Are you thinking of investing in a short-term rental property in 2021? Then you should consider the locations which offer the highest average Airbnb daily rate this year.
Despite the initial negative impact of the Covid-19 pandemic on the short-term rental industry in the spring of last year, the Airbnb investing business started recovering within a few months to re-emerge as one of the most profitable real estate investment strategies in 2021. Mashvisor’s data confirms that Airbnb rentals bring a higher return on investment than traditional rentals in the majority of the US housing market 2021. This is why buying a vacation home to rent out on Airbnb, VRBO, HomeAway, or another similar platform is a smart investment decision this year.
One of the most important factors which real estate investors should consider when buying a short-term rental is the average Airbnb daily rate in the location of their property. Together with the Airbnb occupancy rate, the ADR – for short – determines the Airbnb income which hosts will be able to generate. In turn, when combined with the property price and the rental expenses, the Airbnb rental income is one of the major factors establishing the rate of return on a rental property, whether looking at the cash on cash return or the cap rate.
To help you find the perfect location for your vacation rental property, we have ranked the 50 US cities with the highest average Airbnb daily rates based on our nationwide real estate market analysis.
What Is the Average Airbnb Daily Rate?
Before we take a look at the most profitable Airbnb locations in 2021, it’s important to understand the meaning of ADR. This is one of the main metrics which experienced Airbnb hosts use to evaluate the profitability of their short-term rental properties as well as to forecast the performance of an income property for sale which they are considering investing in.
In simple terms, the ADR signifies the amount of money which a guest pays for renting the property for one night. The average Airbnb daily rate, meanwhile, is the average amount of money which a host receives for all the nights when his/her property was occupied, in a month or in a year.
This measure is so important because when you multiply it by the Airbnb occupancy rate (or the number of days when your vacation home gets rented out), you get the monthly Airbnb rental income.
However, when trying to optimize their Airbnb income, investors should be careful. Charging a higher daily rate doesn’t necessarily mean generating more income. If you list your property for significantly more than the average Airbnb daily rate in the area, your vacation home might remain vacant, thus compromising your overall income.
So, especially as a beginner investor, you should aim to list your Airbnb property for a nightly rate close to the average in the area.
Where to Find the Highest Average Airbnb Prices in 2021
Key West, FL offers the highest average Airbnb daily rate in 2021, according to Mashvisor’s data
Now that we know what the ADR means and why it is such an important concept in real estate investing, it’s time to have a look at the 50 US cities which offer the highest average Airbnb daily rate this year.
We have ranked these best cities for Airbnb investment in 2021 based on our own real estate data and analytics. Our Airbnb data comes directly from the Airbnb platform before we apply to it our machine-learning algorithms to forecast the performance of short-term rentals in any US market.
Related: Where to Get Reliable Airbnb Data in 2021
In addition to the ADR, we also provide you with estimates of the average Airbnb occupancy rate, the average Airbnb rental income, the average Airbnb cash on cash return, and the median property price in each of these locations. These metrics will help you choose the best location for buying an Airbnb property in 2021 based on your budget and your expectations as an investor.
50 Cities with the Highest ADR 2021
| City and State | Average Airbnb Daily Rate | Average Airbnb Occupancy Rate | Average Airbnb Monthly Rental Income | Average Airbnb Cash on Cash Return | Median Property Price | |
| #1 | Key West, FL | $646 | 47% | $5,780 | 2.28% | $1,132,743 |
| #2 | Tuscaloosa, AL | $475 | 34% | $2,088 | 2.78% | $326,300 |
| #3 | Blacksburg, VA | $442 | 35% | $2,984 | 4.22% | $556,805 |
| #4 | Mashpee, MA | $365 | 49% | $4,281 | 4.62% | $726,406 |
| #5 | Ithaca, NY | $344 | 53% | $4,060 | 4.24% | $574,946 |
| #6 | Cathedral City, CA | $344 | 58% | $3,250 | 3.21% | $504,172 |
| #7 | Hilton Head Island, SC | $322 | 50% | $2,359 | 2.34% | $769,325 |
| #8 | Oxnard, CA | $314 | 67% | $5,198 | 3.05% | $771,993 |
