Alabama is home to many thriving short-term rental markets, but identifying the top-performing cities can be overwhelming, especially when combing through data from countless locations across the state.
To simplify this process, we analyzed data from markets statewide and compiled a list of the top 17 cities for investors and landlords seeking potentially high-return rental properties in the coming year.
As always, we recommend thorough underwriting and analysis of any prospective property and a review of local short-term rental regulations before making any investment decisions.
How We Created This List
First, we looked at all Airbnb listings in Alabama that met the following criteria as of January 2025:
- Average Rating: 4.8 stars and above
- Guest Review Count: Minimum of 10
- Average Daily Rate: $1 (minimum) to $2,000 (maximum)
- Occupancy Rate: 1% (minimum) to 99% (maximum)
- Property Size: 1 to 10 bedrooms
- Property Type: Entire homes
We did this to eliminate Airbnb listings from our analysis that fall outside of what we consider "realistic" situations. This left us with a total of 4,240 Airbnb listings across the state of Alabama to work with.
Next, we grouped these listings by city and eliminated markets that didn't have at least 75 Airbnb listings meeting the above criteria. We took this step to avoid outlier cities we felt didn't have enough data to be considered at this current time. This left us with 17 cities in Alabama to rank.
Then, we needed to arrive at a gross yield number for each of our remaining cities in order to create our rankings. We did this by taking the average annual Airbnb revenue for each city and combining it with the cities median property value (from Zillow as of December 2024) to calculate our gross yield for each city.
Finally, we ordered the cities by highest gross yield.
The Top 17 STR Markets in Alabama
1. Fairhope, AL
Fairhope, AL is a charming haven for tourists with its picturesque landscapes and vibrant cultural scene, making it one of the best places for short-term rental properties. The city's attractions include the Fairhope Pier and the bustling Fairhope Arts and Crafts Festival, attracting visitors year-round. For sports fans, there are local golf courses and sailing events on Mobile Bay. These draw significant tourism, offering real estate investors appealing opportunities in vacation rentals and Airbnb. Savvy investors can capitalize on the booming vacation homes market to achieve good returns and rental income.
Key STR Metrics:
- Average Gross Yield: 11.1%
- Average Property Value: $775,156 (as of December 2024)
- Average Annual Revenue: $86,048 (past 12 months)
- Average Occupancy Rate: 43% (past 12 months)
- Qualifying Airbnbs: 123 (as of January 2025)
- Year-Over-Year Growth in Airbnbs: 79%
Find Airbnbs For Sale in Fairhope, AL →
2. Tuscaloosa, AL
Tuscaloosa, AL offers a vibrant short-term rental market perfect for real estate investors seeking lucrative vacation homes. Known for the University of Alabama, home to the Alabama Crimson Tide, it attracts sports enthusiasts year-round. Key attractions like the Tuscaloosa Amphitheater and vibrant downtown scene make it a top destination for tourists. Annual events like the Kentuck Festival energize tourism and ensure consistent rental income for Airbnb hosts. With steady demand from guests, Tuscaloosa promises a good return and strong cash flow for those in real estate investing.
Key STR Metrics:
- Average Gross Yield: 10.5%
- Average Property Value: $389,210 (as of December 2024)
- Average Annual Revenue: $40,758 (past 12 months)
- Average Occupancy Rate: 26% (past 12 months)
- Qualifying Airbnbs: 125 (as of January 2025)
- Year-Over-Year Growth in Airbnbs: 102%
Find Airbnbs For Sale in Tuscaloosa, AL →
3. Northport, AL
Northport, AL, is an emerging gem for short-term rental markets with its charming Southern appeal and proximity to Tuscaloosa. Home to the University of Alabama, it draws visitors for Crimson Tide football games, creating lucrative opportunities for vacation rentals. The city boasts attractions like Kentuck Art Center and the scenic Lake Lurleen State Park. With its vibrant arts scene and annual events like the Kentuck Festival of the Arts, Northport is a haven for tourists, promising real estate investors good returns through lucrative rental income from short-term rental properties.
