2022 is THE year to invest in an Airbnb rental. To help you, we found the 10 best places to buy short term rental property in the US.
Even though COVID-19 continues to disrupt the travel industry as a whole, it has also presented a lucrative opportunity for current and aspiring Airbnb hosts.
Mortgage interest rates in the 2022 real estate market are still at their lowest, making it more attainable for investors to afford a property. Beginners simply need to have enough money for initial out-of-pocket expenses. Meanwhile, those who already have at least one property can refinance their investments at a very low rate, which they can then use to buy another rental home.
Travel sentiments for this year are trending positively as well. 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 weeks, and 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 as Airbnb demand in these places went up while urban and suburban rentals went down.
With these trends in mind, we used Mashvisor’s analytics to find the 10 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.
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 10 best places to buy short term rental property, we will share what criteria we used to determine what makes a city or town perfect for this short term rental strategy.
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 high earning potential. The list in the section will cover such markets.
Cap Rate or 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. 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 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 cash you spent 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.
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 the national average.
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 an area that has high Airbnb demand for any number of reasons. While most short term rentals get a lot of bookings because of their proximity to popular tourist destinations, others generate a lot of income because they are near a business district.
In this article, we narrowed down our list 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 a low 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 low occupancy rates.
If you are a beginner investor, try to aim for no higher than a $200,000 property in an up-and-coming neighborhood. Those 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. This means that their monthly rental income should be equivalent to at least 1% of the property price to become profitable.
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 also 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.
For the list of best places to buy short term rental property, we made sure to only include the cities and towns that allow non-owner-occupied Airbnbs. Still, we highly encourage you to double-check the regulations in your municipality as well as the HOA rules in the community for the latest and most accurate information.
The 10 Best Places to Buy Short Term Rental Property
#1: Pulaski, VA
- Airbnb Rental Income: $3,483
- Airbnb Cash on Cash Return: 9.88%
- Airbnb Daily Rate: $241
- Airbnb Occupancy Rate: 58%
- Median Property Price: $144,613
- Average Price per Square Foot: $126
- Days on Market: 51
- Walk Score: 63
The town of Pulaski is known for being close to Claytor Lake State Park, where tourists can go boating, fishing, swimming, hiking, and picnicking. It is also in proximity to New River Trail State Park, which features a 57-mile linear park that follows an abandoned railroad bed and is popular among off-road cyclists. The town also has Thee Draper Village, which has a variety of dining and shopping options as well as spaces for events like weddings.
At the time of writing, there are 15 Pulaski, VA homes for sale on Mashvisor, ranging from $79,900 to $229,750. The median property price is $144,613, trending down by -7% year-over-year. Homes in this town have sold for approximately the selling price. Because it is a balanced market, you may not have much leverage in the negotiations, but you may be able to find a suitable property without worrying about the competition.
#2: Spring Grove, IL
- Airbnb Rental Income: $7,171
- Airbnb Cash on Cash Return: 9.80%
- Airbnb Daily Rate: $328
- Airbnb Occupancy Rate: 66%
- Median Property Price: $253,617
- Average Price per Square Foot: $150
- Days on Market: 29
- Walk Score: 21
The village of Spring Grove is one of the best places to buy short term rental property for being a popular weekend getaway destination without the dense crowds that other hot tourist attractions get. What makes this place perfect for Airbnb investment is that it features attractions and events year-round, so you would not have to worry about seasonality. Winter in Spring Grove, for example, features a lot of Christmas attractions such as the Lighting of the Square, which takes place on Friday after Thanksgiving.
There are 9 Spring Grove, IL homes for sale on Mashvisor, ranging from $125,000 to $450,000. The median property price is $253,617, down by -22% year-over-year. Nevertheless, homes have sold for approximately the asking price. Spring Grove is in a seller’s market as well. Investors who want to acquire a property here need to act fast and maybe even place an offer above the asking price.
#3: Osceola, WI
- Airbnb Rental Income: $3,670
- Airbnb Cash on Cash Return: 9.24%
- Airbnb Daily Rate: $254
- Airbnb Occupancy Rate: 55%
- Median Property Price: $268,695
- Average Price per Square Foot: $218
- Days on Market: 155
- Walk Score: 56
The village of Osceola serves as a peaceful and charming retreat to visitors who have spent the day adventuring in the region. Despite its small size, it has a lot of attractions without being too crowded, which is what travelers are looking for nowadays. One of these attractions is the St. Croix National Scenic Riverway, where tourists can ride a vintage train or go paddle boating down the river.
There are 24 Osceola, WI homes for sale on Mashvisor, ranging from $160,000 to $574,900. The median property price is $268,695, an increase of 12% year-over-year. Homes in this village have sold for approximately the asking price, and since it is in a seller’s market, buyers do not have the leverage to negotiate.
#4: Franklin, NH
- Airbnb Rental Income: $4,280
- Airbnb Cash on Cash Return: 9.23%
- Airbnb Daily Rate: $270
- Airbnb Occupancy Rate: 79%
- Median Property Price: $254,120
- Average Price per Square Foot: $149
- Days on Market: 140
- Walk Score: 48
Franklin is dubbed the Three Rivers City because it is located where the Pemigewasset and Winnipesaukee rivers meet to form the Merrimack River. It features a number of attractions that appeal to both history buffs and outdoor enthusiasts. The Daniel Webster Birthplace, for example, is associated with the birth and childhood of one of the country’s most respected orators and statesmen. Visitors have to go through the hiking trail to reach the historic site.
There are 12 Franklin, NH homes for sale on Mashvisor, ranging from $149,900 to $749,000. The median property price in the area is $254,120, up 13% year-over-year. The Franklin, NH housing market is somewhat competitive, with some homes getting multiple offers. But these houses have sold for about 1% below the asking price and have gone pending after 140 days on the market.