| #9 | Honolulu, HI | $308 | 59% | $2,394 | 2.05% | $893,765 |
| #10 | Miami Beach, FL | $297 | 42% | $2,648 | 0.02% | $893,459 |
| #11 | Naples, FL | $294 | 56% | $2,926 | 1.99% | $719,546 |
| #12 | Bourne, MA | $288 | 45% | $2,804 | 3.22% | $501,976 |
| #13 | Fort Lauderdale, FL | $286 | 52% | $2,856 | 0.44% | $753,732 |
| #14 | Round Rock, TX | $282 | 67% | $3,418 | 3.77% | $430,366 |
| #16 | Santa Barbara, CA | $281 | 61% | $7,197 | 1.77% | $1,969,847 |
| #15 | Scottsdale, AZ | $281 | 62% | $2,915 | 1.35% | $1,049,878 |
| #17 | Bartlett, TN | $278 | 42% | $2,502 | 5.59% | $295,344 |
| #18 | North Miami, FL | $278 | 50% | $1,392 | 0.20% | $265,466 |
| #19 | Charlottesville, VA | $273 | 60% | $4,804 | 5.97% | $573,284 |
| #20 | Green Bay, WI | $272 | 43% | $1,736 | 2.74% | $248,225 |
| #21 | Austin, TX | $266 | 56% | $3,906 | 2.93% | $732,510 |
| #22 | Bryan, TX | $265 | 42% | $2,058 | 2.91% | $334,899 |
| #23 | San Rafael, CA | $259 | 67% | $4,457 | 2.09% | $994,900 |
| #24 | Charleston, SC | $255 | 64% | $3,993 | 4.12% | $707,762 |
| #25 | Virginia Beach, VA | $252 | 55% | $3,618 | 5.60% | $432,470 |
| #26 | Waianae, HI | $248 | 58% | $2,192 | 4.41% | $367,039 |
| #27 | Boulder, CO | $248 | 63% | $3,601 | 1.90% | $1,132,145 |
| #28 | Ventura, CA | $240 | 68% | $4,354 | 2.06% | $937,047 |
| #29 | San Francisco, CA | $240 | 56% | $3,800 | 0.36% | $1,452,510 |
| #30 | Irvine, CA | $237 | 65% | $3,916 | 1.19% | $1,075,121 |
| #31 | Pompano Beach, FL | $237 | 55% | $2,099 | 1.16% | $424,213 |
| #32 | Plantation, FL | $235 | 59% | $3,365 | 4.24% | $405,098 |
| #33 | Middletown, NJ | $232 | 52% | $1,827 | 0.27% | $620,577 |
| #35 | Henderson, NV | $226 | 67% | $3,909 | 4.34% | $691,019 |
| #34 | Jupiter, FL | $226 | 42% | $2,953 | 0.86% | $849,765 |
| #36 | Clarkstown, NY | $225 | 66% | $4,174 | 4.23% | $591,990 |
| #37 | Chula Vista, CA | $221 | 70% | $3,414 | 3.23% | $625,989 |
| #38 | Newburgh, NY | $219 | 63% | $4,340 | 6.21% | $391,600 |
| #39 | Nashville, TN | $217 | 50% | $2,619 | 2.95% | $509,517 |
| #40 | Louisville, KY | $212 | 51% | $1,611 | 2.13% | $272,122 |
| #41 | Sandy Springs, GA | $211 | 48% | $2,940 | 1.95% | $472,684 |
| #42 | Madison, WI | $208 | 64% | $3,570 | 4.84% | $402,398 |
| #43 | Torrance, CA | $204 | 76% | $4,201 | 2.25% | $890,430 |
| #44 | Richardson, TX | $203 | 65% | $3,361 | 4.48% | $429,139 |
| #45 | Traverse City, MI | $203 | 53% | $3,110 | 3.63% | $604,312 |
| #46 | Oshkosh, WI | $202 | 42% | $1,249 | 1.72% | $199,098 |
| #47 | Augusta, GA | $201 | 50% | $1,633 | 3.39% | $240,597 |
| #48 | Lake Oswego, OR | $201 | 69% | $5,069 | 2.11% | $1,297,181 |
| #49 | Gilbert, AZ | $200 | 67% | $3,422 | 4.46% | $489,494 |
| #50 | Bend, OR | $200 | 57% | $3,384 | 2.41% | $789,052 |
What Is the Airbnb Data 2021 Telling Investors?
If you’re wondering how to start an Airbnb business in 2021, you might not be able to make full sense of all these numbers. So let’s conduct a quick analysis of the data provided by Mashvisor’s Airbnb profit calculator to help you make the most profitable investment decision.
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ADR Range
In these 50 best places for investing in Airbnb rentals for excellent nightly rates, you can expect to charge an average Airbnb daily rate from $200 per night in Airbnb Gilbert, reaching $646 per night in Airbnb Key West.
The median daily rate for vacation home rentals is $250.
As mentioned above, when looking for a lucrative Airbnb rental property, you should consider a number of different Airbnb analytics and metrics. Focusing entirely on the nightly rate will not ensure optimal monthly rental income and return on investment.
To achieve high rental income and good cash on cash return, you should also look at the average Airbnb occupancy rate in the market. This value ranges from 34% in Airbnb Tuscaloosa to 76% in Airbnb Torrance.
Related: What Airbnb Occupancy Rate Can You Expect in 2021?
When we factor in both the average ADR and the Airbnb occupancy rate, we can estimate the average Airbnb income in a location. In these top 50 Airbnb locations for 2021, the monthly rental income ranges from $1,249 in Airbnb Oshkosh to $7,197 in Airbnb Santa Barbara.
Meanwhile, the city-level Airbnb cash on cash return starts at 0.02% in Airbnb Miami Beach and reaches 6.21% in Airbnb Newburgh.
You have probably heard that good cash on cash return is considered 8-12% or higher, and this is absolutely right. However, you need to keep in mind that the Airbnb data presented here is just average values at the city level. Individual Airbnb for sale properties are able to generate double-digit returns in each of these markets.
