Investing in short-term rental properties can be quite rewarding if you know where to look. It’s all about location, location, location! There are several cities around the globe that are proving to be gold mines for short-term rental investors. In this blog post, we will explore seven of the top short term rental markets for 2023 based on factors such as rental demand, property prices, and local regulations. If you’re considering investing in or starting a short-term rental business, these are the locations you should be keeping an eye on.
Orlando is famous for its theme parks like Disney World and Universal Studios, attracting millions of tourists each year. This makes it one of the most desirable locations for short-term rentals. Besides, Orlando has a thriving economy and growing population which creates a high demand for housing. The city’s relatively affordable real estate market alongside robust tourism makes it an excellent choice for short-term rental investors looking to maximize their return on investment in 2023.
Nashville, the country music capital of the world, is another promising market for short-term rentals. The city attracts visitors with its vibrant music scene, rich history, and southern charm. Over the past few years, Nashville has experienced rapid growth in both population and job market which has increased the demand for housing. Short-term rentals in popular neighborhoods close to downtown or music venues can yield substantial profit margins.
With its captivating history, picturesque landscapes and affordable living costs, Lisbon has become one of Europe’s most sought-after tourist destinations in recent years. This Portuguese city offers a favorable environment for short-term rental investors with flexible zoning laws and low property acquisition costs. From charming apartments in historic neighborhoods to modern condos boasting breathtaking views, short-term rental opportunities in Lisbon are plentiful and diverse.
As Canada’s largest city and a major global financial center, Toronto attracts a steady stream of business travelers, tourists, and students. This creates a high demand for short-term rentals throughout the year. Toronto’s strong economy and stable real estate market make it an excellent choice for investors seeking consistent rental income. Furthermore, the city’s vibrant culture, diverse culinary scene, and numerous attractions ensure there are always people looking for places to stay.
Cancun is a popular vacation destination known for its beautiful beaches and vibrant nightlife. The city enjoys a year-round influx of tourists which guarantees constant demand for short-term rentals. Whether you invest in a beachfront condo or a property closer to the city center, Cancun offers attractive rental yields. Additionally, the cost of property maintenance is relatively low in Mexico which further enhances the return on investment.
With its blend of rich history, stunning architecture, and delicious food, Barcelona is one of Europe’s top tourist destinations. The city offers a variety of short-term rental opportunities from quaint apartments in the Gothic Quarter to luxury villas overlooking the Mediterranean Sea. Although Barcelona has stricter rental regulations compared to other cities, its high tourist demand and robust real estate market make it an appealing option for discerning investors.
Sydney is Australia’s largest city and a major hub for both domestic and international tourism. Known for its iconic landmarks like the Sydney Opera House and Harbour Bridge, the city attracts millions of visitors each year. While property prices are on the higher end, Sydney’s thriving tourism industry ensures a steady demand for short-term rentals. Investing in prime locations like the Central Business District or near popular beaches can generate significant rental income.
Renowned for its world-class vineyards and rich history, Bordeaux is a top choice for short-term rental properties. The city sees a high volume of tourists each year, especially wine enthusiasts looking to explore the famous Wine Route. Besides, Bordeaux offers an attractive quality of life with its peaceful environment, beautiful architecture and proximity to both the ocean and mountains. The city’s property market is stable and offers ample opportunities for investors with a keen eye for value and potential. Whether it’s a quaint cottage in the countryside or a stylish apartment in the city center, you’ll find plenty of prospects here.
Austin, a city known for its live music scene and vibrant culture, offers promising prospects for short-term rental investments. The city has seen significant growth over the past decade due to its booming tech industry attracting young professionals from all over. Coupled with numerous events such as SXSW and Austin City Limits Music Festival, there’s always a high demand for temporary housing. Despite rising property prices, Austin’s thriving economy and consistent demand make it a sound investment.
Queenstown, New Zealand
As one of the leading tourist destinations in New Zealand known for its outdoor activities and breathtaking landscapes, Queenstown fosters a robust market for short-term rentals. The town sees a constant flow of tourists year-round seeking adventures in bungee jumping, skiing or hiking. Furthermore, properties in Queenstown are known to hold their value well due to the limited land available for development. Despite stricter regulations on short term rentals, high demand makes this location worth considering.
