Everyone seems to have a picture-perfect idea of an Airbnb investment: a chic downtown loft with skyline views or a quaint cabin tucked away in the mountains.
And while those can certainly be winners, just as many investors get burned by chasing the obvious. The real answer to what makes the best investment is far more nuanced and, frankly, a lot more interesting.
The most profitable properties aren't always the ones you see on Instagram. They are the ones that quietly and consistently solve a problem for a specific type of traveler. Your job as an investor isn't just to buy real estate; it's to create a product that people are excited to pay for.
Look Beyond the Obvious Postcard Shot
Location is everything, but not in the way most people think. Don't just look for tourist hotspots. Instead, hunt for demand drivers. Why are people coming to this specific area? A property near a major hospital can be a goldmine, attracting a steady stream of traveling nurses and families visiting patients. That "boring" suburban house with a great backyard and pool? It might become the go-to spot for families attending local sports tournaments or visiting relatives, filling up weekends year-round when the downtown condos are empty.
Choosing the Right Location
Think about the underserved markets. Is there a local university without enough visitor lodging? A new corporate campus bringing in consultants for weeks at a time? These less glamorous locations often provide more reliable income because they aren't as susceptible to the whims of tourist seasons. The key is to match the property to the reason for travel. A two-bedroom apartment is perfect for a pair of business travelers, but a disaster for a family of five.
Your Property Is a Product, Not Just a Place
Once you have a location, the property itself becomes your product. What makes a guest choose your place over the Hilton down the street or the ten other Airbnb’s in the neighborhood? It’s the experience. Unique properties like A-frames, tiny homes, or converted barns are popular for a reason. They offer a story, an escape from the ordinary.
But you don't need a novelty property to succeed. You just need to create a better experience. A comfortable bed with high-quality linens, a blazing-fast internet connection, and a kitchen stocked with good coffee can make all the difference. The real magic happens when you add amenities that create memorable moments. A fire pit for s'mores, a hot tub for relaxing after a long day, or a well-curated collection of board games can turn a good stay into a five-star review and a repeat booking. These are the details that hotels can't compete with.
Savvy Investors Vs Amateurs
This is where savvy investors separate themselves from the amateurs. All those furnishings and appliances including outdoor decks, and even the landscaping are business assets. Most hosts just accept the standard, painfully slow depreciation schedule the IRS allows for residential property. A smarter approach is to treat your short-term rental like the business it is.
A strategy called cost segregation allows you to identify all these components and write them off on a much faster schedule. This can result in massive tax savings for Airbnb hosts, effectively giving you a huge chunk of your setup costs back in your pocket in the first year. That’s cash you can use to pay down debt, make more upgrades, or save for your next property.
Creating a Well Run Business
The best Airbnb investment isn't a specific type of house or condo. It’s a well-run business. It’s the property where the host obsessed over the guest, the location's true demand, and the numbers in equal measure. Get those three things right, and you'll have a successful investment on your hands, no matter what it looks like from the outside.