There are a lot of ways to invest in real estate. However, if you are interested in hospitality and want to invest, then you should be thinking about buying an Airbnb property. Having a short-term rental property is a great way to make money and can even become your primary business if you scale it up.

There are a lot of things that go into buying an Airbnb property and it’s important to understand them before you buy. Mistakes made early on can sink your business venture and leave you with an unmarketable property that doesn’t make much money. In this article, we will help you avoid those mistakes by giving you some tips on what to look for when buying your first Airbnb property.

1 - Understand the area

Certain areas are going to work well for an Airbnb short-term rental property and others that are more suited to long-term rentals with tenants. This means you have to research the area where you wish to buy and consider if people will pay to stay for a few days at that property.

There are two types of areas to look for when buying. There should be some tourism infrastructure there that you can take advantage of. People will book an Airbnb over a hotel in many cases because they are cozier and they can cook there. Yet, they have to have a reason to be there and tourism is the main reason.

Another factor is business travel. If there is a convention center or lots of businesses around that see people coming from out of town so they can make business deals then you will attract some of them.

If you are looking at Tennessee real estate then look for places in those two types of areas to buy your property. If you choose a suburban neighborhood that isn’t close to either tourist areas or businesses then it will likely fail and you should be looking at long-term tenants.

2 - Buy the right property type

Not all types of property will work for the type of renter that you will likely have in that area. For instance, if you are buying someplace near a water park, then you will be mainly dealing with families. This means that buying a studio apartment is not going to get much traction. In this case, look for a large apartment or small house for the property type.

Business travelers have different needs than tourists do so you will need to have a property that suits those needs.

3 - Find the right price point

The price is something that is going to make or break your profit margin. There is a fine line between pricing it to give you a profit above your expenses and pricing too high and not renting the place out.

Make sure to research the market to understand what price the properties in the area can get and what types of properties they are. This will help you zero in on the right price to start out with.