airbnb friendly metro areas

[David Rutledge]

Hi everyone,

I wanted to get some feedback/thoughts on a short term rental strategy I am looking into.

We have 8 strs in TN that are doing very well. These are great but they are all in the Smokies a traditional vacation market so we are looking to diversify and move into some other markets.

We have quite a bit saved up from the cash flow and recent cash out refis. I do not want to go into another vacation market but rather a metro area with a more diversified economy again just to get into a different type of asset.

That being said I do want to continue to short term rent the next few properties we get at least in the first few years of ownership in order to increase cash flow to combat these higher prices and carrying costs before potentially converting to more passive long terms down the line.

Therefore I am looking for markets that 1) have a decent draw of visitors year round 2) have regulations that allow strs in some parts of the city 3) Are in growing cities in the west or south.

Below is a list of markets I have identified as potential places to look and I was hoping to get some insight from either other investors doing the same thing or agents/investors in any of these markets on whether this is potentially a good market to explore or not.

1) Salt Lake City (this is right at the top of my list due to its proximity to ski resorts, expanding of the airport and long term strategic business planning of the area but I have very little knowledge of this market)

2) Denver 

3) Phoenix (used to live in AZ and like the fact that the state of AZ seems to look favorable on strs)

4) Tucson (see above but lower home prices/potentially less appreciation)

5) San Diego/LA (these are attractive because of their proximity to my home in Irvine)

6) San Antonio (love that it is very close to the booming Austin and feel that this is a market that could see some real growth in the future)

7) Tampa/St Pete (I have always been very interested in this market for both short term and long term rentals)

8) Raleigh (have invested in Charlotte and love NC but again very little knowledge on this area)

Any insights or advice on any of this would be greatly appreciated. Thanks so much for your time. 

David

[David Rutledge]

Quote from @Jason Kudo:

@David Rutledge

Realtor here who works with investors in both the STR and LTR markets.

Consider my local area of Long Beach, CA.

Most of LA and Orange County are STR-unfriendly but Long Beach just opened it's regulations to allow non-owner occupied STRs.

Aside from being a beach town in it’s own right, it is quickly becoming an aerospace hub. We have SpaceX, Spinlaunch, Virgin Galactic, and Boeing, etc. Mercedes Benz also has a large facility as well. Long Beach has it’s own airport and will host the majority of the 2028 Olympics water sports at the newly rebuilt Long Beach Olympic Aquatic Center.

Long Beach has some of the best kite-surfing on the west coast, good beginner traditional surfing waves, and stand-up paddle boarding and canoeing through the Naples canals. We are just a heartbeat away from the Orange County beaches for all your more advanced traditional surfing needs and also not far from the South Bay beaches too.

Let me know what questions I can answer for you in regards to the STR market in Long Beach, CA!

 Thanks Jason, I do love Long Beach but I am not sure I can make it work with the home prices. 

[David Rutledge]

Quote from @James Carlson:

@David Rutledge

Like @Jeff Slusarz said, the city of Denver is a no-go for Airbnb investment, but you're right, there are a handful of suburbs that allow them and that have pretty good returns. Adams County will soon allow for them, according to the planner I talked to who is writing the short-term rental ordinance. Centennial allows them, but it's on the south side of Denver, and that's not quite as "hot" as the northwest and west sides of the metro area. I'd consider either Arvada or Wheat Ridge. We have several STR investor clients who've done well in these areas, like this guy in Wheat Ridge and this guy in Arvada. 

Wheat Ridge is a wide, flat city that butts butts up against the city of Denver on Denver's west side. (If you drove west from Denver along 32nd, you'd never know when you cross into Wheat Ridge. It feels like the same city and is so close to the hot areas of the Highlands neighborhood and the Berkeley neighborhood.) Arvada is just northwest of Denver. If you're in Olde Town Arvada -- the charming downtown with shops, bars/breweries and restaurants -- you can be in downtown Denver in 15 minutes. 

The prices in the Denver metro make the Airbnb numbers not quite as good as some other locations, but they're still good, and the long-term appreciation potential remains strong. (And if you're hoping to have a place that you also want to visit, you could do worse than the awesome city of Denver and the great state of Colorado.)

 This is very helpful James. Thanks so much. My wife raves about Denver but I have never been. I want to check it out this summer. 

[Sean Walsh]

@Jeff Slusarz I had a similar experience. To be more precise, Denver's STR policy applies to the entire City and County, not just downtown.

City staff are meticulous at making sure the applicants for a license are in fact the primary residents of the property - including interviewing neighbors. In surrounding municipalities it’s a bit of a patchwork, so be sure to carefully research each city’s website for their regs.

