Where in the U.S. can your Airbnb or VRBO investment yield the highest returns? Our in-depth analysis of the most profitable cities for short-term rental property investments may hold the answer. Drawing on data from AlltheRooms.com and Realtor.com, we’ve evaluated 100 of the most populous U.S. cities based on factors like average net profits, mortgage payments, and real estate market dynamics.
Our findings offer insights into the top cities for short-term rental return on investment (ROI) and shed some light on market affordability and demand nuances. Whether you’re a potential investor or a seasoned rental host, let this article be your compass as you consider short-term rental investment options.
- Henderson, NV; Nashville, TN; North Las Vegas, NV; Las Vegas, NV; and Boston, MA, are the top cities for short-term rental return on investment, among the most populous cities in the U.S.
- Detroit, MI, ranks the most affordable based on the median 20% home down payment ($26,990); San Jose, CA, ranks the least affordable ($289,000).
- Columbus, OH, ranks at the top for market real estate supply (scoring 98.98 out of 100); New York, NY, ranks at the bottom (4.33).
- Columbus, OH, ranks at the top for market real estate demand (scoring 87.45 out of 100); New York, NY, ranks at the bottom (0.31).
- Jersey City, NJ, and Boston, MA, have the highest short-term rental occupancy rate (69%); Corpus Christi, TX, has the lowest (26%).
- New York, NY, has the largest short-term rental market based on monthly market revenue ($27,445,975); St. Paul, MN, has the smallest ($19,762).
U.S. Cities Where Airbnb and VRBO Profits Soar
To begin our study of potential short-term rental investments, we reveal the U.S. cities that could offer the most promising returns based on city real estate, Airbnb, and VRBO rental data. Each location’s unique characteristics present a compelling case for potential investors. Let’s explore what makes these destinations stand out in the short-term rental market.
According to our ranking criteria, Henderson, Nevada, emerged as the most profitable city for short-term rental investments among the 100 most populated U.S. cities. It had the highest estimated yearly ROI at $31,706 per property, on average, and ranked near the top for occupancy rates. Henderson’s popularity is likely driven by travelers wanting to stay in a less crowded and more relaxed environment that’s still close to the bright lights of Las Vegas.
Known for turning musicians into country legends, Nashville, Tennessee, attracts millions of visitors annually and is the second-most profitable city for an Airbnb or VRBO investment. Returning to Nevada, North Las Vegas came in at No. 3 on our list. Considering its nearness to the Las Vegas Strip, it’s a relatively cost-effective option for visitors compared to its neighbor: the next-most profitable city on our list, Las Vegas, Nevada. The endless stream of tourists coming to Vegas seeking nightlife and entertainment makes it a perennial hotspot for short-term rental investments.
Boston, Massachusetts, rounded out the top five most profitable cities for short-term rentals with an average annual ROI of just over $18,000 per property and a top rank in occupancy rates. With its many historical attractions and esteemed academic institutions, this city appeals to various demographics, cementing its position as a prime location for short-term rental ventures.
Costs, Supply, and Demand: Decoding the Short-Term Rental Market
Next, we’ll explore the affordability of properties, market dynamics, occupancy rates, and revenue potentials in various cities, uncovering key insights for discerning investors.
In assessing the affordability and market dynamics of short-term rental investments, we found striking contrasts across the 100 most populated U.S. cities. Detroit, Michigan, was the most budget-friendly option, requiring a median 20% down payment of just $26,990. In stark contrast, San Jose, California, was the least affordable, demanding a hefty median down payment of $289,000.
Compared to the other cities we studied, Columbus, Ohio’s real estate market positioned it favorably for potential investors. It boasted the highest supply score at 98.93 out of 100, coupled with a robust demand score of 87.45, indicating a healthy and active market. On the other end of the spectrum, New York found itself at the bottom in each regard, with a supply score of just 4.33 and a demand score of merely 0.31, reflecting a challenging market landscape.
Despite this, the Big Apple proved to have the largest short-term rental market in terms of monthly revenue, raking in an impressive $27,445,975. This may reflect the extremely high cost of rent in New York. Occupying the other end of the spectrum, St. Paul, Minnesota, had the smallest market, generating $19,762 monthly.
As for VRBO and Airbnb occupancy rates, Jersey City, New Jersey, and Boston, Massachusetts, led the way with a high rate of 69% for each, signaling strong and consistent visitor interest in short-term rentals. In contrast, Corpus Christi, Texas, lagged with the lowest occupancy rate of only 26%.
Making the Right Short-Term Rental Investment
Our exploration of the short-term rental investment landscape reveals diverse opportunities in U.S. cities. From Detroit’s affordability to the active market in Columbus, each city offers unique prospects for investors. High occupancy rates in cities like Jersey City and Boston also illustrate the importance of location in short-term rental success.
Our findings highlight the need for investors to evaluate financial viability and market conditions carefully. This study serves as a practical guide, aiding investors in making informed decisions in the dynamic short-term rental market that’s filled with potential for those who navigate it thoughtfully.
For this study, we leveraged AllTheRooms and Realtor.com to determine the best cities for short-term rental investments in the U.S., focusing on the 100 most populous cities. To determine the best cities for short-term rental investment, we looked at the average net profit (average revenue minus a 10% operations cost) of Airbnb and VRBO rentals in each city (based on AlltheRooms data) and the average annual mortgage payment (based on a 30-year fixed-rate loan at 7.7% interest and the property taxes within each state summed with state-based property taxes).
We also collected additional metrics from AlltheRooms (including Airbnb/VRBO occupancy rates and Airbnb/VRBO monthly market revenue) and Realtor.com (including real estate supply and demand scores). The data collected was based on reports from October 2023 and scaled to represent annual measurements. Actual costs, rates, revenues, and returns may vary.
About JW Surety Bonds
JW Surety Bonds is a leading national provider of surety bonds, offering a range of services, including mortgage broker and lender bonds. Our extensive network of insurers and specialty programs ensures clients receive the best rates and options available in the market.
Fair Use Statement
Know someone who might be interested in these investment insights? We encourage you to share this article for noncommercial purposes and ask that you provide a link back to this page, allowing your audience full access to our comprehensive research and methodology.