How to Find Airbnb Properties to Buy

Buying an investment property to rent out on Airbnb can be an incredibly lucrative strategy to derive profit both in the short term and the long run. However, those who attempt to invest in a vacation rental quickly realize that this might be easier said than done. 

There are a lot of factors that go into locating and purchasing a house which has the potential to turn into a profitable Airbnb. This guide provides a detailed breakdown of the aspects that investors need to consider and the steps that they need to take in order to find Airbnb properties to buy.

Find Out If Buying an Airbnb Property Is Worth It

Before learning how to find Airbnb properties to buy, you should answer the question: Is Airbnb still profitable in 2024 despite all the competition and the regulations imposed over the last decade?

The short answer is: Yes, Airbnb can still be a very profitable strategy. To prove this point, let’s look at some short term rental data.

According to Summer data, in the second half of 2023, the average monthly Airbnb revenue in the US market was $4,608, and this number is likely to have increased in 2024 due to the general inflation rate. 

Meanwhile, the average rent in the US - which translates into the average income from a long term rental property - was $1,535 in mid-2024, based on Apartments.com data. This means that the typical US Airbnb host makes three times more money than the typical landlord. 

Even after accounting for the higher expenses associated with running an Airbnb business than a traditional rental business, Airbnb emerges as the more profitable strategy.

If we move away from revenue and look at ROI instead, things are looking similar. Mashvisor analysis of markets with median property prices below $1,000,000 (controlling for affordability) reveals that in 2023 the nationwide average Airbnb cash on cash return was 3.23%, while the average Airbnb cap rate was 3.28% in 2023.

For comparison, the average values for long term rental properties were around 2.70%. As these return metrics account for revenue and expenses, short term rentals remain the better real estate investment strategy when taking into consideration all factors.

However, the fact that Airbnb properties are on average more profitable than traditional rentals doesn’t mean that every single house has the potential to turn into a good vacation rental or that every market is suitable for this strategy. 

For instance, going back to the Mashvisor data, the average Airbnb CoC return in Atlanta, GA was only 0.06%, compared to 7.94% in Northlake, IL. Zooming into the property level, within the same city one property might barely break even while another one might be running a double-digit profit. Thus, savvy investors need to consider the specific market and the individual property when searching for profitable opportunities.

Factors to Consider When Buying an Airbnb Property

Like any other investment decision, finding a property to rent out on Airbnb must be based on multiple factors. You cannot buy the first property that comes your way and expect it to generate solid profit.

The most important considerations that go into landing a good Airbnb deal include:

• Budget: This should take into account your savings, income, and expenses as well as expected changes in any of these items in the upcoming years. Your budget should include an emergency fund in case of the need for major repairs or your property becoming temporarily inoperational. Once you have a budget, you need to make sure that you stick to it in order to make the monthly mortgage payments and cover all other expenses without risking the profitability of your investment or your financial stability.
• Property prices: Another major factor to consider is the level of home values in the market. You should look for a market with property prices that fit your budget (as well as financing plans) and that result in positive cash flow and good ROI from Airbnb operations.
• Types of guests: In order to find the right type and size of an Airbnb property, you need to take into consideration the type of guests that you plan to cater to. For instance, a small condo in the city center is suitable for hosting business travelers, while a single family home near the beach is fit for welcoming vacationing families with kids and pets.
• Market demand: The Airbnb business is largely driven by local demand. That’s why you should analyze seasonality in tourism trends, the effect of weekends on bookings, any major events that bring short term visitors, and the kind of guests who visit the area most frequently. These factors will help you determine if there is enough demand for short term rentals, for what type of properties, and how seasonality will affect your business.
• Market supply: You need to figure out how many Airbnb listings there are in the area, how well they are performing, what’s available and what’s missing in the market, and whether there is a need for more vacation rentals. If the market is already oversaturated, it’s better to invest somewhere else. If existing listings are able to charge good daily rates and are generally occupied, there’s space for additional short term rentals.
• Airbnb laws: Check out the local short term rental regulations. US locations have introduced varying types of rules and restrictions that aim to protect local residents and housing markets but that have a direct impact on Airbnb hosts and their activities. You need to confirm that Airbnb is legal - albeit regulated - in the area before moving forward with searching for potential investment opportunities.