Suburban Denver cities fall into a few categories: 1) those with no STR regs (yet); 2) those where they require the license holder to be the primary resident; 3) those that do not include a primary resident requirement for a license.

Of course do your due diligence, but I’m pretty sure Arvada, Wheat Ridge, Littleton and Centennial are in category 3.

Good luck!

[Steven Foster Wilson]

Quote from @David Rutledge:

Hi everyone,

I wanted to get some feedback/thoughts on a short term rental strategy I am looking into.

We have 8 strs in TN that are doing very well. These are great but they are all in the Smokies a traditional vacation market so we are looking to diversify and move into some other markets.

We have quite a bit saved up from the cash flow and recent cash out refis. I do not want to go into another vacation market but rather a metro area with a more diversified economy again just to get into a different type of asset.

That being said I do want to continue to short term rent the next few properties we get at least in the first few years of ownership in order to increase cash flow to combat these higher prices and carrying costs before potentially converting to more passive long terms down the line.

Therefore I am looking for markets that 1) have a decent draw of visitors year round 2) have regulations that allow strs in some parts of the city 3) Are in growing cities in the west or south.

Below is a list of markets I have identified as potential places to look and I was hoping to get some insight from either other investors doing the same thing or agents/investors in any of these markets on whether this is potentially a good market to explore or not.

1) Salt Lake City (this is right at the top of my list due to its proximity to ski resorts, expanding of the airport and long term strategic business planning of the area but I have very little knowledge of this market)

2) Denver 

3) Phoenix (used to live in AZ and like the fact that the state of AZ seems to look favorable on strs)

4) Tucson (see above but lower home prices/potentially less appreciation)

5) San Diego/LA (these are attractive because of their proximity to my home in Irvine)

6) San Antonio (love that it is very close to the booming Austin and feel that this is a market that could see some real growth in the future)

7) Tampa/St Pete (I have always been very interested in this market for both short term and long term rentals)

8) Raleigh (have invested in Charlotte and love NC but again very little knowledge on this area)

Any insights or advice on any of this would be greatly appreciated. Thanks so much for your time. 

David

Most cities with strong tourist attractions can be great STR markets. One thing you'll want to think about as well is the supply. Thats why I like Columbus, it has a strong STR market but not a lot of supply.

[Jeff Slusarz]

Quote from @Sean Walsh:

@Jeff Slusarz I had a similar experience. To be more precise, Denver's STR policy applies to the entire City and County, not just downtown.

City staff are meticulous at making sure the applicants for a license are in fact the primary residents of the property - including interviewing neighbors. In surrounding municipalities it’s a bit of a patchwork, so be sure to carefully research each city’s website for their regs.

Suburban Denver cities fall into a few categories: 1) those with no STR regs (yet); 2) those where they require the license holder to be the primary resident; 3) those that do not include a primary resident requirement for a license.

Of course do your due diligence, but I’m pretty sure Arvada, Wheat Ridge, Littleton and Centennial are in category 3.

Good luck!

Yes, I should have been more specific it's at the city/county level. And in my situation, my primary residence was on the same lot as my rental unit and they still were pursuing charges even though I asked my neighbors for permission, ran the property for over a year with no complaints and lived less than 100 ft away.

In short, it's just not worth the hassle in Denver City/County right now. 

[Remington Lyman]

Quote from @David Rutledge:

Hi everyone,

I wanted to get some feedback/thoughts on a short term rental strategy I am looking into.

We have 8 strs in TN that are doing very well. These are great but they are all in the Smokies a traditional vacation market so we are looking to diversify and move into some other markets.

We have quite a bit saved up from the cash flow and recent cash out refis. I do not want to go into another vacation market but rather a metro area with a more diversified economy again just to get into a different type of asset.

That being said I do want to continue to short term rent the next few properties we get at least in the first few years of ownership in order to increase cash flow to combat these higher prices and carrying costs before potentially converting to more passive long terms down the line.

Therefore I am looking for markets that 1) have a decent draw of visitors year round 2) have regulations that allow strs in some parts of the city 3) Are in growing cities in the west or south.

Below is a list of markets I have identified as potential places to look and I was hoping to get some insight from either other investors doing the same thing or agents/investors in any of these markets on whether this is potentially a good market to explore or not.

