If you’re dreaming about owning a short-term rental (STR) property — you’re not alone. The idea of generating extra income, hosting guests, and building long-term wealth is exciting. But before you dive into property listings and Airbnb decor boards, there are a few critical first steps you need to take.
Here are the three things you should do first before buying your short-term rental:
1. Research the Best Market
The success of a short-term rental comes down to location. Not every city — or even neighborhood — is STR-friendly, so do your homework early.
Look for areas with:
- High occupancy rates
- Consistent year-round demand (not just seasonal traffic)
- STR-friendly zoning laws and regulations
Use data tools like AirDNA, Mashvisor, or Rabbu to analyze potential markets. These platforms can show you average nightly rates, monthly income projections, and competition levels.
Pro tip: Don’t assume your hometown is the best option — let the numbers guide you.
2. Get Clear on Your Budget + Financing
Before you fall in love with a property, make sure you understand your full investment picture. That includes:
- Down payment (usually 15–25% for investment properties)
- Closing costs
- Furniture, linens, and STR setup essentials
- Startup services (cleaning, smart locks, professional photos, etc.)
Talk to a lender about STR-friendly mortgage options, including:
- DSCR loans (Debt Service Coverage Ratio): Based on projected rental income, not personal income
- Investment property loans
Pro tip: Many STR hosts underestimate furnishing and setup costs — budget at least $10–15K to start, depending on size.
3. Learn the Local Laws + Permits
Nothing will derail a deal faster than discovering you can’t legally rent it short-term.
Before making any offers:
- Check if the city/town requires a STR license or permit
- Understand any zoning restrictions
- Review HOA or condo association rules
- Know the tax requirements (local STR tax, occupancy tax, etc.)
Some areas have moratoriums or outright bans on STRs — others are very supportive. Don’t assume, verify.
Pro tip: Visit the city’s official website or call the planning/zoning department to get accurate, up-to-date info.
Final Thoughts
Buying a short-term rental is more than just purchasing a property — it’s building a business. Taking the time to research the market, know your numbers, and understand the legal landscape will set you up for long-term success (and fewer expensive surprises).
At KP_BNB, we’ve been through the process ourselves — and we’re here to help you make confident, informed decisions from day one.