These are the big-picture factors that go into a profitable Airbnb investment decision. Next, we’ll take a more detailed look at how to work out each of them.

Assess Your Airbnb Property Budget

A good Airbnb property investment is one that is financially sound and stable. That’s why it’s crucially important to find out how much it will cost to start and operate an Airbnb business in your selected market and how you can finance the investment.

Following are the main costs that need to go into an Airbnb investment budget:

Startup costs

The main expenses to get started include the down payment (which usually exceeds 20% for rental properties, at least with conventional mortgage loans, or $73,000 considering an average US home value of $363,438), closing costs (3-6% of the loan amount), property tax, interior design and furnishing (the average cost to furnish a house for Airbnb is $15,000-$40,000), installation of Airbnb smart locks and other home security devices, purchasing linen and other supplies, Airbnb insurance, professional photography services, deep cleaning, getting licenses and permits, and short term rental management tools. 

The total startup cost can vary widely, depending on the market, the property type and size, the level of furnishing, and the short term rental management solution (being a DIY host vs hiring an Airbnb manager). You can check out our Airbnb host checklist for a comprehensive list of everything you need to get your property ready for welcoming guests.

Operating expenses

Owning and operating a vacation rental business is associated with multiple recurring costs. The standard Airbnb costs include Airbnb host fees (equivalent to 3% of booking revenue), marketing and advertising, cleaning, laundering linen, restocking supplies, property tax, rental income tax, Airbnb-related taxes, short term rental insurance, renewing permits and licenses, property and amenities maintenance, property fixes, and Airbnb management software subscriptions or Airbnb property manager charges (usually 25-40% of booking revenue). 

Similar to startup costs, operating expenses can be very different depending on the needs of your Airbnb property and the price level in your market.

Financing methods

Airbnb property investors face multiple financing options and need to figure out the best one for their needs. Very few hosts are able to purchase a house in cash, while many resort to a conventional mortgage. With the latter option, the down payment usually needs to be at least 20% of the property sales price. 

Other options include private money loans and hard money lenders that offer more flexible terms for investors with poor credit history but charge higher interest rates and have shorter repayment periods. Some are able to invest in a short term rental with a home equity loan, home equity line of credit (HELOC), and cash-out refinance.

Debt-service coverage ratio (DSCR) loans can be used to renovate and furnish an investment property. Choosing the best Airbnb loan should be based on the amount of money needed, the purpose (buying a property vs renovating it), the interest rate, the repayment term, and the host’s credit score.

Once you have both sides - the expenses and the financing plan - you need to analyze the budget and make sure that the numbers make sense. You need to find a property that covers the monthly costs, pays back the investment amount, and provides a good return on investment.

Find Your Target Airbnb Guests

The process of how to find an Airbnb property to buy also goes through identifying the type of guests that you plan to host. There are several different kinds of Airbnb guest personas, and each one of them comes with their own set of ideal property features and characteristics.

The main types of Airbnb guests and what they are looking for are:

• Solo travelers: Some people choose to travel on their own to savor local culture, arts, and cuisine without distractions, and they often prefer short term rentals over hotels because of the more personalized experience. While solo travelers need only a small place, they value furnishings, decorations, and experiences that allow them to merge into the local culture.
• Couples: Dating, engaged, or recently married couples look for romantic getaways where they can celebrate an anniversary, a birthday, or Valentine’s Day. They appreciate comfortable private properties in top locations with easy access to restaurants, cafes, and local attractions.
• Families with children: That’s one of the most popular types of guests. These are younger or older families with a couple of children who are looking for a place for their vacation. They frequent the top tourist destinations and look for properties that are spacious enough, offer an outdoor area, and are sufficiently stocked for a comfortable one- to two-week stay.
• Group travelers: Many groups of friends going on vacation choose a vacation rental where they can all stay together, cook together, and party together. They require large properties with amenities like swimming pools and hot tubs. If you plan to cater to group travelers, you need to have clear house rules that specify what gatherings and noise are allowed on site.
• Wedding parties: More and more people opt for getting married in unique Airbnb properties and spending a few days there with their closest relatives. Wedding venues are a special type of Airbnbs that cater to these guests. They need to be spacious and luxurious, have a unique character, and offer plenty of outdoor space for the reception.
• Business travelers: People who travel for business purposes are another special category of Airbnb guests, with their own needs. They expect relatively small properties with easy access to transportation. They value amenities like a high-quality coffee machine, a comfortable working space, and air conditioning.
• Digital nomads/remote workers: After Covid, there has been an influx of remote workers who stay for extended periods of time (a couple of weeks or more) to benefit from the digital economy. These digital nomads enjoy quiet spaces with a home office setup, a furnished kitchen, and a comfortable relaxing area.
• Pet owners: Some travelers choose Airbnb properties over hotels as many of them allow pets. It’s important to consider having a pet-friendly Airbnb to attract more guests who might be solo travelers, couples, or families with furry friends. You can decide on the type and number of pets that you allow. Keep in mind that service animals do not count as pets and cannot be prohibited.
• Travelers with disabilities: You should make sure that your property is accessible for and friendly to people with different disabilities. This includes installing things like a wheelchair ramp and handlebars in the bathrooms. It’s better to find a one-floor property with no stairs.
• Foreign visitors: All the above-listed types of Airbnb guests might be foreigners. In order to cater to their needs, it’s a good idea to have your listing information, communication, and guest guidebooks in multiple languages. It’s also smart to offer Airbnb experiences that showcase the local culture, lifestyle, and food and beverages.

Deciding on your target Airbnb guests will make the process of finding an Airbnb property much easier. You will know the exact property type and features that you need so that you can focus your search on them.

Identify Your Airbnb Market

Location is a key factor in real estate investing, and this holds true for short term rental properties. Thus, when trying to find the best Airbnb property, it’s important to allocate special time and attention to choosing a top market for this strategy.

You should base your Airbnb market decision on the following factors:

• Property values: Check out the listing prices of homes for sale to ensure that this market is affordable for your budget. The price of the property (or the down payment) is the largest startup cost, and you need to invest in a location that you can afford.
• Travel activities: Study trends in tourism activities to know when how many people visit the area each year, whether the number is increasing or decreasing, and when the high and low seasons are.
• Visitors: Find out what types of visitors come to the city and what types of properties and experiences they are looking for. This will help you find the right property and create the optimal experiences.
• Competition: Learn about available Airbnb listings and their performance. Figure out the most popular amenities as well as those that are missing from the market (but might be in demand) so that you can provide something unique.
• Proximity to public amenities and tourist attractions: Focus on neighborhoods that are close to commercial centers (for business traveler guests) or tourist attractions (for culture enthusiast guests) and that provide access to public transportation, shops, restaurants, cafes, and bars.
• Safety: Choose a location that has a low crime rate as guests are unlikely to book a rental where they will need to worry about their own safety. Moreover, in this way, your property will not be subjected to burglary.
• Average daily rates and occupancy: Research what nightly prices existing rentals in the market have and what occupancy rates they generate. You need a market where the expected Airbnb income will be more than enough to cover all investment expenses.
• Long-term appreciation: Look for a market with strong long-term real estate appreciation rates. In this way, you will make money not only in the short term (from Airbnb revenue) but also in the long run (when you sell your property).

Choosing one of the best Airbnb locations should be based on all these factors to achieve success.

Understand Short Term Rental Laws and Regulations

After you’ve identified a market that looks like a profitable location for Airbnb properties, you need to check if short term rental activities are legal and relatively unrestricted. Short term rental laws are highly localized, with major differences across US states, counties, and cities. 

While the objective is to guarantee the safety and comfort of local residents and the affordability of housing prices, the ultimate effect of these regulations is that they impose a lot of restrictions on hosts.