Key STR Metrics:
- Average Gross Yield: 10.1%
- Average Property Value: $394,965 (as of December 2024)
- Average Annual Revenue: $39,754 (past 12 months)
- Average Occupancy Rate: 27% (past 12 months)
- Qualifying Airbnbs: 110 (as of January 2025)
- Year-Over-Year Growth in Airbnbs: 93%
Find Airbnbs For Sale in Northport, AL →
4. Foley, AL
Foley, AL is a thriving hub for short-term rental properties, making it one of the best places for real estate investors seeking strong rental income. Known for its family-friendly attractions like OWA amusement park and the Tanger Outlets, Foley draws tourists year-round. The city also hosts exciting events like the Gulf Coast Hot Air Balloon Festival, alongside access to sports at the Foley Sports Tourism Complex. With a growing real estate market, investing in vacation homes or Airbnb properties here promises good returns and vibrant cash flow from enthusiastic guests and visitors.
Key STR Metrics:
- Average Gross Yield: 9.6%
- Average Property Value: $406,543 (as of December 2024)
- Average Annual Revenue: $39,207 (past 12 months)
- Average Occupancy Rate: 38% (past 12 months)
- Qualifying Airbnbs: 113 (as of January 2025)
- Year-Over-Year Growth in Airbnbs: 64%
Find Airbnbs For Sale in Foley, AL →
5. Gulf Shores, AL
Gulf Shores, AL is a premier destination for real estate investors eyeing the short-term rental market. Known for its pristine beaches, vibrant attractions, and family-friendly events, it offers lucrative opportunities in vacation homes. The city's bustling tourism scene is fueled by the Gulf State Park, annual Hangout Music Festival, and exciting sporting events like the SEC Beach Fest. As a hotspot for visitors year-round, it ensures steady rental income for Airbnb hosts, making it one of the best places for real estate investing with strong cash flow potential.
Key STR Metrics:
- Average Gross Yield: 8.9%
- Average Property Value: $736,266 (as of December 2024)
- Average Annual Revenue: $65,882 (past 12 months)
- Average Occupancy Rate: 42% (past 12 months)
- Qualifying Airbnbs: 1,195 (as of January 2025)
- Year-Over-Year Growth in Airbnbs: 94%
Find Airbnbs For Sale in Gulf Shores, AL →
6. Montgomery, AL
Montgomery, AL, is a vibrant destination for short-term rental investors seeking good returns. Known for its rich history and attractions like the Rosa Parks Museum and the Alabama State Capitol, it draws tourists year-round. The city boasts sports teams like the Montgomery Biscuits and hosts events such as the Montgomery Film Festival. Its thriving tourism and affordable real estate market make it one of the best places for vacation rentals, ensuring steady rental income and strong cash flow for AirBnB hosts.
Key STR Metrics:
- Average Gross Yield: 8.5%
- Average Property Value: $263,060 (as of December 2024)
- Average Annual Revenue: $22,447 (past 12 months)
- Average Occupancy Rate: 35% (past 12 months)
- Qualifying Airbnbs: 199 (as of January 2025)
- Year-Over-Year Growth in Airbnbs: 72%
Find Airbnbs For Sale in Montgomery, AL →
7. Mentone, AL
Mentone, AL is a charming haven for real estate investors seeking lucrative opportunities in the short-term rental market. Nestled atop Lookout Mountain, it offers breathtaking views and is popular for vacation homes with excellent rental income potential. Visitors are drawn to attractions like Desoto Falls and Little River Canyon. Mentone hosts events such as the Rhododendron Festival, enhancing its tourism appeal. This area provides a good return on investment, making it one of the best places for an Airbnb host to thrive in the thriving housing market.
Key STR Metrics:
- Average Gross Yield: 8.4%
- Average Property Value: $454,198 (as of December 2024)
- Average Annual Revenue: $38,264 (past 12 months)
- Average Occupancy Rate: 35% (past 12 months)
- Qualifying Airbnbs: 91 (as of January 2025)
- Year-Over-Year Growth in Airbnbs: 135%
Find Airbnbs For Sale in Mentone, AL →
8. Dadeville, AL
Dadeville, AL, is a hidden gem for real estate investors seeking lucrative opportunities in the short-term rental market. Nestled near the popular Lake Martin, this area offers visitors serene vacation homes and abundant water activities. Its vibrant local sports teams and annual events such as the Lake Martin Jazz Festival attract tourists year-round. The growing tourism scene, paired with an attractive housing market, provides real estate investors with solid rental income potential, making it one of the best places for investment property in 2025.
