The Essentials: Location — Choosing Where to Buy Your First Short-Term Rental

How do you screen markets: permits first, demand second?

Build a shortlist of three to five candidate markets and rank them by STR permit availability before ranking them by revenue potential; a market with strong demand and a permit moratorium isn't a real option no matter how good the comp data looks on paper. Within a permit-friendly market, look at how saturated the existing STR supply already is relative to demand drivers such as a festival calendar, a hospital system, a university, or a ski resort, rather than just total annual visitor numbers, since oversupply compresses occupancy across the board even in genuinely popular destinations that draw plenty of tourists.

Distance to the Demand Driver Determines Everything

A property five minutes from a trailhead, stadium, or downtown entertainment district consistently out-books one twenty-five minutes away at the same price point, even within the boundaries of the same city, because guests are booking around a specific activity rather than the city name itself. Map your candidate properties against the actual thing bringing visitors to the area, not the geographic city center, since 'downtown' and 'the reason people are visiting' aren't always the same location, a mountain town's ski lift base area versus its historic main street being a common example of that mismatch. Drive the actual route a guest would drive from the highway exit or airport, at a realistic time of day, rather than trusting a map app's optimistic estimate.

Can parcel-level zoning override a city's short-term rental rules?

Some cities permit short-term rentals citywide in principle but layer additional restrictions by zoning district, overlay area, or historic district designation, meaning a property two blocks apart can operate under completely different rules despite sharing the same city-level policy. Check the specific parcel, not just the general city-wide policy summary, before committing to a location, since the parcel-level answer is what actually governs whether you can operate there at all.

How do you estimate income and occupancy before you buy?

Use at least two data sources rather than one: AirDNA, Mashvisor, or Rabbu for market-level averages, and a manual review of 10-15 comparable listings within a mile or two that match your bedroom count, amenities, and review score. Look at each comp's calendar for blocked dates to estimate real occupancy, and compare nightly rates in shoulder and peak seasons. Discount any estimate that assumes 80% or higher occupancy year-round. Then run the deal at conservative occupancy, a rate 10-15% below comps, and a higher expense ratio than a long-term rental, since cleaning, supplies, utilities, software, platform fees, taxes, and maintenance can consume a large share of revenue. Underwrite the property so it still works if bookings come in below the average.

What property features drive bookings in each type of market?

Beach and lake markets reward outdoor space, parking for boats or several cars, and sleeping capacity for groups. Ski and mountain markets need gear storage, heat, and winter-ready access, so check plowing and road maintenance. Urban markets favor walkability, quiet, and parking or transit access. Hot tubs, game rooms, and views can lift nightly rates but add insurance, maintenance, and permit questions. Count real sleeping spaces the way the city does, since some jurisdictions cap occupancy by bedroom count. Buy for the guest group your market actually draws.

Does walkability or remoteness matter for self-check-in?

Use at least two data sources rather than one: AirDNA, Mashvisor, or Rabbu for market-level averages, and a manual review of 10-15 comparable listings within a mile or two that match your bedroom count, amenities, and review score. Look at each comp's calendar for blocked dates to estimate real occupancy, and compare nightly rates in shoulder and peak seasons. Discount any estimate that assumes 80% or higher occupancy year-round. Then run the deal at conservative occupancy, a rate 10-15% below comps, and a higher expense ratio than a long-term rental, since cleaning, supplies, utilities, software, platform fees, taxes, and maintenance can consume a large share of revenue. Underwrite the property so it still works if bookings come in below the average.

Why compare STR and long-term rental zoning district by district?

Within the same city, some residential zoning districts permit long-term rentals freely but restrict short-term rental use specifically, while a nearby mixed-use or commercial-adjacent district might allow STR with fewer restrictions precisely because fewer full-time residents live there to file noise complaints. Widening your search to include these less-obvious districts, rather than fixating on the most 'charming' residential blocks, can surface properties with both looser operating rules and less competition from other STR listings targeting the same guests.

Visit at the Time of Day and Week You're Actually Marketing To

A property that looks perfect on a quiet Tuesday morning showing can feel completely different on a Friday night when it's next to a bar's overflow crowd or a street that turns into event parking, so walk the block at the times your target guest would actually be arriving and staying. This is a five-minute check that costs nothing but catches problems a daytime drive-by, which is how most buyers evaluate a location, will simply never reveal.

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