20 Most Profitable Airbnb Locations: Cash on Cash Return

Are you excited to join the millions of Airbnb hosts in the new year? Are you looking for the best place to buy a short term rental? Have a look at the 20 most profitable Airbnb locations based on cash on cash return.

Top 20 Most Profitable Airbnb Locations

Location location location… Have you come across this phrase in the real estate investing world? What it means is that the location is the most important factor for buying an investment property with a high potential for making money.

So, to help you figure out the best place for investing in Airbnb rentals in the US housing market, we’ve put together a list of the 20 real estate markets with the highest Airbnb cash on cash return figures. The estimates have been calculated by Mashvisor’s Airbnb profitability calculator, a special type of rental property calculator which conducts Airbnb investment analysis. The calculations are based on nationwide Airbnb big data taken directly from the source, Airbnb.com.

You will note that all these best cities for short term rentals have a double-digit cash on cash return.

1. Tuscaloosa, AL

• Airbnb Cash on Cash Return: 17.5%
• Airbnb Occupancy Rate: 40.9%
• Airbnb Rental Income: $4,880
• Median Property Price: $294,300
• Price per Square Foot: $172
• Listings for Sale: 116
• Airbnb Listings: 225
• Walk Score: 48

2. Trenton, NJ

• Airbnb Cash on Cash Return: 16.4%
• Airbnb Occupancy Rate: 56.4%
• Airbnb Rental Income: $2,200
• Median Property Price: $163,500
• Price per Square Foot: $109
• Listings for Sale: 216
• Airbnb Listings: 55
• Walk Score: 67

3. South Bend, IN

• Airbnb Cash on Cash Return: 16.1%
• Airbnb Occupancy Rate: 41.5%
• Airbnb Rental Income: $2,920
• Median Property Price: $145,800
• Price per Square Foot: $85
• Listings for Sale: 172
• Airbnb Listings: 284
• Walk Score: 80

4. Paducah, KY

• Airbnb Cash on Cash Return: 16.1%
• Airbnb Occupancy Rate: 44.8%
• Airbnb Rental Income: $3,140
• Median Property Price: $205,900
• Price per Square Foot: $91
• Listings for Sale: 199
• Airbnb Listings: 53
• Walk Score: 47

5. Abilene, TX

• Airbnb Cash on Cash Return: 16.1%
• Airbnb Occupancy Rate: 59.7%
• Airbnb Rental Income: $3,560
• Median Property Price: $236,800
• Price per Square Foot: $111
• Listings for Sale: 585
• Airbnb Listings: 71
• Walk Score: 30

6. Newburgh, NY

• Airbnb Cash on Cash Return: 14.1%
• Airbnb Occupancy Rate: 51.8%
• Airbnb Rental Income: $3,580
• Median Property Price: $273,800
• Price per Square Foot: $138
• Listings for Sale: 112
• Airbnb Listings: 51
• Walk Score: 43

7. Hampton, VA

• Airbnb Cash on Cash Return: 14.0%
• Airbnb Occupancy Rate: 57.0%
• Airbnb Rental Income: $3,490
• Median Property Price: $202,000
• Price per Square Foot: $119
• Listings for Sale: 482
• Airbnb Listings: 71
• Walk Score: 34

8. Columbus, GA

• Airbnb Cash on Cash Return: 13.9%
• Airbnb Occupancy Rate: 69.0%
• Airbnb Rental Income: $2,750
• Median Property Price: $192,100
• Price per Square Foot: $89
• Listings for Sale: 360
• Airbnb Listings: 463
• Walk Score: 35

9. Dayton, OH

• Airbnb Cash on Cash Return: 13.7%
• Airbnb Occupancy Rate: 58.3%
• Airbnb Rental Income: $2,220
• Median Property Price: $115,800
• Price per Square Foot: $69
• Listings for Sale: 104
• Airbnb Listings: 611
• Walk Score: 42

10. Albany, GA

• Airbnb Cash on Cash Return: 13.2%
• Airbnb Occupancy Rate: 66.9%
• Airbnb Rental Income: $2,580
• Median Property Price: $129,900
• Price per Square Foot: $67
• Listings for Sale: 134
• Airbnb Listings: 2,161
• Walk Score: 61

11. Seguin, TX

• Airbnb Cash on Cash Return: 13.1%
• Airbnb Occupancy Rate: 47.3%
• Airbnb Rental Income: $4,470
• Median Property Price: $310,200
• Price per Square Foot: $154
• Listings for Sale: 132
• Airbnb Listings: 41
• Walk Score: 67

12. Jasper, AL

• Airbnb Cash on Cash Return: 12.3%
• Airbnb Occupancy Rate: 47.4%
• Airbnb Rental Income: $2,620
• Median Property Price: $246,100
• Price per Square Foot: $100
• Listings for Sale: 116
• Airbnb Listings: 43
• Walk Score: 49