Key STR Metrics:
- Average Gross Yield: 8.1%
- Average Property Value: $874,046 (as of December 2024)
- Average Annual Revenue: $71,083 (past 12 months)
- Average Occupancy Rate: 30% (past 12 months)
- Qualifying Airbnbs: 79 (as of January 2025)
- Year-Over-Year Growth in Airbnbs: 87%
Find Airbnbs For Sale in Dadeville, AL →
9. Mobile, AL
Mobile, AL, offers a promising short-term rental market for real estate investors seeking lucrative vacation rentals. Known for its rich history and vibrant culture, Mobile attracts tourists with attractions like the USS Alabama Battleship Memorial Park and the annual Mardi Gras celebrations. Sports enthusiasts can enjoy games from the Mobile BayBears, while events like the Azalea Trail Run draw in visitors year-round. With its unique charm, Mobile provides robust rental income opportunities, making it one of the best places for investment property and cash flow in 2025.
Key STR Metrics:
- Average Gross Yield: 7.3%
- Average Property Value: $308,108 (as of December 2024)
- Average Annual Revenue: $22,477 (past 12 months)
- Average Occupancy Rate: 33% (past 12 months)
- Qualifying Airbnbs: 234 (as of January 2025)
- Year-Over-Year Growth in Airbnbs: 81%
Find Airbnbs For Sale in Mobile, AL →
10. Auburn, AL
Auburn, AL is a thriving hub for short-term rental markets, perfect for investors seeking lucrative opportunities with solid cash flow potential. Home to Auburn University, this vibrant city attracts tourists year-round, drawn by top attractions like Jordan-Hare Stadium and the Jule Collins Smith Museum of Fine Art. Major events such as football games and the Auburn CityFest further boost rental income prospects for Airbnb hosts. With a strong housing market, Auburn offers some of the best places for real estate investing in vacation rentals, ensuring a good return for savvy real estate investors.
Key STR Metrics:
- Average Gross Yield: 7.3%
- Average Property Value: $560,296 (as of December 2024)
- Average Annual Revenue: $40,849 (past 12 months)
- Average Occupancy Rate: 34% (past 12 months)
- Qualifying Airbnbs: 196 (as of January 2025)
- Year-Over-Year Growth in Airbnbs: 118%
Find Airbnbs For Sale in Auburn, AL →
11. Birmingham, AL
Birmingham, AL, is a dynamic short-term rental market ideal for real estate investors seeking robust rental income. Famous for its rich history in the civil rights movement, the city attracts tourists to its museums and the historic 16th Street Baptist Church. Sports enthusiasts flock to catch UAB Blazers games and the annual Magic City Classic. With its vibrant arts scene, festivals, and proximity to natural attractions like Red Mountain Park, Birmingham offers an appealing setting for investment properties like vacation homes and Airbnb rentals, promising a good return and strong cash flow.
Key STR Metrics:
- Average Gross Yield: 7.1%
- Average Property Value: $367,049 (as of December 2024)
- Average Annual Revenue: $25,945 (past 12 months)
- Average Occupancy Rate: 35% (past 12 months)
- Qualifying Airbnbs: 514 (as of January 2025)
- Year-Over-Year Growth in Airbnbs: 99%
Find Airbnbs For Sale in Birmingham, AL →
12. Orange Beach, AL
Orange Beach, AL, is a prime destination for vacation rentals, attracting tourists with its stunning Gulf Coast beaches, vibrant real estate market, and family-friendly attractions like the Adventure Island amusement park. Known for its short-term rental properties, the area offers excellent opportunities for real estate investors seeking good cash flow and rental income. The local housing market is bolstered by popular events, including the Orange Beach Billfish Classic and Hangout Music Festival, ensuring a steady stream of guests and visitors all year round.
Key STR Metrics:
- Average Gross Yield: 7.1%
- Average Property Value: $1,097,753 (as of December 2024)
- Average Annual Revenue: $77,471 (past 12 months)
- Average Occupancy Rate: 48% (past 12 months)
- Qualifying Airbnbs: 536 (as of January 2025)
- Year-Over-Year Growth in Airbnbs: 104%
Find Airbnbs For Sale in Orange Beach, AL →
13. Dauphin Island, AL
Dauphin Island, AL, a hidden gem on the Gulf Coast, is gaining traction among real estate investors looking for lucrative short-term rental markets. Known for its pristine beaches and rich history, this island offers vacation homes that promise high rental income. Visitors flock to the Dauphin Island Sea Lab, the Audubon Bird Sanctuary, and the historic Fort Gaines. The island hosts annual events like the Alabama Deep Sea Fishing Rodeo, attracting tourists year-round. With its robust tourism and emerging STR scene, Dauphin Island is among the best places for real estate investing in 2025.
