Choosing the Right Short Term Rental Market: An Investor’s Guide
Investing in short term rentals is one of the most exciting wealth-building strategies in real estate. But here’s the truth: your success has far less to do with the property itself than with the market you choose. Picking the right location can mean the difference between a high-performing vacation rental that books year-round and a property that struggles to cover its expenses.
In this guide, we’ll walk through how to approach choosing the right short term rental market, the key factors to evaluate, and why working with savvy short term rental agents can help you make smarter investment decisions.
Why the Market Matters More Than the House
When new investors think about short term rentals, they often get hung up on granite countertops, hot tubs, or stylish furniture. While those amenities matter, they pale in comparison to the biggest driver of success: location.
A well-located property in a high-demand vacation market can thrive even if it’s not the fanciest home on the block. But the best-designed house in the wrong market? That’s a recipe for disappointment.
This is why choosing the right short term rental market is the single most important decision you’ll make.
Factors to Consider When Choosing a Short Term Rental Market
Here are the top things you should analyze before buying:
1. Regulations
Local short term rental laws vary widely. Some cities, like New York and Los Angeles, are cracking down hard. Others, like the Smoky Mountains or Gulf Shores, embrace tourism and welcome vacation rentals.
👉 Before you buy, research whether the area has:
-
STR permitting requirements
-
Occupancy taxes or fees
-
Restrictions on how many nights you can rent
The Short Term Shop podcast has 10+ hours of episodes breaking down regulations for every single market we operate in, so you don’t have to dig through city council PDFs alone.
2. Tourism Demand
At the end of the day, you’re running a hospitality business. Your renters aren’t just booking a home; they’re booking an experience. That means you want a market where tourism is already strong.
Look at:
-
Annual visitor counts
-
Seasonality of tourism
-
Reasons people travel to the area (outdoor activities, theme parks, beaches, national parks, etc.)
For example:
-
The Smoky Mountains bring over 14 million visitors per year.
-
The Emerald Coast of Florida has beaches that draw millions of families annually.
-
Broken Bow, OK is a fast-growing cabin market with year-round outdoor appeal.
3. Seasonality and Occupancy Trends
Some markets, like Orlando or Scottsdale, have year-round demand. Others, like ski towns, may see huge peaks in winter and slower shoulder seasons.
Neither is “bad”—it just affects your cash flow planning. Understanding seasonality helps you build realistic revenue projections.
4. Property Prices vs. Rental Income
This is where the math comes in. The best short term rental markets balance:
-
Affordable purchase prices
-
Strong nightly rates
-
Solid occupancy
A million-dollar cabin in Aspen might look glamorous, but a $500,000 cabin in Gatlinburg often produces stronger returns.
5. Accessibility
Is the market within driving distance of major cities? Can guests fly in easily? Properties within a few hours’ drive of metro areas (like Atlanta to Blue Ridge, or Dallas to Broken Bow) often outperform because they attract weekend travelers.
The Role of Data in Choosing the Right Short Term Rental Market
Gut feeling is good, but numbers don’t lie. Tools like AirDNA, PriceLabs, and Redfin housing market reports can help you:
-
Compare average daily rates (ADR)
-
Track occupancy trends
-
Analyze local housing price movements
This is where working with an investor-focused real estate agent is critical. A traditional agent might only talk about granite countertops. A savvy short term rental agent knows how to interpret revenue projections and guide you toward markets where the numbers actually make sense.
Why The Short Term Shop Is the Best Team to Help You
At The Short Term Shop, we’ve helped over 5,000 investors purchase more than $3.5 billion in short term rentals across the U.S.
We aren’t just realtors—we’re investors ourselves. We own hundreds of short term rentals, and we’ve learned firsthand what separates a winning market from a losing one.
When you work with us, you get:
-
Local experts in every major vacation market (Smoky Mountains, Emerald Coast, Blue Ridge, Gulf Shores, Broken Bow, Branson, and more).
-
Access to our Short Term Shop Plus program with weekly Q&As, mentorship, and training on remote self-management.
-
A team that’s been ranked a Top 20 Real Estate Team in the U.S. by The Wall Street Journal / RealTrends.
📌 Ready to start? Book a call with us here.
How to Research a Market on Your Own
Here’s a step-by-step process to begin:
-
Pick 3–4 markets you’re interested in.
-
Check regulations on local government sites or with the help of our podcasts.
-
Run numbers on AirDNA or PriceLabs.
-
Compare purchase price vs. projected revenue.
-
Talk to an expert agent who knows both the housing market and the rental market.
Internal Resources
-
🎧 The Short Term Shop Podcast — 10+ hours of deep dives into every market we serve.
-
📖 Short Term Rental Tax Loophole Guide — how investors use STRs for tax savings.
-
🏡 Buying a Short Term Rental in Broken Bow — a market-specific guide. (We have these guides for all 20 of our markets).
FAQ: Choosing the Right Short Term Rental Market
Q: What’s the number one mistake investors make?
A: Buying in a market without understanding local regulations. Always research laws first.
Q: How much money do I need to start?
A: It depends on the market. Some investors start with $200k cabins in the Smokies, others with $500k beach houses in Florida.
Q: Are big-name cities like Miami or New York good markets?
A: Not always—high regulations and competition make them tricky. Often, regional vacation markets outperform big cities.
Q: How do I know if a market is saturated?
A: Look at occupancy data, ADR trends, and new STR permit issuances. If rates are falling and supply is skyrocketing, tread carefully.
Final Thoughts
At the end of the day, choosing the right short term rental market comes down to doing your homework. Pair solid data analysis with guidance from savvy short term rental agents who live and breathe this industry, and you’ll set yourself up for long-term success.
📞 Contact The Short Term Shop
Phone: 800-898-1498
Email: agents@theshorttermshop.com
STS Plus Membership | Book a Call | Podcast Library
⚠️ Disclaimer: This content is for educational purposes only and is not financial or legal advice. Always consult with your CPA, attorney, or licensed financial advisor before making investment decisions.
