This is THE year to invest in an Airbnb rental. To help you, we found the ten best places to buy short term rental property in the country.
Short term rentals are making a huge comeback after the COVID-19 pandemic. We all knew how the dreaded disease turned everything upside down. And although the short term rental industry suffered for some time, it’s now well on its way to recovery.
Table of Contents
- 6 Qualities of the Best Places to Buy Short Term Rental Property
- The 20 Best Places to Buy Short Term Rental Property
- How to Find a Profitable Short Term Rental Property
The adverse effects of the pandemic and the very unexpected tension in Eastern Europe have not stopped people from making travel plans throughout the year. After being holed up in their homes for nearly two years, people are raring to go out on the road again.
It’s a different story, however, for real estate investors, especially those who want to start a rental property business.
Mortgage interest rates in the 2022 real estate market have soared way faster than expected and are currently in the 6.50% to 7.00% range. Beginner investors are also faced with high property prices. Meanwhile, those who already have at least one property also need to deal with high inflation to maintain their properties.
Given these current issues, some of you might be wondering if now is the best time to buy a vacation rental property. The good news is that regardless of the surrounding conditions, you can still find the best possible deals on rental properties given the right tools and data.
With the tools provided by a real estate website like Mashvisor, you can find the best place to buy rental property.
6 Qualities of the Best Places to Buy Short Term Rental Property
You cannot just buy an Airbnb property and hope for the best. You need to do your research and consider several factors to find a profitable investment. Before we list the best places to buy short term rental property, we will share what criteria we used to determine what makes a city or town the best place for a short term rental strategy.
Location
Where you are buying your vacation rental is the most important factor to consider. The best places to buy short term rental property are lucrative because people visit them often and end up booking vacation homes.
While hot tourist destinations seem to be the most obvious choice for investors, they are now so saturated with existing vacation rentals that newcomers may get a lower Airbnb return on investment. It also does not help that homes for sale in these areas are high in price and low in supply, keeping beginner investors with low capital out of the local market.
Whether you are looking for your first or fifth short term rental property, you may want to consider areas that are less popular but still have great potential to get you a good return on investment. These are the best places for investing in vacation rental properties. The list later in this article will cover such markets.
Cap Rate and Cash on Cash Return
The Airbnb cap rate, or capitalization rate, measures an Airbnb rental’s profitability and return potential regardless of its financing method. This metric is typically used by investors who make all-cash transactions. It is calculated by dividing the net operating income (NOI) by the property’s value and is expressed as a percentage.
But if you plan to buy a short term rental using financing, you will get a more accurate analysis of the property’s performance if you calculate the cash on cash return instead. This metric measures your annual return relative to the actual amount of cash you spend on your investment.
You calculate this by dividing the sum of your annual NOI plus mortgage payments by the total cash invested during that same period. The total cash invested may include the closing costs and remodeling expenses as well as your mortgage payments. Using this metric gives you an idea of what your dollar-for-dollar earning potential is.
For our list of the best places to buy short term rental property, we looked at the cities and towns that provide the highest cash on cash returns compared to the rest.
Monthly Rental Income
The income you will earn from short term rental depends on the popularity of the location and the amenities that your property offers. But when considering a house based on this factor, do not just look at how much you will make each month. You must also make sure that your income is enough to cover your expenses and generate a positive cash flow.
In this article, we found that the best places to buy short term rental property have monthly rental income that is higher than $2,000.
Occupancy Rate
Occupancy rate is the proportion of days in a month for which a short term rental is booked. Obviously, the best places to buy short term rental property get a lot of bookings and may even get fully booked depending on the season.
To make your investment viable, you need to find the places that have the best Airbnb demand percentage throughout the year. While most short term rentals get a lot of bookings because of their proximity to popular tourist destinations, the best places for vacation rentals generate a lot of income because they are near a business district.
In this article, we narrowed down our list of best places to buy short term rental properties to include cities and towns that have an occupancy rate of more than 50%.
