So you’ve done your research, narrowed your list, and found not one but two promising markets for your next short-term rental or hospitality investment. Congratulations—but now comes the tough part: picking just one.
Choosing between two strong markets isn’t about finding the perfect one (spoiler: it doesn’t exist). It’s about identifying which option aligns best with your investment goals, lifestyle, and long-term strategy. Here are six questions to help you confidently move from indecision to action.
1. What Are Your Investment Goals?
Before diving into market stats, zoom out. Your personal or business goals should steer your decision.
Ask yourself:
- Are you looking for steady cash flow or long-term appreciation?
- Do you prefer low-maintenance properties or are you ready for value-add renovations?
- Is this for personal use part-time or purely for revenue?
For example, a market with lower purchase prices but high tourism traffic might yield better cash flow, while a rapidly developing urban area may offer stronger appreciation over time. The right market should match your primary objective—not just what looks good on paper.
2. What Does Seasonality Look Like?
Even profitable markets can have wildly different seasonal patterns. Understanding when guests travel (and why) will impact your income predictability and how you manage your property.
Compare:
- High vs. low seasons (and how long each lasts)
- Whether bookings are driven by weather, events, or school holidays
- The typical occupancy rate month-by-month
A beach town might boom in summer and go quiet in winter, while a city market with conventions or year-round tourism may provide a more balanced calendar. If you’re depending on consistent revenue, seasonality can be a deciding factor.
3. What Are the Local Regulations?
No matter how attractive a market is, STR or boutique hospitality success hinges on local laws. Some areas are incredibly investor-friendly. Others? Not so much.
Look into:
- STR permitting requirements
- Zoning restrictions or HOA limitations
- Local tax rules and compliance expectations
- The trend in policy (is it getting stricter or more welcoming?)
Even two markets in the same state can differ dramatically. Choosing a city with predictable, stable regulations will save you stress—and possibly your entire investment.
4. What Type of Guest Will You Attract?
Different markets attract different types of travelers. Understanding who your typical guest will be can shape everything from your interior design to your nightly pricing.
Consider whether your market draws:
- Families on vacation
- Digital nomads
- Business travelers
- Adventure seekers
- Luxury staycationers
Your ideal guest should match your hosting style and property vision. If you’re great at hosting families, for example, a market with kid-friendly attractions and large rental homes may make more sense than a downtown condo hub.
5. What Are the Operating Costs?
It’s easy to be lured by high nightly rates—but profits aren’t just about what comes in; they’re also about what goes out.
Evaluate:
- Property taxes and insurance costs
- HOA fees or special local assessments
- Cleaning, maintenance, and staffing availability
- Utilities and seasonal weather impact
A mountain resort town may bring in premium bookings, but if snow removal and heating eat into your margins, that has to be factored in. Always run the full numbers—net income beats gross potential every time.
6. How Easy Will It Be to Manage?
If you plan to self-manage or be actively involved, proximity matters. But even with a team or a cohost, logistics can make or break your experience.
Ask:
- Is it easy to find reliable cleaners and handymen in this market?
- Is the market saturated or still growing?
- How responsive are local vendors and service providers?
- Are you familiar with the area’s culture, language, or systems?
Markets that are popular but under-resourced can present a challenge. On the flip side, an up-and-coming area with a growing hospitality infrastructure might be the perfect sweet spot.
When Both Markets Shine, This Can Help You Decide
Choosing between two excellent markets isn’t about picking a “winner.” It’s about finding the right fit for your investment style, your team’s capacity, and your guest experience goals. When in doubt, revisit your non-negotiables—and don’t underestimate the value of local connections or personal familiarity with a place.
Still torn? Consider test-driving one market first with a smaller property or even a short-term rental arbitrage strategy. Then scale into the second location later with more experience and insight.
Real estate success isn’t just about the market—it’s about how well the market matches you.
