Do You Evaluate the Property First or the Market First?

Short-Term & Vacation Rental Discussions
5moFollow

Do You Evaluate the Property First or the Market First?

David Blake
Specialist · Sheridan, WY · Member since 2026 · 13 posts · 4 votes

Most STR investors spend a huge amount of time evaluating properties and surprisingly little time evaluating markets.

After analysing several very different STR destinations—including Breckenridge, Whitefish, Moab, Bar Harbor, and Springdale—I've noticed that the strongest markets tend to share a handful of common characteristics:

• Durable tourism demand
• Pricing power (ADR resilience)
• Limited supply growth
• Strong revenue potential
• Long-term destination appeal

What's interesting is that these characteristics show up in very different ways depending on the market type.

For example:

A ski resort market such as Breckenridge derives demand from winter tourism and affluent destination travel.

A national park gateway market such as Moab relies heavily on visitation growth and outdoor recreation trends.

A coastal destination such as Bar Harbor has an entirely different seasonality profile again.

My question for the BiggerPockets community:

When you're evaluating a potential STR market, what metric carries the most weight?

• Occupancy?
• ADR?
• Revenue per listing?
• Supply growth?
• Something else?

I'd be interested to hear how others approach market selection.

2Reply
281 views

Most Popular Reply

John UnderwoodPro Member
Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
5mo

If it is not a good market to start with no point in evaluating properties in a bad market.

7Reply
See this reply in the discussion

18 Replies

Jump to latestLatest
  • Andrew SteffensBusiness Member
    Tampa, FL · Member since 2022 · 4k+ posts · 3k+ votes
    5mo

    I live and operate as a PM and a broker in Tampa FL so I cannot comment on what I do to analyze markets because all I have is here.  Maybe one day I will venture out, always have/had an itch to do it but I am kept so busy here.

    That said 95%+ of my client are out of state so I get a glimpse of their analysis into why they chose Tampa. Mostly its personal reasons and not strictly the numbers. Using Tampa area as an example it has good returns (but probably not the best in the nation), durable demand, its a growing area, has great beaches and is generally a place they will enjoy visiting annually. That tells me most STR investors, or at least the ones I interact do think positive cashflow as well as future appreciation are important, but I think what is more important is its a place they can use and enjoy in the future. I regularly see people choose the property with a slightly lower ROI because they like the house of where it is specifically located.

    These also, in my experience, tend to be the better investors in the long run.  They have some emotional ties to the property.  I have worked with pure investors in the past and they try to squeeze every dollar out of the place.  If you have a good manager there is not a lot you can do to maximize revenue if you have a solid revenue management plan, but you can cut costs.  Too much cost cutting has a negative effect on the property within a few years it can literally be falling apart and hemorrhaging money.

    [email protected]813-563-0877
    Vacation Rentals of Florida53 Reviews
    WebsiteView Page
    4Reply
  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    5mo

    If it is not a good market to start with no point in evaluating properties in a bad market.

    7Reply
  • David Blake
    OP
    Specialist · Sheridan, WY · Member since 2026 · 13 posts · 4 votes
    5mo

    That's an interesting observation and one that probably doesn't get discussed enough.

    A lot of market analysis focuses on occupancy, ADR, revenue, and appreciation potential, but many successful STR investors seem to have a personal-use component in their decision making as well.

    What I've noticed is that markets with strong lifestyle appeal often end up benefiting from multiple demand drivers and that people initially buy because they enjoy the destination, but over time they also benefit from tourism demand and long-term destination popularity.

    I also agree with your point about pure financial optimisation. It's tempting to maximise short-term returns by cutting costs, but guest experience ultimately drives reviews, repeat bookings, and long-term performance etc

    Out of curiosity do you find that owner-occupiers tend to hold properties  longer than purely investment-focused owners?

    0Reply
  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    5mo

    I see both as being very important. A property has to have value in some way to be worth even looking at. Let's say you buy a property as an STR and then the city changes its regulations.....that property needs to be able to operate as a standalone LTR as well, right?

