Buying our first short term rental property

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Buying our first short term rental property

Jon Luft
Rental Property Investor · Boyertown Pa · Member since 2019 · 4 posts · 1 vote

Hi everyone! My fiancé and I are looking to buy our first short term rental property. What does everyone think is the most profitable area to purchase in? We are willing to spend up to 500,000. Any tips and information is greatly appreciated thank you! 

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Jeff Roth
Real Estate Consultant · Ann Arbor, MI · Member since 2022 · 460 posts · 250 votes
1y

Hi Jon from Boyertown, PA-

You and your fiancé are interested in buying your first short-term rental and wonder profitable areas to purchase with a budget up to $500,000.

I would look at places along the west coast of Michigan, Grand Rapids, Kalamazoo, and near Ann Arbor, MI.

It is important to understand the local STR regulations in each community and partner with a property management company that can help your navigate that and manage it well for an excellent guest experience.

Don't forget to look into bonus depreciation and doing a cost segregation study to increase the tax benefits of ownership and if you "materially participate" in the management of the property per IRS guidelines it can offset active W-2 income which most real estate cannot.

To Your Success!

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  • Jules Aton
    MD/DC · Member since 2024 · 1k+ posts · 1k+ votes
    1y

    Welcome, and congratulations! The first one is exciting. I have always preferred to stay in the areas I know and that are within a reasonable driving distance for me 90ish minutes from my home. It is helpful to have your eye on neighborhood changes as well as being able to get there quickly if needed. 

    0Reply
  • Collin HaysBusiness Member
    Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
    1y

    Congratulations! You can find profitability most anywhere - probably even in your own backyard.  Find an area to focus on, research it for 6 months, then score a deal.

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  • Travis TimmonsPro Member
    Rental Property Investor · Ellsworth, ME · Member since 2021 · 1k+ posts · 2k+ votes
    1y

    Wherever you have a subject matter expertise. If you can't think of one, find a niche and start studying. My general rule of thumb is that a property needs to do 15-20% of the purchase price in gross rental income. That kind backs out to 12-15% cash on cash return. 

    Collin is correct - take your time and go slow. I researched and studied for about year before buying my first STR. It was a lot of stalking airbnb and vrbo calendars. If you track listings a full lap around the calendar, you get a real idea of the revenue comps in an area. I'd rather trust that research than something like airdna or rabbu.

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  • Jon Luft
    OP
    Rental Property Investor · Boyertown Pa · Member since 2019 · 4 posts · 1 vote
    1y

    Thanks everyone! We have been looking in the smoky mountain area, Florida, and north/south Carolina. Is the Gatlinburg/ pigeon forge area over saturated? We have 3 long term rentals now and we can’t decide if it would be a better investment to go short term or stay long term. 

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  • Andrew SteffensBusiness Member
    Tampa, FL · Member since 2022 · 3k+ posts · 3k+ votes
    1y

    I think there are a few types of people when it comes to this oft asked questions.  At the risk of overgeneralizing, I will put them into categories:

    1 - The close to home folks - For many this purchase is large and perhaps a bit scary. Being 30, 60, 90 mins away ensures you can touch your property basically whenever you want. But, it may not offer the ROI as other locales, and it may not be "fun" like buying in a favorite vacation spot.

    2 - The highest ROI folks - Self explanatory, will go where ROI is high and/or regulation low.

    3 - The second home/retirement minded - These people are looking for minimal ROI but want the house in a specific location because they like to use the property and want it to pay for itself.\

    Either way, as mentioned above, take your time and do you research.  Good luck :)

    [email protected]813-563-0877
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  • Jeff Roth
    Real Estate Consultant · Ann Arbor, MI · Member since 2022 · 460 posts · 250 votes
    1y

    Hi Jon from Boyertown, PA-

    You and your fiancé are interested in buying your first short-term rental and wonder profitable areas to purchase with a budget up to $500,000.

    I would look at places along the west coast of Michigan, Grand Rapids, Kalamazoo, and near Ann Arbor, MI.

    It is important to understand the local STR regulations in each community and partner with a property management company that can help your navigate that and manage it well for an excellent guest experience.

    Don't forget to look into bonus depreciation and doing a cost segregation study to increase the tax benefits of ownership and if you "materially participate" in the management of the property per IRS guidelines it can offset active W-2 income which most real estate cannot.

    To Your Success!

    1Reply
  • Basit SiddiqiBusiness Member
    Accountant · New York, NY · Member since 2015 · 8k+ posts · 3k+ votes
    1y

    You should consider making an investment in an area where you have a competitive advantage others. I.E. you know the area better than others.

    Is there a short-term rental market where you vacation at, where you went to college or where you grew up in?

    [email protected]917-280-8544
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  • Erik EstradaBusiness Member
    Lender · Member since 2022 · 6k+ posts · 1k+ votes
    1y
    Quote from @Jon Luft:

    Hi everyone! My fiancé and I are looking to buy our first short term rental property. What does everyone think is the most profitable area to purchase in? We are willing to spend up to 500,000. Any tips and information is greatly appreciated thank you! 


     Hi Jon, 

    Have you lined up the financing yet?

    [email protected]818-269-7983
    LuxePrivate Investments LLC 572 Reviews
    WebsiteView Page
    0Reply
  • Olivia Feller
    Interior Decorator · Northern Indiana · Member since 2023 · 8 posts · 2 votes
    1y

    Hi Jon! How exciting! As you allocate your budget, I'd suggest factoring in a decent portion for interior design/furnishings and amenities. Many investors, especially those coming from the LTR space, tend to squeeze themselves in the purchase price and rehab, leaving design as an afterthought. But this is really your first touchpoint with potential guests who are scrolling the endless options of airbnb, vrbo, etc. If you aren't standing out in the first 30 seconds with eye-catching design, you're leaving money on the table and missing occupancy that could be yours.