The main types of regulations include:

• Business registration and licensing: Many local authorities require Airbnb properties to obtain a business registration as well as additional licenses and permits that need to be regularly renewed.
• Taxes: In most locations, short term rentals are expected to pay state, county, and/or municipal taxes like transient occupancy tax (TOT), lodging tax, or sales tax.
• Zoning regulations: In some markets, vacation rentals are only allowed in certain zones (commercial areas) and prohibited in others (residential areas).
• Ownership: Some US cities permit only primary residences to be rented out on a short term basis and often require the host to be present on site during guest stays.
• Limits on the number of guests: Frequently, authorities allow only two adult guests per bedroom and also put a cap on the maximum number of overnight guests per property.
• Limits on the number of days rented: In some cities, hosts can market their short term rental for a certain number of days per calendar year.
• Safety and security: Short term rental ordinances introduce the minimum number of required home security devices, such as smoke detectors, carbon dioxide alarms, fire extinguishers, and others.
• Noise regulations: In some areas, the noise coming from Airbnb properties should be kept under a certain limit, and parties are not allowed.

Since there is no centralized location where all short term rental regulations across the US market are available, various channels should be explored.

Investors looking for local short term rental regulations can check out or approach:

• The websites of local governments (most recommended)
• The websites of zoning authorities
• The legal department sections of the websites of local colleges and universities
• Local newspapers and news websites
• The Airbnb Help Center
• Airbnb investing websites and blogs
• Airbnb property managers
• Local Airbnb hosts
• Real estate attorneys

Studying local Airbnb laws and regulations is a major step in the process of finding a good property for Airbnb that cannot be omitted. These rules impact operations, startup and recurring costs, and the overall feasibility of a short term rental business.

Select Airbnb Properties for Deeper Review

Finally, it’s time to find an Airbnb property that aligns with your budget and caters to the needs of your target guests. Once you have a solid list of homes for sale, you need to conduct detailed short term rental property analysis to choose the most profitable option.

There are many ways in which you can locate potential Airbnb for sale, including:

• Working with a real estate agent who specializes in investment properties
• Checking out real estate websites like Zillow, Trulia, and Realtor.com
• Talking with Airbnb property managers to see if any of their customers is selling
• Connecting with local Airbnb hosts to check if they might be selling
• Driving for dollars or driving around the neighborhood looking for “For Sale” signs
• Asking friends and relatives about potential leads
• Partnering with Summer: Our highly qualified acquisition team will work hand in hand with you to set up your criteria, analyze select homes, and choose the best opportunity.

After finding a number of properties that meet their general criteria and look like potentially good options, investors need to analyze them, focusing on:

• Daily rates: While nightly prices differ by the day, the average daily rate (ADR) should be high enough to bring good revenue.
• Occupancy: A property should be of a highly demanded type, yet unique enough for the area to attract a lot of bookings and have a good Airbnb occupancy rate. Together with the ADR, that’s the main determinant of income and profit.
• Rental income: The monthly income is calculated by multiplying the average daily rate by the occupancy rate. This is the money that an Airbnb property generates from bookings and additional fees.
• Startup and operating expenses: A house to be bought to be rented on Airbnb should have costs that are aligned with your previously calculated budget and that do not exceed the expected revenue.
• Cash flow: Investing in a positive cash flow property is a must. This means that the income should be (significantly) higher than the costs.
• Cap rate: The Airbnb capitalization rate (Airbnb cap rate) is one of the main ROI metrics used to evaluate the profitability of short term rental property investments. It’s the ratio between the rental income and the current market value of the property. You should aim for properties that promise a cap rate of 8-12% to balance between profit and risk.
• Cash on cash return: The Airbnb cash on cash return is another popular way to measure return in real estate. It’s calculated by dividing the earned cash by the invested cash. A good cash on cash return is above 8%.

Conducting Airbnb analysis manually requires the collection, manipulation, and calculation of thousands of data points, which makes it virtually impossible for beginners. Thus, investors should resort to tools, such as an Airbnb calculator, that give them access to readily available estimates of the main Airbnb data analytics of their shortlisted properties. Alternatively, they can consult with a professional who can do the analysis for them.

Bottom Line

Finding Airbnb properties to buy for profitable investments requires a lot of steps and efforts. Our guide helps you streamline the process by highlighting and explaining the factors that should drive your search and decision. When looking for money-making short term rentals for sale, you should focus on your budget, the target type of guests, the market, and the applicable laws and regulations. You should analyze different opportunities in detail to choose the one that promises the highest ROI within your budget.