13. Cumberland, MD

• Airbnb Cash on Cash Return: 11.2%
• Airbnb Occupancy Rate: 49.5%
• Airbnb Rental Income: $2,170
• Median Property Price: $129,100
• Price per Square Foot: $75
• Listings for Sale: 137
• Airbnb Listings: 56
• Walk Score: 33

14. Youngstown, OH

• Airbnb Cash on Cash Return: 10.7%
• Airbnb Occupancy Rate: 51.3%
• Airbnb Rental Income: $1,620
• Median Property Price: $106,600
• Price per Square Foot: $68
• Listings for Sale: 158
• Airbnb Listings: 53
• Walk Score: 34

15. Jonesboro, AR

• Airbnb Cash on Cash Return: 10.5%
• Airbnb Occupancy Rate: 61.9%
• Airbnb Rental Income: $2,350
• Median Property Price: $266,000
• Price per Square Foot: $105
• Listings for Sale: 221
• Airbnb Listings: 177
• Walk Score: 24

16. Wilmington, DE

• Airbnb Cash on Cash Return: 10.5%
• Airbnb Occupancy Rate: 62.4%
• Airbnb Rental Income: $3,110
• Median Property Price: $245,700
• Price per Square Foot: $482
• Listings for Sale: 409
• Airbnb Listings: 140
• Walk Score: 80

17. Evansville, IN

• Airbnb Cash on Cash Return: 10.5%
• Airbnb Occupancy Rate: 65.1%
• Airbnb Rental Income: $2,510
• Median Property Price: $170,000
• Price per Square Foot: $89
• Listings for Sale: 508
• Airbnb Listings: 52
• Walk Score: 65

18. Harrisonburg, VA

• Airbnb Cash on Cash Return: 10.4%
• Airbnb Occupancy Rate: 59.8%
• Airbnb Rental Income: $3,330
• Median Property Price: $236,600
• Price per Square Foot: $137
• Listings for Sale: 117
• Airbnb Listings: 185
• Walk Score: 38

19. Fort Wayne, IN

• Airbnb Cash on Cash Return: 10.4%
• Airbnb Occupancy Rate: 63.9%
• Airbnb Rental Income: $2,110
• Median Property Price: $214,200
• Price per Square Foot: $107
• Listings for Sale: 1,073
• Airbnb Listings: 1,155
• Walk Score: 35

20. Hattiesburg, MS

• Airbnb Cash on Cash Return: 10.3%
• Airbnb Occupancy Rate: 63.0%
• Airbnb Rental Income: $2,050
• Median Property Price: $237,100
• Price per Square Foot: $84
• Listings for Sale: 261
• Airbnb Listings: 163
• Walk Score: 33

Why Use Airbnb Cash on Cash Return?

After you’ve gone through our list of the most profitable locations for buying an Airbnb investment property, you might be wondering why we’ve chosen the CoC return metric. There are many ways to measure the rate of return and profitability of residential real estate investments. The capitalization rate (or cap rate for short), the internal rate of return (IRR), the return on investment (ROI), and cash on cash return are just some of them.

The most important advantage of using CoC return is that it is a very comprehensive and thus accurate metric. Unlike the cap rate, another popular measure, it takes the method of financing of rental properties into consideration.

A property that was bought with a mortgage will have a much higher cash on cash return than a property that was purchased all in cash because the cash investment is smaller. Knowing what return to expect is an important factor in investors’ decisions on how to finance their income properties if they can choose from a few options. That’s why it’s better to look at the CoC return than at any other metric out there.

What Data Goes into the Calculations?

The big data necessary for evaluating the best places to invest in an Airbnb rental comes from several different property data online sources. One of them is Airbnb.com. Mashvisor’s Airbnb profit calculator predicts the Airbnb rental income and Airbnb occupancy rate based on the actual performance of Airbnb listings in the past 12 months.

The data related to various startup costs and recurring expenses comes from various publicly available sources. These include county offices, state websites, and others.

Last but not least, the property price values are taken directly from the MLS. The vast majority of properties listed on Mashvisor are actual MLS listings, while there are also some foreclosures, short sales, bank owned homes (from Auction.com), and off market properties (for sale by other users).

All the estimates are highly accurate and reliable because they use predictive analytics: finding patterns in the historical and present behavior of investment properties to predict their future potential.

What Are the Most Important Characteristics of the Best Cities for Airbnb?

While the most profitable locations for Airbnb rentals look as diverse as possible, there are some common features among them.

1. “Surprising” Locations

Let’s face it. These are not the first places which come to your mind when you think about Airbnb. How about Airbnb Miami? Airbnb Las Vegas? Airbnb Los Angeles? Airbnb New York? Airbnb San Diego? Airbnb Chicago? Airbnb San Francisco? Airbnb Boston?

First of all, short term rental properties have been ruled illegal in most of these cities when it comes to non-owner occupied rentals and investment properties (as opposed to primary residences). The residents and the hotel lobbies in most major US cities have forced the local authorities to impose strict and even prohibitive Airbnb laws.