Median Home Prices
Whether you are a beginner investor with a small capital or an established one who can pull together a lot of funds, it is still a good idea to buy an investment property at the lowest possible cost. This is mainly because the more expensive a house is, the higher your operating expenses will be.
It will also be more challenging to turn a profit since high-end vacation rentals tend to have lower occupancy rates as their nightly rates are a bit beyond the reach of most regular travelers.
If you are a beginner investor, aim to buy a property for no higher than $200,000 in an up-and-coming neighborhood. Investors with a lot of capital may be able to handle a rental home that costs as much as $500,000 for as long as they can meet the 1% rule.
The 1% Rule in real estate simply implies that their monthly rental income should be equivalent to at least 1% of the overall property price to be considered profitable.
Airbnb Regulations
The profit potential of a property as a short term rental is useless if you cannot legally rent it out to guests. Some cities have laws that restrict residents from hosting guests for under 30 days. Others only allow homeowners to rent out a part of their primary residence. Meanwhile, there are cities that restrict short term rentals in certain areas.
You should be able to find these regulations in the city’s zoning or administrative ordinances. Even if short term rentals are allowed in an area, it might require you to register and apply for a permit or business license before you can advertise your property and accept bookings.
Make sure you know what the requirements are or else you might face fines or even get banned from legally running a short term rental business in the city.
Aside from business registration, cities have different tax requirements. In some jurisdictions, Airbnb calculates, collects, and remits the necessary tax on your behalf. But there are other places where you have to do these on your own.
To find the best places to buy short term rental property, we highly encourage you to double-check the short term rental regulations in your place of choice. You should also consider the HOA rules in the community, not just the laws put in place by the local government.
The 20 Best Places to Buy Short Term Rental Property
Travel sentiments for this year have positively trended. According to Think with Google, Millennial and Gen Z travelers, which consist of more than half of the American population, will reignite the travel industry.
Google searches using the terms “Can I travel” and “Travel to” have increased by 800% and 100% respectively in the last several months. Plus, more than half of these users are looking to travel more when the pandemic is over.
Millennial and Gen Z travelers equally prioritize affordability and authenticity, which can be found in rural areas and mountain towns. This trend was already seen in late 2020 and throughout 2021 and 2022 as Airbnb demand in these places went up while urban and suburban rentals slightly went down.
With these trends in mind, we used Mashvisor’s analytics to find the 20 best places to buy short term rental property. If you want to start hosting on Airbnb and other short term rental platforms but are not sure where to invest, keep reading to learn where to look.
Criteria for Market Selection
If you’re in the market for vacation rentals for sale, check out the following locations. The locations included on this list were selected using the following criteria:
- Each market should have a median property price that doesn’t exceed $1,000,000
- Each market should have a minimum of 100 active Airbnb listings
- Each market should have a monthly rental income of at least $2,000
- Each market should have a cash on cash return of no less than 2.00%
- Each market should have a 50% short term rental occupancy rate or higher
This list is ranked from the highest to the lowest cash on cash return based on Mashvisor’s short term rental data from December 2022.
1. Harpers Ferry WV
- Median Property Price: $399,075
- Average Price per Square Foot: $265
- Days on Market: 59
- Number of Short Term Rental Listings: 107
- Monthly Short Term Rental Income: $4,315
- Short Term Rental Cash on Cash Return: 7.77%
- Short Term Rental Cap Rate: 7.88%
- Short Term Rental Daily Rate: $220
- Short Term Rental Occupancy Rate: 57%
- Walk Score: 0
Harpers Ferry in West Virginia is a great weekend destination for history buffs and those who just want to enjoy some much-needed peace and quiet.
Start searching for profitable short term rentals in Harpers Ferry WV.
2. Schiller Park IL
- Median Property Price: $284,199
- Average Price per Square Foot: $221
- Days on Market: 29
- Number of Short Term Rental Listings: 132
- Monthly Short Term Rental Income: $3,643
- Short Term Rental Cash on Cash Return: 7.64%
- Short Term Rental Cap Rate: 7.79%
- Short Term Rental Daily Rate: $165
- Short Term Rental Occupancy Rate: 57%
- Walk Score: 71
Schiller Park makes for a good vacation rental location, given its proximity to Chicago. There are plenty of dining and entertainment options easily accessible to tourists and visitors.
