might surprise you because the homes in this area can be pretty spendy. The reason it’s on the list is that the demand for rentals is high and you can command very high prices. This area is also referred to as Coachella Valley because of the famous music festival that is held there each year. In addition to Coachella, the area is known for a number of other annual events. This is a boon for investors because prices can jump up several times the normal rate during these events.
Smoky Mountains, Tennessee
This is one of the most popular short-term rental markets among members of our community. The area includes Pigeon Forge, Gatlinburg and Sevierville. It’s a popular tourist destination with attractions like Dollywood and Great Smoky Mountains National Park. While the number of short-term rentals in this area have skyrocketed, it seems occupancy has remained steady according to our members.
Scottsdale, AZ
This is another popular short-term rental market among our community members. The area attracts a large number of visitors year round, which is ideal for investors. People come to the area for the weather, great shopping and golf. Over a dozen major league baseball teams come to the area for spring training. The great thing about this area is that you aren’t only catering to short-term renters. You can attract guests of all types, going to Scottsdale for a variety of reasons, for example, medical reasons, work, and weddings to name a few. This means that you aren’t going to be as impacted if a recession hits and people stop going on vacations.
So What’s Your Next Step?
Are you ready to jump in and buy your first short-term rental in one of these markets?
No matter which market you choose, you’ll need to learn how to select the right property, how to set it up so that it stands out among the competition, and you’ll need to learn how to run your short-term rental business profitably.
If you want to short-cut your time to success and be surrounded by a community of like-minded high-income professionals, join us the next time we launch our short-term rental course. You can join our waitlist by CLICKING HERE.
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