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Top 10 Cities for Short-Term Rental Investments

Want to invest in a short-term rental? Check out Fairbanks, Alaska – ranked second in a list of the best places to invest in the USA. Want something closer to home? Peoria, Illinois leads the list as your best bet.

The source of the list is AirDNA, a Denver-based provider of short-term rental (STR) data and analytics, which higlights an innovative guide that shows the markets where STR is most promising. It is based on an analysis of 540,000 properties currently for sale based on demand, revenue growth potential, “investability” and whether such rentals are heavily regulated.

Last year was a difficult one for STR investors, AirDNA noted, due to a limited supply of homes and apartments. Listings grew by just 6.8%, compared to 14.4% in 2023.

The biggest growth was in small city and rural areas, where listings grew by 16%, and in mid-sized cities where there was 10.3% growth. However, high interest rates, rising home values and declining growth in short-term rental performance have made STR investments tougher and will continue to do so in 2025, the report said.

On the other hand, occupancy and average daily rates are expected to rise in 2025, which could offset the higher costs of properties for sale.

To compile its list, AirDNA examined cities and rural areas by certain criteria. These included how often rentals are booked and the strength of travel interest in a given market, whether revenue is growing as properties become more valuable over time, how many properties are actively for sale, and how strictly STRs are regulated.

The top 10 markets in order were:

  • Peoria emerged as the top market in the U.S. for gross yields, with affordable real estate and strengthening STR performance, as well as some local attractions. 
  • Fairbanks – an arctic gateway destination -- showed high average revenue potential, the highest occupancy – 66% -- of all the markets examined, and strong nightly rates.
  • Akron, OH exhibited “sky-high listing growth showing investor interest” but a market still unsaturated and offering “vibrant attractions” as well as a firm industrial base.
  • Columbus, GA, was assessed as a market that generated strong cash flow and 13.4% gross yield, but with “manageable” prices and a growing nightly rate in a city with a rich history and many attractions.
  • Crescent City, a year-round coastal destination in California with “stunning natural beauty," has high revenue potential and gross yield, as well as growing demand, though the home prices are higher.
  • Shreveport is seeing improving occupancy rates that are increasing revenue per available room (RevPAR) as growing numbers of tourists flock to its riverboat casinos and festivals.
  • Page, AZ, home to iconic landmarks, has one of the highest average daily rates of all the markets examined at more than $300, and the second-highest RevPAR, resulting in strong cash flow, but few properties for sale.
  • Rockford, IL., noted as “a charming destination, has affordable home prices and strong STR performance that produces solid gross yields and steady cash flow and has seen a 27% increase in Airbnb listings.
  • Dayton, OH is attracting many travelers with demand driving an 8.1% increase in RevPAR in the past year and yielding strong cash flow opportunities.
  • Frankfort, KY, a home of fine bourbon, saw a 64.7% rise in STR listings last year, resulting in solid RevPAR growth and rising occupancy rates.

Reprinted with permission from the Tuesday, 04 February 2025 06:24:02 EST online edition of GlobeSt © 2025 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited, contact 877-256-2472 or reprints@alm.com.