#5: Battlefield, MO
- Airbnb Rental Income: $3,365
- Airbnb Cash on Cash Return: 8.95%
- Airbnb Daily Rate: $125
- Airbnb Occupancy Rate: 78%
- Median Property Price: $257,850
- Average Price per Square Foot: $133
- Days on Market: 36
- Walk Score: 31
As part of Greene County, the city of Battlefield is in proximity to several parks like the Wilson’s Creek National Battlefield, where the second major battle of the Civil War happened. Visitors can go on a self-guided driving or walking tour of the area, or go walking, hiking, and horseback riding on the other trails. The city also has easy access to golf courses, sports complexes, and other facilities like the Butterfly House and Dickerson Park Zoo.
There are 107 Battlefield, MO homes for sale on Mashvisor, ranging from $85,000 to $3,800,000. The median property price in the city is $257,850, an increase of 29% year-over-year.
#6: St. Robert, MO
- Airbnb Rental Income: $2,776
- Airbnb Cash on Cash Return: 8.90%
- Airbnb Daily Rate: $109
- Airbnb Occupancy Rate: 70%
- Median Property Price: $212,250
- Average Price per Square Foot: $100
- Days on Market: 51
- Walk Score: 23
Unlike other places in this list, the city of St. Robert has a thriving tourist industry with families and friends attending graduation ceremonies at Fort Leonard Wood, which trains around 100,000 service members every year. While this demand has led to 22 hotels and motels opening in the area, many of these families prefer staying in a short term rental home.
There are 76 St. Robert, MO homes for sale on Mashvisor, ranging from $65,500 to $318,900. The median property price is $212,250, up 29% year-over-year. St. Robert’s 2022 housing market is somewhat competitive, with some homes getting multiple offers. Houses in this city have sold for about 1% below the asking price after being on the market for 51 days.
#7: Edgerton, WI
- Airbnb Rental Income: $4,936
- Airbnb Cash on Cash Return: 8.82%
- Airbnb Daily Rate: $258
- Airbnb Occupancy Rate: 64%
- Median Property Price: $422,900
- Average Price per Square Foot: $193
- Days on Market: 72
- Walk Score: 51
The city of Edgerton is well-known for its historic downtown architecture, which transports visitors to the past while they enjoy modern attractions and shopping. Outdoor enthusiasts would love to hike, bike, run, or walk the beautiful trails and public parks that go through the neighborhoods. And in the winter months, tourists can go snowmobiling around the city using the same trail system.
There are 19 Edgerton, WI homes for sale on Mashvisor, ranging from $154,900 to $709,900. The median property price is $422,900, a sharp 54% increase year-over-year. Homes in this city have sold for approximately the asking price. And because it is in a very hot seller’s market, you may have a difficult time buying a property unless you offer above the listing price.
#8: Santa Claus, IN
- Airbnb Rental Income: $4,231
- Airbnb Cash on Cash Return: 8.70%
- Airbnb Daily Rate: $246
- Airbnb Occupancy Rate: 54%
- Median Property Price: $329,010
- Average Price per Square Foot: $132
- Days on Market: 77
- Walk Score: 30
Just because this town bears the name of Santa Claus does not mean you will only get bookings during the Christmas season. It actually has attractions that people can visit any time of the year. They can go on a guided tour on horseback around the countryside at Santa’s Stables, learn about self-sufficiency and farm living at the Lincoln Living Historical Farm, and more.
There are 11 Santa Claus, IN homes for sale on Mashvisor, with prices ranging from $99,900 to $424,900. The median property price in the area is $329,010, up 43% year-over-year.
#9: Bryans Road, MD
- Airbnb Rental Income: $6,768
- Airbnb Cash on Cash Return: 8.68%
- Airbnb Daily Rate: $180
- Airbnb Occupancy Rate: 76%
- Median Property Price: $427,311
- Average Price per Square Foot: $174
- Days on Market: 78
- Walk Score: 13
Bryans Road in Charles County, Maryland is the perfect destination for weekend getaways with the family. The bestselling Airbnbs in this area have 4 bedrooms and lots of amenities, making them the perfect vacation home for groups who want to escape their busy city lives. It is also a 40-minute drive from Washington, DC, so tourists visiting here may choose to stay in Bryans Road.
There are 9 Bryans Road, MD homes for sale on Mashvisor, ranging from $135,000 to $875,000. The median property price is $427,311, an increase of 31% year-over-year. Because it is in a seller’s market, houses in the area have sold for approximately the asking price.
#10: Caledonia, MI
- Airbnb Rental Income: $4,777
- Airbnb Cash on Cash Return: 8.61%
- Airbnb Daily Rate: $196
- Airbnb Occupancy Rate: 59%
- Median Property Price: $384,703
- Average Price per Square Foot: $182
- Days on Market: 6
- Walk Score: 39
Located 25 minutes southeast of Grand Rapids, the village of Caledonia boasts a bustling business district and acres of green pastures and flowing waters. Its residents work hard to preserve the area’s rural heritage and small-town feel while adding tourist attractions and events. Golfers can play at the 36-hole Saskatoon Golf Club, while the outdoor types can bike, hike, run, or roller-blade down the Paul Henry Trail.
There are 38 Caledonia, MI homes for sale on Mashvisor, with prices ranging from $140,000 to $749,900. The median property price is $384,703, up by 33% year-over-year. It is a seller’s market in the village, with many homes getting multiple offers, some with waived contingencies. Properties have also sold for 2% above the asking price and go pending after 6 days.
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. You can try this out for yourself by starting your 7-day free trial with Mashvisor now.