3. Columbia Heights MN
- Median Property Price: $255,662
- Average Price per Square Foot: $139
- Days on Market: 49
- Number of Short Term Rental Listings: 327
- Monthly Short Term Rental Income: $3,175
- Short Term Rental Cash on Cash Return: 7.52%
- Short Term Rental Cap Rate: 7.68%
- Short Term Rental Daily Rate: $158
- Short Term Rental Occupancy Rate: 57%
- Walk Score: 82
Not only is this Minneapolis suburb an excellent place to live in, but it is also one of the best locations for vacation rentals in the area, with a high occupancy rate and cash on cash return.
4. Harvey LA
- Median Property Price: $252,088
- Average Price per Square Foot: $160
- Days on Market: 80
- Number of Short Term Rental Listings: 799
- Monthly Short Term Rental Income: $2,868
- Short Term Rental Cash on Cash Return: 7.37%
- Short Term Rental Cap Rate: 7.53%
- Short Term Rental Daily Rate: $181
- Short Term Rental Occupancy Rate: 57%
- Walk Score: 61
With a 57% short term rental occupancy rate and an above 7.00% cash on cash return, you won’t go wrong making an investment in Harvey LA.
5. Northlake IL
- Median Property Price: $321,543
- Average Price per Square Foot: $204
- Days on Market: 59
- Number of Short Term Rental Listings: 118
- Monthly Short Term Rental Income: $4,013
- Short Term Rental Cash on Cash Return: 7.29%
- Short Term Rental Cap Rate: 7.42%
- Short Term Rental Daily Rate: $168
- Short Term Rental Occupancy Rate: 54%
- Walk Score: 33
Chicago tourists and visitors who want to enjoy the peace and quiet that a suburb offers but still have access to big-city amenities will find Northlake a paradise. A 25-minute driving distance separates Northlake from the Windy City, making it another ideal location for a short term rental property.
6. Laurel MS
- Median Property Price: $417,487
- Average Price per Square Foot: $196
- Days on Market: 140
- Number of Short Term Rental Listings: 105
- Monthly Short Term Rental Income: $3,223
- Short Term Rental Cash on Cash Return: 7.21%
- Short Term Rental Cap Rate: 7.36%
- Short Term Rental Daily Rate: $161
- Short Term Rental Occupancy Rate: 53%
- Walk Score: 74
Laurel has a beautiful comeback story that makes it an interesting place to visit. Its inspiring history, told by its hospitable and accommodating residents, make a trip there worth it. You won’t want to miss out on the action as visitors flock to this charming southern town.
7. Bar Harbor ME
- Median Property Price: $493,800
- Average Price per Square Foot: $396
- Days on Market: 41
- Number of Short Term Rental Listings: 306
- Monthly Short Term Rental Income: $5,115
- Short Term Rental Cash on Cash Return: 7.20%
- Short Term Rental Cap Rate: 7.28%
- Short Term Rental Daily Rate: $309
- Short Term Rental Occupancy Rate: 64%
- Walk Score: 75
This small resort town in Maine offers tourists and visitors a stunning view of its coastal beauty as well as signature Maine dishes that never fail to satisfy. Its very high occupancy rate means it is a great location for an Airbnb business.
8. Penn Yan NY
- Median Property Price: $260,920
- Average Price per Square Foot: $190
- Days on Market: 270
- Number of Short Term Rental Listings: 145
- Monthly Short Term Rental Income: $3,544
- Short Term Rental Cash on Cash Return: 7.08%
- Short Term Rental Cap Rate: 7.22%
- Short Term Rental Daily Rate: $321
- Short Term Rental Occupancy Rate: 52%
- Walk Score: 77
Penn Yan offers tourists and visitors a rustic yet cozy environment to enjoy. Keuka Lake is one of its main selling points, which makes Penn Yan a great place to invest in a vacation rental property.