1) Salt Lake City (this is right at the top of my list due to its proximity to ski resorts, expanding of the airport and long term strategic business planning of the area but I have very little knowledge of this market)

2) Denver 

3) Phoenix (used to live in AZ and like the fact that the state of AZ seems to look favorable on strs)

4) Tucson (see above but lower home prices/potentially less appreciation)

5) San Diego/LA (these are attractive because of their proximity to my home in Irvine)

6) San Antonio (love that it is very close to the booming Austin and feel that this is a market that could see some real growth in the future)

7) Tampa/St Pete (I have always been very interested in this market for both short term and long term rentals)

8) Raleigh (have invested in Charlotte and love NC but again very little knowledge on this area)

Any insights or advice on any of this would be greatly appreciated. Thanks so much for your time. 

David

 I have 12 airbnbs here in Columbus, Ohio that I rent out year round. They bring in a lot of cashflow.

[Jack Smith]

Quote from @Remington Lyman:
These are the top 20 cities for STRs in the country as of April 2022 according the Hosty. The bottom quartile is the most investor friendly from a price point perspective with vacancy rate and % of return fairly in line with the rest of these cities.
17. North Canton, Ohio

• Standard price: $270,890
• Rate of Occupancy: 75%
• Average per-day rate: $85
• Average percentage of returns: 5.3%
• Average monthly income: $3810

18. Columbus, Ohio

• Standard price: $222,200
• Rate of Occupancy: 57%
• Average per-day rate: $192
• Average percentage of returns: 6%
• Average monthly income: $2310

I find it just fascinating that North Canton is even on this list as I believe short term rentals are not even allowed within the city limits. But a quick search sure enough shows a number of them, but most are apartments. A new rental registration program is coming Jan 1st, which will close any remaining gaps on rentals in the city. The standard prices shown are what pretty nice SFR are going for in town right now - and good luck finding one, btw. Something just doesn't add up that this small, bedroom community would show up on this list compared to a Columbus or some of these other larger and more attractive metro areas. Something just seems fishy with these results, or maybe I just don't get it.

[David Rutledge]

There are so many "best str market" lists online and they always seem to include cities that do not allow STRs i.e Malibu, Manhattan etc...

[Jack Smith]

@David Rutledge I don't doubt it, but it's a town of about 20,000 people, and aside from this thing a number of miles away called the Pro Football Hall of Fame, there really isn't anything that spectacular to draw tourism in the area... it must all be corporate and maybe kids returning to visit their elderly parents?  Ha... 

The stats can easily show a high occupancy rate if it's an under served community - which makes sense if there's laws against it.  

[David Rutledge]

Quote from @Sean Walsh:

@Jeff Slusarz I had a similar experience. To be more precise, Denver's STR policy applies to the entire City and County, not just downtown.

City staff are meticulous at making sure the applicants for a license are in fact the primary residents of the property - including interviewing neighbors. In surrounding municipalities it’s a bit of a patchwork, so be sure to carefully research each city’s website for their regs.

Suburban Denver cities fall into a few categories: 1) those with no STR regs (yet); 2) those where they require the license holder to be the primary resident; 3) those that do not include a primary resident requirement for a license.

Of course do your due diligence, but I’m pretty sure Arvada, Wheat Ridge, Littleton and Centennial are in category 3.

Good luck!

 Very interesting about Denver. It seems they are one of the more aggressive cities in terms of enforcing str regulations which is quite the opposite to most cities it seems. 

[Grant Schroeder]

@David Rutledge Glad to see your name pop up in the forums! I would definitely recommend Phoenix/Scottsdale or Tucson, AZ as @Emily And Eric Erickson's article points to strength in that market. I am seeing a lot of investors have success in different markets in AZ with STRs right now with not hardly any regulation to inhibit invstors continuing to grow there. @Craig Gerulski runs an AirBnb arbitrage company and I have teamed up with him to take down a couple STRs in AZ recently. If you have questions, about those markets, I would definitely ask Craig our are realtor teammate Carissa Vivirito as she is has 9 STRs herself and is an expert on the local Scottsdale/Phoenix market.

[David Rutledge]

Quote from @Grant Schroeder:

@David Rutledge Glad to see your name pop up in the forums! I would definitely recommend Phoenix/Scottsdale or Tucson, AZ as @Emily And Eric Erickson's article points to strength in that market. I am seeing a lot of investors have success in different markets in AZ with STRs right now with not hardly any regulation to inhibit invstors continuing to grow there. @Craig Gerulski runs an AirBnb arbitrage company and I have teamed up with him to take down a couple STRs in AZ recently. If you have questions, about those markets, I would definitely ask Craig our are realtor teammate Carissa Vivirito as she is has 9 STRs herself and is an expert on the local Scottsdale/Phoenix market.

 Thanks so much Grant. I would love to connect with them. Could you connect me with Craig or Carissa?