Investing in a short-term rental can be highly profitable, but success depends on selecting the right market, and a well throughout execution strategy. Before purchasing a property, it’s crucial to evaluate demand to ensure strong occupancy rates and long-term profitability.

While data-driven tools like AirDNA are invaluable, social research and local insights are just as important, and can provide a competitive edge. Here are some steps to help analyze market demand before making your investment.

 

1. Utilize Data-Driven Market Research Tools

AirDNA & Similar Platforms

AirDNA, Mashvisor, and Transparent provide comprehensive data on short-term rental markets. 

These tools offer insights such on:

• • Average nightly rates
  • Occupancy rates
  • Seasonal trends
  • Revenue projections
  • Competitor performance

By analyzing historical and real-time data, you can identify markets with high potential profitability and avoid locations with declining STR performance.

 

Local Tourism and Economic Reports

Check reports from your city’s tourism board or chamber of commerce. 

Key factors to look for include:

• • Visitor statistics (number of annual visitors, peak travel seasons)
  • Major attractions and events (festivals, conferences, sports events)
  • Business travel demand (corporate headquarters, hospitals, universities)

 

2. Conduct Social & Community Research

Data is crucial, but understanding local sentiment and traveler behavior is equally important.

Check Local Facebook Groups and Forums

Local STR and real estate groups can provide firsthand insights from hosts and investors.

Look for discussions on:

• • Current occupancy challenges
  • Popular neighborhoods for STRs
  • Upcoming regulations or restrictions

 

Monitor Airbnb and VRBO Listings

Browse Airbnb and VRBO listings in your target area. 

Pay attention to:

• • Review trends: Properties with consistently high ratings indicate strong demand.
  • Last-minute availability: A high number of unbooked properties may signal low demand.
  • Host turnover: Frequent listing removals could indicate market instability.

 

Explore Reddit and Travel Forums

Reddit communities like r/AirBnB and r/realestateinvesting often share honest opinions on market conditions. Additionally, traveler-focused forums such as TripAdvisor reveal what guests are looking for in a given location.

 

3. Evaluate Local Regulations and Trends

Short-Term Rental Laws

Some cities impose strict STR regulations, including permit requirements, zoning laws, or rental bans.

Check:

• • City and county websites for the latest ordinances
  • Local news for recent regulatory changes
  • STR advocacy groups to understand future risks

Infrastructure and Development Plans

Research upcoming developments that could impact STR demand, such as:

• • New hotels (increased competition)
  • Infrastructure projects (better accessibility, rising property values)
  • Local business growth (more corporate travelers)

4. Test Demand Before Committing

If possible, test the market before purchasing a property. 

Consider:

• • Renting a property in the area and listing it on Airbnb for a few months.
  • Partnering with a current host to manage a listing and analyze performance.
  • Offering a room in your existing home as a short-term rental.

 

5. Compare STR vs. Long-Term Rental Potential

A strong STR market should outperform long-term rentals in terms of revenue. 

Calculate:

• • Average monthly STR income vs. potential long-term rental income.
  • Expense-to-revenue ratio (think cleaning fees, management & marketing costs).
  • Seasonality risks (will slow months still be profitable?).

 

Final Thoughts

Evaluating demand before investing in a short-term rental is essential to ensure profitability. While tools like AirDNA provide valuable data, supplementing this with local social research will give you a deeper understanding of market trends. By analyzing online communities, monitoring regulations, and testing demand before committing, you’ll be well-equipped to make a strategic investment.

By taking a well-rounded approach, you can confidently choose a location where your STR will thrive, delivering strong occupancy rates and maximizing returns.

 

Done with the research, and ready to jump in?

• Book a complimentary consultation with us today!
• Join The PWD Academy for more tips on building your STR business.

 

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