To start searching for the most profitable Airbnb investment opportunities in any of these 50 cities, sign up for Mashvisor now.
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Most Profitable Airbnb Locations in 2021
According to Mashvisor’s Airbnb profitability calculator, the Key West real estate market 2021 offers the highest Airbnb daily rate by city this year. This is the second year in a row that Airbnb Key West emerges as the most profitable city for nightly rates. In 2020 Key West Airbnb hosts generated an average of $665 per night.
You can check out the other cities with the highest Airbnb daily rates in 2020 to see the major changes compared to this year.
While you can find markets with good average ADR values across the US, the best opportunities are concentrated in a few particular states. The California real estate market has the largest number of cities with a high Airbnb daily rate including Airbnb San Francisco and Airbnb Irvine. Following is the Florida real estate market, where there is also a concentration of profitable locations for short-term rentals such as Airbnb Fort Lauderdale and Airbnb North Miami. Other states which are worth considering for buying an Airbnb property in 2021 include the Texas real estate market, the Virginia real estate market, and the Wisconsin real estate market.
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Return on Investment for Short-Term Rentals
Mashvisor’s national real estate market analysis reveals that these 50 cities constitute not only the locations with the highest average ADR but also some of the absolutely most profitable places for owning an Airbnb property in 2021.
When searching for the most lucrative Airbnb locations, savvy investors should consider Airbnb Newburgh, Airbnb Charlottesville, Airbnb Virginia Beach, and Airbnb Bartlett. The average Airbnb cash on cash return offered by these markets exceeds significantly the values in other US cities.
Related: 2021 Cash on Cash Return by City: What to Expect as a Real Estate Investor
How to Set Up the Right Daily Rate for Your Airbnb Investment Property
Deciding how much to charge for rent is equally important whether you invest in traditional or Airbnb rental properties. You need to strike the right rental rate in order to maximize your income and – ultimately – your Airbnb cash on cash return and Airbnb cap rate.
Here are the most important factors which you should consider when setting up your Airbnb daily rate:
1. Neighborhood
Airbnb nightly rates vary not only by city but also by neighborhood. Depending on the exact location and the proximity to tourist attractions, transportation, shopping opportunities, restaurants, and others, rental rates can be drastically different from one area to another, within the same city.
So, you should conduct neighborhood analysis to understand what rates Airbnb rental comps in the area are charging. This will help you set up a rate which is competitive, yet not below market value.
2. Property Type
Different property types also get rented out for different daily rates on Airbnb. For example, you can list a single-family home for a significantly higher nightly rate than an apartment because it offers more square footage indoors as well as an outdoors space.
Generally speaking, a bigger property is able to accommodate more Airbnb guests, so you should ask for a higher rate.
3. Amenities and Extras
Another crucially important factor to take into consideration is what makes your vacation home rental stand out from the rest of the competition in the neighborhood. Offering more additional amenities and services (such as a swimming pool, a welcoming package, breakfast, free WiFi, etc.) will allow you to charge a higher price for your Airbnb property.
4. Airbnb Rating and Reviews
You should never underestimate the importance of Airbnb reviews and Airbnb ratings when pricing your rental property. Short-term guests always look at what previous guests have to say about a property before booking it.
So, having a good Airbnb rating and boasting a lot of good Airbnb reviews will let you push your Airbnb daily rate up. That’s one of the indispensable Airbnb tips in 2021.
5. Season
Last but not least, the average Airbnb daily rate varies widely between seasons. This is particularly true for seasonal tourist destinations such as beach resorts and ski resorts. Weekends and holidays also have a major effect on Airbnb prices. Make sure to maintain your nightly rates flexible in order to attract more guests and push your Airbnb occupancy rate up. This will affect your Airbnb income and return on investment positively as well.
If you’re a beginner investor who’s not sure how to set up the right Airbnb daily rate, you can check out Mashvisor. We provide you with Airbnb rental comps for hundreds of thousands of short-term rental properties in the US market so that you can decide on a competitive price for your own vacation home. Get started now.
Mashvisor Airbnb Calculator: Rental Comps for a Key West Investment Property
Related: 3 Airbnb Tools You Need for Buying Property
Airbnb Laws and Regulations
One last thing you should consider before buying an Airbnb investment property is the short-term rental laws and rules in the local market. Many top locations for Airbnb investments have established strict regulations to control – or even prevent – the further spread of the Airbnb industry. So, if you’re planning to buy an income property for the sole purpose of renting it out on Airbnb, you need to make sure that non-owned occupied short-term rentals are legal and do not face restrictions in the market of your choice.
While there are many ways to start your short-term investment property search, beginning with the locations that offer the highest average Airbnb daily rate is a winning strategy. These 50 US cities are full of lucrative opportunities for investors interested in Airbnb rental properties in 2021. As long as you get access to the best real estate investment tools, finding a profitable vacation home rental is easy. Sign up for a 7-day free trial of Mashvisor now to start searching for the top-performing Airbnb properties in the city of your choice.