    If you're interested in brainstorming the creative end, this is our bread and butter! My sister and I founded Abideaway to help short term rental hosts increase their profitability and guest experience through interior design, mural painting, and digital branding—in essence, a suite of creative services to set them apart :) We work nationwide and would be happy to help wherever you land.

    Would love to chat with you to learn more about your direction and see how we can assist. If interested, please message me or find us at abideaway.com and we'll find a time! Regardless, best of luck in this new endeavor!

    0Reply
  • Andrew Street
    Member since 2019 · 1k+ posts · 292 votes
    1y

    Hi Jon! Congrats on starting your short-term rental journey! The best area really depends on your goals—whether you’re looking for steady year-round bookings, high seasonal demand, or strong appreciation. Popular markets often include beach towns, mountain retreats, and areas with strong tourism.

    It’s also important to research local regulations, occupancy rates, and management costs to make sure the numbers work. Wishing you the best on your search—happy to connect and chat more! 

    1Reply
  • Rob Anteau
    Charlotte, NC · Member since 2017 · 29 posts · 19 votes
    1y

    There is so much that goes into buying an STR, especially your first one. I would highly recommend you listen to all the podcasts from Kenny Bedwell - Cashflow Positive. Provides a lot of content on what to consider when buying an STR. He even provides a service to help you find the right one. I've never used his service, but it may be something you want to consider. Best of luck in your search!

    0Reply
  • Vince Scipione
    Realtor · Scranton / Pocono Mountains, PA · Member since 2020 · 99 posts · 33 votes
    1y

    Most states have very desirable areas to start investing in STR's. My recommendation would be somewhere close by so you can manage it yourself. Your first year will be a learning experience, you will want to be close to the action, as you may not have the capital to pay someone to handle everything. Most successful STR owners I work with in the Pocono's/Lake Wallenpaupack PA utilize only someone to clean, and a few local handymen. The cleaner will actually do all the shopping for the rental among other small misc things. They charge ~$120 a stay usually a 2-3 night minimum.

    You are in PA? How about checking out the Pocono's. It is a hotspot. I personally know of top 1% Airbnb homeowners that are flushed. Lakefronts can command a $900 /night stay, there are many ski resorts close by which help offset winter vacancy rates. 


    1Reply
  • Jon Luft
    OP
    Rental Property Investor · Boyertown Pa · Member since 2019 · 4 posts · 1 vote
    1y
    Quote from @Erik Estrada:
    Quote from @Jon Luft:

    Hi everyone! My fiancé and I are looking to buy our first short term rental property. What does everyone think is the most profitable area to purchase in? We are willing to spend up to 500,000. Any tips and information is greatly appreciated thank you! 


     Hi Jon, 

    Have you lined up the financing yet?


     Hey Erik! we have talked with a broker but haven’t lined anything up yet. Do you have any recommendations?

    0Reply
  • Erik EstradaBusiness Member
    Lender · Member since 2022 · 6k+ posts · 1k+ votes
    1y
    Quote from @Jon Luft:
    Quote from @Erik Estrada:
    Quote from @Jon Luft:

    Hi everyone! My fiancé and I are looking to buy our first short term rental property. What does everyone think is the most profitable area to purchase in? We are willing to spend up to 500,000. Any tips and information is greatly appreciated thank you! 


     Hi Jon, 

    Have you lined up the financing yet?


     Hey Erik! we have talked with a broker but haven’t lined anything up yet. Do you have any recommendations?


     I am happy to connect! 

    [email protected]818-269-7983
    LuxePrivate Investments LLC 572 Reviews
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    0Reply
  • Jon Luft
    OP
    Rental Property Investor · Boyertown Pa · Member since 2019 · 4 posts · 1 vote
    1y

    Hi Vince! We are in PA about a hour and half from the poconos. I will definitely check out that area. I see you are a realtor do you service that area? 

    0Reply
  • Vince Scipione
    Realtor · Scranton / Pocono Mountains, PA · Member since 2020 · 99 posts · 33 votes
    1y
    Quote from @Jon Luft:

    Hi Vince! We are in PA about a hour and half from the poconos. I will definitely check out that area. I see you are a realtor do you service that area? 

    Yes I am, I have been a resident of the poconos going on 6 years, and have been an agent for 12. I would love to connect with you Jon! 
    0Reply
  • Dustin TaylorBusiness Member
    Realtor · Blue Ridge, GA · Member since 2020 · 62 posts · 22 votes
    1y
    Quote from @Jon Luft:

    Hi everyone! My fiancé and I are looking to buy our first short term rental property. What does everyone think is the most profitable area to purchase in? We are willing to spend up to 500,000. Any tips and information is greatly appreciated thank you! 


    This going to highly depend on your finance position and what your definition is on the most profitable area. Are you specifically looking for COC, ROI, ROE, etc?? COC will make you money now and appreciation will make you wealthy! Im a realtor and investor in Georgia. I have a large network with other STR investors across the country. Id be happy to answer any questions you have about STR investing and certain markets. All this will depend on your goals. There is so much more to consider in the STR space than you may realize. Give me a call or send me a message! Happy to connect!

    [email protected]
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  • Raymond J. RodriguesBusiness Member
    Lender · Miami, FL · Member since 2017 · 1k+ posts · 797 votes
    1y

    @Jon Luft if you're looking in FL around the Tampa Bay area, reach out to @Josh Green! He'll help you make sense of the numbers. May have to increase your budget to 550k range tho. 

    [email protected]619-456-8311
    Helm Mortgage Corp.5125 Reviews
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