In 2022, there were approximately 7 million listings on Airbnb worldwide, with 660,000 listings in the United States, the highest number of any country in the world. Short-term rentals have exploded in popularity, emerging as a key asset class for real estate investors looking to diversify their revenue streams. However, before you jump on the bandwagon – choosing the right city will be critical to ensure a highly-profitable short-term investment property that will generate the highest ROI.
What makes a good Airbnb rental market?
Most real estate investors know that location can either make or break the success of your short-term rental property. Here are the following factors you should consider when looking for a lucrative Airbnb rental market to invest in.
Understanding when and why people visit your destination can make all the difference between having a successful or unsuccessful rental. Knowing which months will bring tourists based on local attractions, festivals, or events will help you find a location that fits your budget and is likely to draw business. Being aware of seasonal fluctuations in demand may also help you determine peak times when raising the cost of your rental would be beneficial. Regardless of where you decide to locate your property, considering seasonality is essential for making sure your Airbnb remains competitive year-round.
Airbnb Occupancy Rate
The Airbnb occupancy for your chosen area will significantly impact your short-term investment property’s monthly income. This is the number of nights booked divided by the total nights available to be booked across all relevant listings. When researching the right market for your Airbnb investment, look up the occupancy rate for that particular location. You can quickly search for similar rental properties in the area. Pro tip: Aim for markets that offer above 50% Airbnb occupancy rates to give you a better return on investment.
Each city or town will have its own Airbnb regulations, so understanding the different regulations for each location is an important factor to consider when purchasing a rental property. While some areas have no rules around short-term rentals, other places might have specific occupancy limits or restrictions on how long quick stays can be allowed. Awareness of these regulations before selecting a rental property location is crucial, as non-compliance could lead to undesirable penalties and fines. Researching the available Airbnb regulations can save you time, money, and energy in the long run.
As you search for a location, make sure to think about its appeal. Tourism can significantly impact the number of bookings you get and how much you can charge for short-term rentals. Tourist hotspots tend to be full of renters seeking local activities and amenities, as tourists often look for unique experiences they won’t find at home. An Airbnb location with high tourism traffic improves occupancy rates and revenue compared with properties situated in less popular areas. Even if most of your customers don’t specifically plan on visiting attractions near your property, they may choose to once they arrive and realize what else the area offers. Take advantage of local resources or work with nearby tourist organizations to promote your Airbnb and encourage visitors to stay at your location.
2022 Top Cities for Airbnb Short-Term Rental Properties
From warm weather to sandy beaches and world-renowned theme parks, Florida is a popular vacation destination spot, attracting thousands of visitors across the globe and boasting an impressively strong rental market – five of its cities are included in the top 10 most Airbnb listings per capita.
The fast-paced city known for its energetic nightlife ranks number 6 on Mashfinders’ list of top 10 US markets with the highest number of active Airbnb rental properties. Miami has over 4,004 listings, with an average daily rate of $275, with investors expecting an Airbnb cash-on-cash return of 1.75%.
A 20-minute drive from the vibrant downtown Miami, this city has lots to offer, from its pristine beaches to popular tourist attractions like the Everglades Safari Park and Biscayne National Park; Sweetwater, FL, is a hub of excitement and sunsoaked adventure. According to Masvisor, a data and analytics platform that analyzes Airbnb properties, Sweetwater places at the top of the list for cities with the highest cash-on-cash returns in Florida.
Known for its cobbled-stone streets, artisanal markets, world-famous baked beans, and Fenway Park, Boston boasts a thriving economy, offering a variety of activities for tourists to enjoy. The average daily rate for Boston short-term properties in 2022 was around $225. However, keep in mind that all those perks don’t come cheap — investors can expect to pay top dollar to purchase a short-term rental property in the city dubbed the “Hub of the Universe.” Before handing over your hard-earned cash, it’s important to conduct extensive research to see which neighborhood will yield the highest profit.
With its versatile topography spanning from mountains to sea, it’s no secret why North Carolina and South Carolina have experienced short-term rental market growth. From sandy beaches to eclectic cuisine, music festivals, tangy BBQ, and the iconic mountains of the Blue Ridge Parkway, tourists flock to the Carolinas and choose to stay in short-term rental properties.
Asheville, NC, is a vacation hot for short-term rentals. A thriving city nestled within the beautiful Blue Ridge mountains. It recently placed in the top 10 cities in the country for Airbnb rental property, with 1,041 Airbnb listings per 50,000 people.
Tourists can dine on delicious local cuisine, enjoy a late-night drum circle or stroll through Asheville’s colorful River Art District. Visit Biltmore Estate, America’s biggest home, and be awe-inspired by sprawling, manicured lawns, a beautiful garden bursting with colorful flowers, or barrel-aged red vino from their private vineyard. Whether browsing the cute, local shops that line the streets of downtown or hiking the peaks of the Blue Ridge mountains, millions flock to this vibrant city each year for a unique, adventurous experience, making it the perfect place to invest in a short-term rental property.
Charlotte, NC, is a bustling playground in North Carolina’s piedmont region. The city offers tourists an array of fantastic shopping and upscale eateries. Adrenaline seekers can visit Carawinds amusement park to take on death-defying roller coasters, while sports enthusiasts can immerse themselves in history at the NASCAR Hall of Fame. According to a new analysis from Zillow, the city is this year’s hottest housing market. If you want to invest in a short-term rental property, this is the place to do it.
Charleston, SC, is steeped in rich southern tradition, boasting an eclectic blend of English, French, and West African elements. Founded in 1670, it’s the oldest city in South Carolina. This sleepy-beach town draws visitors from across the country with its quaint charm, cobblestone streets, colonial architecture, delicious seafood, and sunset horse-drawn carriage rides. According to statistics, 46,0% of Charleston’s inhabitants, or approximately 60,000 people, are renters who pay an average monthly rent of $2,000–$2,400; paired with the city’s strong local economy, it’s no wonder why Charleston is a goldmine for both short and long-term investments.
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Muriithi, Written by Kabue. “Airbnb Rentals Archives.” Investment Property Tips | Mashvisor Real Estate Blog, 16 Dec. 2022, https://www.mashvisor.com/blog/category/investor-blogs/airbnb-rentals/.