Second, even if Airbnb is legal, the prices of homes for sale in these markets are so high that they don’t allow for a double-digit return on investment. Thus, smaller, less popular destinations are emerging as the top places for buying a vacation rental home.

2. Small Towns and Cities

As mentioned above, the 20 most profitable locations for short term rentals are rather small and somewhat unpopular. What this means is that they are not the top tourist destinations in the US housing market in terms of annual number of visitors. However, each one of them has something unique to offer to tourists, which results in a high Airbnb occupancy rate and nightly rate.

3. Geographically Spread

Moreover, the places on our list have no geographical concentration. Some are in the North, others are in the South, while still others are in the Middle. Similarly, they are located both in the East and in the West. This is good news for those real estate investors who prefer to buy rental properties relatively close to home. They can choose a location which is not too far of a drive.

Still, a few states host a number of top real estate markets for investing in short term rental properties including Alabama, Georgia, Indiana, Ohio, Texas, and Virginia.

4. Affordable Property Prices

The median prices of homes for sales in these top locations for investing in real estate range between $106,600 in the Youngstown real estate market and $310,200 in the Seguin real estate market. This is significantly less than the real estate prices which you can see in other housing markets across the US. Affordability is an important factor in real estate investments for several reasons.

First of all, it makes financing rental properties easier and less risky. The last thing you want as an investor is to end up in foreclosure.

Second, the sale price factors in the calculations of most measures of return on investment in real estate and is inversely proportional to the rate of return. The lower the property price, the higher the return, whether in terms of cash on cash return or cap rate. Buying cheap real estate is a proven strategy for pushing up your profitability right away.

5. High Airbnb Occupancy Rate

Most of the best places for short term rentals have an Airbnb occupancy rate in the 50s and 60s. Compared to other real estate markets, this is a high level. As a future Airbnb host, you should know that the Airbnb occupancy rate is one of the most important determinants of return on investment on vacation rental properties, besides the nightly rate.

It affects positively the rental income and the cash flow and thus the cap rate and the cash on cash return. As a new real estate investor, you should focus on buying a rental property in a high Airbnb occupancy rate city in order to facilitate your marketing efforts.

6. Legal Airbnb Locations

One of the main reasons which make these places the best Airbnb locations is the fact that short term rental properties there are fully legal, both for owner-occupied and non-owner occupied properties. With the rapid expansion of the Airbnb industry in the past decade, many major US cities have imposed restrictive and even prohibitive regulations on vacation rentals.

This is not the case in the cities above where Airbnb laws and regulations – if any – do not prevent investing in a real estate property for the sole purpose of renting it out on Airbnb or another similar home-sharing platform. While investors might be expected to pay certain fees and taxes, the expected Airbnb rental income is enough to result in a double-digit return on investment.

How Can You Find the Most Profitable Airbnb Investment Property for Sale?

The short answer to this complicated real estate question is: By using the best real estate investment tools. Next year, investing in real estate will be all about working smart and not hard which means having access to the latest technology. Here’s how 3 prominent tools on our Airbnb analytics platform can help you make profitable investment decisions each and every time:

• Heatmap

Use Mashvisor’s heatmap tool for conducting neighborhood analysis in the 20 most profitable locations for Airbnb rentals or any other US real estate market. You can analyze neighborhoods by property listing price, Airbnb rental income, Airbnb cash on cash return, and Airbnb occupancy rate. As a new real estate investor, try to find areas that balance between affordable property prices and high return on investment.

• Property Finder

Mashvisor’s Property Finder facilitates investment property search. It allows investors to look for the top-performing rental properties in up to 5 US cities based on their budget, preferred rental strategy, and optimal number of bedrooms. Within a few seconds after inputting all your search criteria, you’ll get a list of properties with the highest cash on cash return with readily available rental property analysis.

• Investment Property Calculator

Mashvisor’s rental property calculator will conduct both neighborhood analysis (a form of real estate market analysis) and investment property analysis for you.

You will be able to get detailed insights on all the most important factors for any US neighborhood such as median property price, average price per square foot, average Airbnb rental income, average Airbnb cash on cash return, average Airbnb occupancy rate, and the optimal rental strategy (to confirm that short term rentals yield a higher rate of return than long term ones).

At the property level, you will get estimates on all start-up costs, recurring monthly expenses, Airbnb rental income, Airbnb occupancy rate, cash flow, Airbnb cash on cash return, Airbnb cap rate, real estate comps, and rental comps.

All in all, the process of researching and finding a top-performing Airbnb investment property will take 15 minutes instead of 3 months!

Don’t let the glamor of major US cities trick you into investing in a short term rental there. They are just not the best options for this rental strategy. Instead, have a look at the 20 most profitable locations for Airbnb rentals based on cash on cash return, and choose one of them.

To start your free trial of Mashvisor today, click here.