9. Bellwood IL
- Median Property Price: $236,886
- Average Price per Square Foot: $206
- Days on Market: 78
- Number of Short Term Rental Listings: 176
- Monthly Short Term Rental Income: $3,264
- Short Term Rental Cash on Cash Return: 7.04%
- Short Term Rental Cap Rate: 7.20%
- Short Term Rental Daily Rate: $163
- Short Term Rental Occupancy Rate: 61%
- Walk Score: 82
Another location near Chicago is Bellwood. Just like the other Chicago suburbs on this list, Bellwood gives visitors and tourists a chance to enjoy both urban and suburban vibes, making it an ideal vacation rental location.
10. Terrytown LA
- Median Property Price: $289,783
- Average Price per Square Foot: $134
- Days on Market: 47
- Number of Short Term Rental Listings: 780
- Monthly Short Term Rental Income: $2,792
- Short Term Rental Cash on Cash Return: 6.92%
- Short Term Rental Cap Rate: 7.08%
- Short Term Rental Daily Rate: $177
- Short Term Rental Occupancy Rate: 57%
- Walk Score: 66
This unincorporated community in Louisiana’s Jefferson Parish is another great location for short term rentals. It is situated on the west bank of the Mississippi just across New Orleans, giving it a beautiful sight of the city. It is small and peaceful, which makes it an ideal weekend getaway.
11. West Saint Paul MN
- Median Property Price: $299,821
- Average Price per Square Foot: $160
- Days on Market: 41
- Number of Short Term Rental Listings: 361
- Monthly Short Term Rental Income: $3,357
- Short Term Rental Cash on Cash Return: 6.88%
- Short Term Rental Cap Rate: 7.01%
- Short Term Rental Daily Rate: $152
- Short Term Rental Occupancy Rate: 60%
- Walk Score: 75
If you’re considering investing between Minneapolis and West Saint Paul, go with the latter. The cost of living in West Saint Paul is a lot lower compared to the state average, making property maintenance a lot more affordable for vacation rental owners.
12. Broadview IL
- Median Property Price: $271,610
- Average Price per Square Foot: $204
- Days on Market: 57
- Number of Short Term Rental Listings: 314
- Monthly Short Term Rental Income: $3,254
- Short Term Rental Cash on Cash Return: 6.78%
- Short Term Rental Cap Rate: 6.91%
- Short Term Rental Daily Rate: $163
- Short Term Rental Occupancy Rate: 59%
- Walk Score: 61
Just 12 miles west of downtown Chicago, Broadview is one of the best places for a vacation rental property investment. Its high cash on cash return and occupancy rate will give you more than $3,000 in rental income per month.
13. Robbinsdale MN
- Median Property Price: $291,650
- Average Price per Square Foot: $138
- Days on Market: 48
- Number of Short Term Rental Listings: 370
- Monthly Short Term Rental Income: $3,199
- Short Term Rental Cash on Cash Return: 6.68%
- Short Term Rental Cap Rate: 6.80%
- Short Term Rental Daily Rate: $167
- Short Term Rental Occupancy Rate: 56%
- Walk Score: 73
The Minneapolis suburb of Robbinsdale is a quaint town that’s quite family-friendly. This makes it a great place for families to visit. Investing in a vacation rental in Robbinsdale will get you a good return on your investment.
14. Bridgeton MO
- Median Property Price: $298,929
- Average Price per Square Foot: $163
- Days on Market: 26
- Number of Short Term Rental Listings: 134
- Monthly Short Term Rental Income: $3,295
- Short Term Rental Cash on Cash Return: 6.67%
- Short Term Rental Cap Rate: 6.79%
- Short Term Rental Daily Rate: $153
- Short Term Rental Occupancy Rate: 58%
- Walk Score: 3
Aside from being a friendly neighborhood, Bridgeton MO is a nice easygoing town. While it doesn’t have much to offer by way of tourist attractions, Airbnbs in this area provide lodging to those who are moving states or going on road trips.