    2Reply
  • Jules Aton
    MD/DC · Member since 2024 · 1k+ posts · 1k+ votes
    5mo

    I'm definitely looking at the area first but with ease of resale always at the top of my list. I still carry a scarcity mindset in some aspects which may contribute to finding value in being able to take my chips and go home at any time. 

    2Reply
  • Collin HaysBusiness Member
    Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
    5mo

    Most markets have to potential to be excellent markets, depending on what you paid.

    [email protected]806-672-7102
    SMOKY MOUNTAIN FALLS INC.51 Review
    WebsiteView Page
    0Reply
  • Mike GrudzienPro Member
    Lender · Eugene, OR · Member since 2019 · 2k+ posts · 1k+ votes
    5mo

    A smart investor looks at all factors in context; there is no one carrying the weight.  Once all the numbers add up, then mix in the investor's personal goals.  May be I want a property just because I like it and the market and it's just a breakeven.

    1Reply
  • Mike GrudzienPro Member
    Lender · Eugene, OR · Member since 2019 · 2k+ posts · 1k+ votes
    5mo

    I will add that your profile says nothing about you or your background: it reads like a piece of advertising for what you are selling...

    1Reply
  • Adam S.
    Member since 2026 · 72 posts · 30 votes
    5mo
    Market > property.  
    1Reply
  • JV Kaufman
    Investor · Gulf Coast · Member since 2026 · 37 posts · 13 votes
    5mo

    Always evaluate market first!

    1Reply
  • Account Closed
    Interior Decorator · Member since 2025 · 82 posts · 42 votes
    5mo

    I would never invest in Bar Harbor unless I had a lot of money to accumulate STR's.

    I live in Maine.

    Better off investing where I live — where almost 80% of the year (April-December) has seasons in which can turn into guest bookings. OR Sunday River areas.

    Bar Harbor is very very seasonal. And small.

    1Reply
  • Nick Sansivero
    Rental Property Investor · Member since 2026 · 56 posts · 30 votes
    5mo

    Identify the market first always, then the property. The market sets your downside and upside. 

    Job growth, supply, rent trends, affordability, and demand determine whether a property has room to appreciate or cash flow. 

    The property comes second because a great deal in a weak market can still underperform, while an average deal in a strong market can do well.

      0Reply
    • Raj Kumar
      Investor · Queens Village, NY · Member since 2016 · 7 posts · 2 votes
      5mo

      Definitely market first and then the property 

      0Reply
    • Burton Williford
      Apex, NC · Member since 2026 · 13 posts · 5 votes
      5mo

      David — market first, every time. The math case is brutal: a B+ property in an A market beats an A property in a B market almost every time on STR, because demand drives ADR which drives RevPAR which drives valuation.

      The framework I score markets on BEFORE looking at a single listing:

      1. Tourism stability — does demand stay year-round, or is it 4 peak months with 8 dead ones?

      2. Pricing power — has ADR grown 4%+ annually over the last 5 years? Markets that don't grow ADR are dying slowly.

      3. Supply growth — how many new STR permits were issued in the last 12 months as a percentage of total active inventory? Over 15% means saturation pressure.

      4. Regulatory risk — is the city actively moving toward STR restrictions? One ordinance can wipe out 30% of cash flow overnight.

      5. Cost basis — can I buy at a price-per-sqft that allows a sustainable cap rate given current ADR and a conservative 60% occupancy?

      If 4 of 5 are green, I look at properties. If 3 of 5, I keep moving.

      The mistake I see new STR investors make is fall in love with a property in a B-tier market because the listing photos are great or the seller is motivated. Then they spend 24 months trying to operate their way out of a market problem. You can outwork a bad property in a great market. You cannot outwork a great property in a bad market.

      Of your 5 examples, Whitefish and Springdale are interesting because both have severe supply constraints (state forest, national park boundaries) that protect ADR even when demand fluctuates. What's your read on the long-term Moab story given the BLM trail access regulatory environment?