The eternal city of Rome, filled with historical landmarks, rich culture and Italian cuisine, attracts millions of tourists each year. This constant influx provides abundant opportunities for short-term rental investors. From apartments with views of the Colosseum to cozy homes in Trastevere, Rome offers a variety of options for tourists and business travelers alike. Despite higher property prices and strict regulations, the city’s enchanting allure and steady tourist flow make it an attractive investment choice.
As a major tourist hotspot known for its beautiful beaches and tropical climate, Maui presents an excellent opportunity for short-term rental investments. The island attracts visitors all year round looking for a tranquil getaway. You can consider investing in properties close to popular beaches or near tourist attractions like the Road to Hana or Haleakala National Park. While property prices can be high, the potential return on investment from consistent rental demand is promising.
Tokyo is a city that blends traditional culture with modern living, making it a unique and exciting destination for tourists worldwide. This cosmopolitan city is consistently packed with business travelers and tourists creating a high demand for short-term rentals. Tokyo’s real estate market is stable and with the city’s efficient transportation system, properties in diverse neighborhoods could turn out to be lucrative investments.
Known as ‘The City of Spas’, Budapest has been growing in popularity among tourists for its thermal baths, rich history, and relatively affordable cost of living. Budapest’s real estate is comparatively cheaper than other European cities, making it an attractive destination for short-term rental investors. With increasing tourist numbers each year, properties in prime locations like District V or around the Castle Hill can yield substantial returns.
Frequently Asked Questions
1. What should be considered before investing in short-term rental properties?
Before investing in short-term rental properties, consider factors such as location, property price, potential rental income, local regulations regarding short-term rentals, and the overall demand for rentals in the area.
2. How is the return on investment calculated for short-term rentals?
The return on investment (ROI) for short-term rentals is calculated by dividing the annual rental income by the total cost of the property, including purchase price and renovation costs.
3. Is investing in short-term rentals profitable?
Investing in short-term rentals can be profitable if done right. It largely depends on factors like location, occupancy rates, rental yield and your ability to effectively manage the property.
4. What are the risks involved in investing in short-term rentals?
Risks involved include property damage by tenants, vacancies, changes in local regulations that may impact short-term rentals, and unexpected maintenance expenses.
5. Can a short-term rental business be managed remotely?
Yes, with the help of property management companies or digital platforms that facilitate key exchanges, cleaning services and more, a short-term rental business can be managed remotely.
6. Are there any tax implications for owning a short-term rental property?
Yes, rental income is typically considered taxable income. However, certain expenses related to the rental property may be deductible. It’s advisable to consult with a tax professional for guidance.
7. Do I need special insurance for a short-term rental property?
Yes, regular homeowner’s insurance may not cover damages or liability from tenants. You will likely need a specific short-term rental insurance policy.
8. How can I increase the profitability of my short-term rental property?
Profitability can be increased by improving the property’s appeal through decor and amenities, optimizing pricing according to demand, and ensuring your listing is effectively marketed.
9. Can I turn my own home into a short-term rental?
Yes, many people rent their primary residences on a short-term basis when they are away. Be sure to check local regulations first as some areas have restrictions on this.
10. Do I need a license to operate a short-term rental?
Requirements vary by location, but many cities do require hosts to obtain a business license or special permit to operate a short-term rental.
11. What is the best way to advertise my short-term rental property?
The most common way is through online platforms like Airbnb, Booking.com, and VRBO. Having professional photos and an engaging description can make your listing stand out.
12. How do I handle maintenance and cleaning of the rental property?
You can either handle it yourself if you live nearby or hire a local property management company or cleaning service.
13. How do I handle check-ins and check-outs for my property?
This can be managed through self check-in systems such as lockboxes or digital locks, or by hiring a local property management company.
14. What should I do if my property gets damaged by a tenant?
You should document the damage with photos, notify your insurance company, and contact the tenant to recover costs. Some online platforms offer host protection policies for such situations.
15. How can I ensure a steady stream of bookings for my short-term rental property?
Ensure your property is competitively priced, well-advertised, and offers amenities that meet or exceed guest expectations. Encourage positive reviews from past guests to boost your property’s reputation.
Embarking on a journey into short-term rental investment can be both challenging and rewarding. Armed with the knowledge from this guide, you’re now better prepared to make informed decisions and potentially see significant returns. Remember, success in the short-term rental market hinges on a carefully considered investment strategy, excellent customer service, and a property that meets or exceeds guests’ expectations. So whether you’re considering an urban apartment in Toronto or a beachfront villa in Cancun, the world of short-term rentals is ripe with possibilities!