Key STR Metrics:
- Average Gross Yield: 6.9%
- Average Property Value: $720,634 (as of December 2024)
- Average Annual Revenue: $49,852 (past 12 months)
- Average Occupancy Rate: 38% (past 12 months)
- Qualifying Airbnbs: 166 (as of January 2025)
- Year-Over-Year Growth in Airbnbs: 58%
Find Airbnbs For Sale in Dauphin Island, AL →
14. Florence, AL
Florence, AL, nestled in the heart of the Shoals area, is a gem for real estate investors eyeing the short-term rental market. Known for its rich musical history and vibrant culture, Florence attracts tourists year-round with attractions like the Frank Lloyd Wright Rosenbaum House and the W.C. Handy Music Festival. The city's proximity to the Tennessee River offers abundant outdoor activities, making it ideal for Airbnb hosts seeking to maximize rental income. With a growing tourism scene, investing in vacation homes here promises a good return and strong cash flow.
Key STR Metrics:
- Average Gross Yield: 6.7%
- Average Property Value: $336,711 (as of December 2024)
- Average Annual Revenue: $22,417 (past 12 months)
- Average Occupancy Rate: 36% (past 12 months)
- Qualifying Airbnbs: 105 (as of January 2025)
- Year-Over-Year Growth in Airbnbs: 86%
Find Airbnbs For Sale in Florence, AL →
15. Guntersville, AL
Guntersville, AL, nestled by the serene Lake Guntersville, is a burgeoning hub in the short-term rental market, drawing in real estate investors eager for good returns. Known for its vibrant tourism scene, guests flock to events like the Guntersville Bassmasters, making it a top destination for anglers. Vacation homes here cater to tourists who enjoy the scenic beauty and abundance of outdoor activities. With a thriving real estate market and high rental income potential, investing in Airbnbs here promises robust cash flow, making Guntersville one of the best places for short-term rental properties.
Key STR Metrics:
- Average Gross Yield: 5.6%
- Average Property Value: $551,105 (as of December 2024)
- Average Annual Revenue: $31,055 (past 12 months)
- Average Occupancy Rate: 32% (past 12 months)
- Qualifying Airbnbs: 128 (as of January 2025)
- Year-Over-Year Growth in Airbnbs: 61%
Find Airbnbs For Sale in Guntersville, AL →
16. Huntsville, AL
Huntsville, AL is a thriving hub for short-term rental properties, attracting tourists with its blend of natural beauty and high-tech allure. Known as the "Rocket City," it boasts the U.S. Space & Rocket Center and hosts events like the Alabama Jubilee and Panoply Arts Festival. It offers real estate investors a lucrative real estate market with good return potential. Vacation homes near Monte Sano State Park or downtown make enticing Airbnb options, providing steady rental income and cash flow from visitors exploring this dynamic city.
Key STR Metrics:
- Average Gross Yield: 5.3%
- Average Property Value: $442,309 (as of December 2024)
- Average Annual Revenue: $23,603 (past 12 months)
- Average Occupancy Rate: 37% (past 12 months)
- Qualifying Airbnbs: 229 (as of January 2025)
- Year-Over-Year Growth in Airbnbs: 76%
Find Airbnbs For Sale in Huntsville, AL →
17. Madison, AL
Madison, AL, is a burgeoning short-term rental market attracting real estate investors. Known for its technological growth along the Huntsville corridor, it offers vacation rentals with good returns. Popular attractions include the U.S. Space & Rocket Center and scenic parks. Sports enthusiasts can enjoy games from the Rocket City Trash Pandas. Annual events like the Madison Street Festival draw tourists, boosting rental income for Airbnb hosts. This vibrant area is a top choice in the housing market for investment property with promising cash flow.
Key STR Metrics:
- Average Gross Yield: 5.0%
- Average Property Value: $536,379 (as of December 2024)
- Average Annual Revenue: $26,979 (past 12 months)
- Average Occupancy Rate: 43% (past 12 months)
- Qualifying Airbnbs: 97 (as of January 2025)
- Year-Over-Year Growth in Airbnbs: 80%