      0Reply
    • Bryce Stephens
      Tulsa, OK · Member since 2026 · 8 posts · 4 votes
      5mo

      Market first to build the short list — but the trap I'd flag is treating occupancy and ADR as separate metrics to rank. They trade off against each other, so either one alone will mislead you. A market can flash a gaudy ADR and leave you empty half the year, or grind high occupancy at rates that barely cover the note. Revenue per listing (RevPAR) is the one I lean on, because it's already both of them multiplied together — closest read on what the median real operator there actually pulls.

      The thing I'd add to your list is supply growth, weighted heavier than most people give it. Revenue per listing tells you what already happened; new permits and new listings are the leading indicator of what that number looks like in two years.

      One caveat from my own analysis, and I come at this more from the underwriting side than operating a big portfolio: the market metric is only as good as the resolution you measure it at. I underwrote a San Antonio deal where the city-level averages made it look like it could pencil, then pulled the actual comps within about a mile and occupancy was running closer to 27% — completely different story, and it killed the deal. Good market, bad submarket. So I screen markets on RevPAR and supply trend, then underwrite the specific property like a pessimist.

      0Reply
    • Tyler Divin
      Property Manager · Chattanooga, TN · Member since 2018 · 179 posts · 135 votes
      5mo

      I tend to agree with evaluating the market first but I would also suggest to realistically evaluate your management scenario first.  

      If you're going to self-manage I think it's highly advantageous to stick close to home so that you can drive to the property.  I'm not a believer that turnover person + handyman = save on a management fee.  There has to be someone in the property on a regular basis who's compensation is based on the overall property performance thinking wholistically about how the property (business) operates I would say at a bare minimum quarterly but more often is better.

      If you're going to hire a manager or co-host who will be in the property my suggestion is to do high level market research then make your first call to the local managers.  Make sure there is one or two in the market that you mesh with, that are willing to engage on property selection guidance.  A good manager should know their market and even the sub-markets and can short-cut the learning curve.  They should also have a gut feel for performance that goes deeper than AirDNA.

      1Reply
      • David Blake
        OP
        Specialist · Sheridan, WY · Member since 2026 · 13 posts · 4 votes
        5mo
        Quote from @Tyler Divin:

        I tend to agree with evaluating the market first but I would also suggest to realistically evaluate your management scenario first.  

        If you're going to self-manage I think it's highly advantageous to stick close to home so that you can drive to the property.  I'm not a believer that turnover person + handyman = save on a management fee.  There has to be someone in the property on a regular basis who's compensation is based on the overall property performance thinking wholistically about how the property (business) operates I would say at a bare minimum quarterly but more often is better.

        If you're going to hire a manager or co-host who will be in the property my suggestion is to do high level market research then make your first call to the local managers.  Make sure there is one or two in the market that you mesh with, that are willing to engage on property selection guidance.  A good manager should know their market and even the sub-markets and can short-cut the learning curve.  They should also have a gut feel for performance that goes deeper than AirDNA.


         Thankyou Tyler.  I agree re your comments about good management. People have high expectations and rightly expect good value and service during their stay. If things go wrong during their stay, as they will ineveitably do sooner or later, nothing beats a fast and helpful response.  If you don't have a good management in place, either personally or through an agent, then soon or later your ratings will suffer and from then on everything becomes hard work.

        0Reply
    • Lisa Davis
      Member since 2025 · 31 posts · 11 votes
      5mo

      RevPAL over occupancy or ADR in isolation
      Both can be misleading on their own

      Supply growth is underrated fr
      Markets with natural or regulatory supply ceilings are a different investment than ones where anyone can build or convert

      The variable most investors underweight is regulatory trajectory
      A market that looks strong on paper but has an active council reviewing STR caps is a materially different risk profile
      I track regulatory changes across target markets through Lodge Compliance before making any acquisition decision

      0Reply
    Join the conversationCreate a free account to reply, vote on answers and follow this thread.
    Log InJoin for Free