There are plenty of reasons to think about investing in a short-term rental property out of state. You may have just gone on a vacation and decided the people who own the place you are renting were making a killing.
When thinking about short-term rentals and Airbnb, people usually jump to thinking about great vacation destinations. While this is true, there is a huge demand for vacation destinations and excellent properties in those locations. Do not discount the fact that people are traveling to places within 50 miles of you.
From a purely financial perspective, you will want to choose a market with strong rental demand, low demand for property, and good prospects for property price and rental demand growth. Unfortunately, these factors are usually at odds with each other.
It is crucial to accurately estimate what your expenses will be to make a sound investment decision. However, what expenses and what proportion they will take on can vary wildly from market to market and by property style.
Unlike expenses, it will be harder to project the revenue for a short-term rental. While you can get insurance quotes or calculate the property taxes after they reflect the new purchase price, you will not see a published number on what the revenue will be.
Short term revenue boils down to this equation: Revenue = ADR (Average Daily Rate) X Occupancy. The challenge comes to determining what both of these are. First, you can scope out some competition by watching how their calendars fill up and how much they charge.