15. Great Falls MT
- Median Property Price: $349,360
- Average Price per Square Foot: $149
- Days on Market: 87
- Number of Short Term Rental Listings: 117
- Monthly Short Term Rental Income: $3,268
- Short Term Rental Cash on Cash Return: 6.61%
- Short Term Rental Cap Rate: 6.73%
- Short Term Rental Daily Rate: $133
- Short Term Rental Occupancy Rate: 56%
- Walk Score: 84
As the third most populous city in Montana, Great Falls has made quite a name for itself as a vacation destination, as it offers visitors several unique experiences. With plenty of sights to see and things to do, investing in Great Falls may be one of the best things you can do.
16. Silverton OH
- Median Property Price: $252,460
- Average Price per Square Foot: $196
- Days on Market: 53
- Number of Short Term Rental Listings: 293
- Monthly Short Term Rental Income: $2,806
- Short Term Rental Cash on Cash Return: 6.58%
- Short Term Rental Cap Rate: 6.73%
- Short Term Rental Daily Rate: $144
- Short Term Rental Occupancy Rate: 52%
- Walk Score: 77
This neighborhood in Hamilton County OH gives short term rental property investors a decent ROI. The suburb is a great in-between place for those who are relocating, which, coincidentally, is growing in numbers given the high property and rental prices in bigger cities.
17. Harahan LA
- Median Property Price: $367,800
- Average Price per Square Foot: $237
- Days on Market: 63
- Number of Short Term Rental Listings: 114
- Monthly Short Term Rental Income: $3,534
- Short Term Rental Cash on Cash Return: 6.54%
- Short Term Rental Cap Rate: 6.64%
- Short Term Rental Daily Rate: $140
- Short Term Rental Occupancy Rate: 60%
- Walk Score: 55
As a New Orleans suburb, Harahan gives visitors access to New Orleans by offering more affordable lodging. This gives investors a chance to earn above $3,500 in rental income a month, given its high occupancy rate of 60%.
18. New Bern NC
- Median Property Price: $382,648
- Average Price per Square Foot: $213
- Days on Market: 127
- Number of Short Term Rental Listings: 169
- Monthly Short Term Rental Income: $3,600
- Short Term Rental Cash on Cash Return: 6.54%
- Short Term Rental Cap Rate: 6.64%
- Short Term Rental Daily Rate: $151
- Short Term Rental Occupancy Rate: 57%
- Walk Score: 74
New Bern NC offers visitors some breathtaking sights of the Neuse and Trent Rivers coming together. The downtown area offers visitors and tourists a decent amount of shopping, entertainment, and dining experiences that make it worth visiting.
19. Columbus GA
- Median Property Price: $230,653
- Average Price per Square Foot: $137
- Days on Market: 117
- Number of Short Term Rental Listings: 295
- Monthly Short Term Rental Income: $2,234
- Short Term Rental Cash on Cash Return: 6.50%
- Short Term Rental Cap Rate: 6.69%
- Short Term Rental Daily Rate: $122
- Short Term Rental Occupancy Rate: 57%
- Walk Score: 35
Columbus has plenty to offer history buffs and nature lovers. Tourists have plenty of options for things to do and places to go. It also doesn’t hurt investors that it offers a 6.50% cash on cash return on very affordable real estate.
20. Mount Desert ME
- Median Property Price: $793,790
- Average Price per Square Foot: $480
- Days on Market: 40
- Number of Short Term Rental Listings: 121
- Monthly Short Term Rental Income: $6,219
- Short Term Rental Cash on Cash Return: 6.49%
- Short Term Rental Cap Rate: 6.54%
- Short Term Rental Daily Rate: $321
- Short Term Rental Occupancy Rate: 60%
- Walk Score: 0
Land, sea, and mountains. This is what Mount Desert Island has to offer tourists, which makes it a haven for nature lovers of all ages. With breathtaking views and lots of fun things to do, MDI continues to rake in visitors year in and year out. This is something you would want to take advantage of as an investor.
Go to Mashvisor now to start looking for and analyzing the most profitable short term rental properties in any location of your choice.
How to Find a Profitable Short Term Rental Property
When it comes to identifying the best places to buy short term rental property—or any investment property for that matter—you need to do the following:
1. Look for the Best Location
As we already mentioned above, the place where a property is situated matters a lot. The location will significantly impact your investment returns, so this is something that you should give plenty of thought to.
When it comes to finding the best place to buy an investment property, you need to consider several factors, such as:
Profitability
While short term rentals are promising investment vehicles, each place has different things to offer investors in terms of ROI. So make sure you perform due diligence first before making any final investment decisions and buying an income property.
Property Taxes
Whether you like it or not, taxes are a part of your life as a rental property investor. Each state and county has different tax requirements and benefits, so it is best to find out what the taxes are like in the place you’re considering. Connect with local agents, other investors, and tax professionals to get a better idea of what to expect before you buy any properties in a city.
Rental Market Conditions
Lastly, gaining a deeper insight into the place you’re considering will benefit you in the long run. Understanding the local rental market’s conditions will allow you to see whether a place is best for buying vacation rentals or not. It also gives you the chance to make the necessary adjustments as a rental property owner.
2. Find the Best Neighborhood
Once you have determined a city to invest in, the next step is to check out what each neighborhood has to offer by way of ROI. The best places to buy short term rental property usually have the following characteristics:
- Easily accessible to public transportation and amenities
- Good school districts
- Low crime rates and are generally considered safe
- Thriving economies and growing job markets
- Very promising future development plans for long-term profitability
Additionally, these places also have very attractive numbers when it comes to—
- Cash on cash return
- Cap rate
- Monthly rental income
- Occupancy rate
- Listing price
3. Use the Best Tools
Lastly, when it comes to identifying the best places to buy short term rentals, you need to have the best tools at your disposal. You will need access to a tool that will give you reliable data and information as well as the means to compute for profitability.
Enter Mashvisor. Mashvisor is a real estate platform that helps investors like you find the best places to buy rental property investment. It gives you access to a wide range of information necessary to make calculated ROI projections.
Mashvisor is known to have a massive database that covers nearly every real estate market in the country. It pulls its data from high-quality sources, such as Zillow, Realtor.com, the MLS, and Airbnb itself. As a user, you will have access to the most up-to-date data and information that will help you work on an accurate rental property analysis.
Mashvisor’s Short Term Rental Calculator
On top of that, you will also be given access to tools such as its investment property calculator, which makes crunching the numbers a lot easier. You can also use Mashvisor’s real estate heatmap to further narrow down your choices to the best possible properties in any place in the US housing market.
Get started on your 7-day free trial with Mashvisor today, followed by a lifetime 15% discount.
Quickly Analyze the Best Places to Buy Short Term Rental Property With Mashvisor
No matter what market cycle the best places to buy short term rental property are in, it is always important to make smart, informed decisions with your investments. Doing so involves a lot of research and analysis, which is why we recommend using a tool that specializes in Airbnb investment properties like Mashvisor.
Our Property Finder helps you search for properties in up to five cities at the same time without having to open multiple tabs on your browser. It will then display all of the homes for sale in these areas in a consolidated search results page, sorting them from highest to lowest cash on cash returns.
You can also filter your search results by setting your budget, preferred rental strategy, property type, and the number of bedrooms and bathrooms.
When you click on a house that you are interested in, you will open its listing page, which contains powerful tools to help you further analyze the property.
One of these tools is the Airbnb calculator, which estimates the home’s rental income, expenses, and occupancy rate based on comparable Airbnb rental properties in the area. But you can also edit these numbers to suit your situation.
After inputting the needed variables, the calculator will then show your estimated cash flow, cash on cash returns, cap rate, and 10-year payback balance.
Learn more about how Mashvisor can help you find the best deals in the most profitable markets by scheduling a demo now.