South Dakota 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 6 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 South Dakota 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 1,305 Airbnb listings across the state of South Dakota 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 6 cities in South Dakota 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 6 STR Markets in South Dakota
1. Sturgis, SD
Sturgis, SD, famous for its annual Motorcycle Rally, is a top choice for real estate investors seeking lucrative opportunities in the short-term rental market. Beyond the rally, Sturgis offers year-round tourism boosts with attractions like Bear Butte State Park and Black Hills National Forest. The strong rental income potential, driven by consistent tourist interest, makes it one of the best places for real estate investing in vacation homes. An Airbnb host here can capitalize on high guest demand during popular events, ensuring good return and cash flow.
Key STR Metrics:
- Average Gross Yield: 15.6%
- Average Property Value: $520,910 (as of December 2024)
- Average Annual Revenue: $81,212 (past 12 months)
- Average Occupancy Rate: 31% (past 12 months)
- Qualifying Airbnbs: 92 (as of January 2025)
- Year-Over-Year Growth in Airbnbs: 67%
Find Airbnbs For Sale in Sturgis, SD →
2. Custer, SD
Nestled in the Black Hills, Custer, SD, is a prime location for real estate investors interested in the short-term rental market. Known for attractions like Custer State Park, Mount Rushmore, and the Crazy Horse Memorial, it draws tourists year-round. The city's vibrant events, including the annual Custer State Park Buffalo Roundup, further increase tourism and rental income potential. With its burgeoning real estate market, owning vacation rentals in Custer offers a good return and consistent cash flow for investors keen on vacation homes and Airbnb.
Key STR Metrics:
- Average Gross Yield: 9.6%
- Average Property Value: $724,576 (as of December 2024)
- Average Annual Revenue: $69,775 (past 12 months)
- Average Occupancy Rate: 46% (past 12 months)
- Qualifying Airbnbs: 144 (as of January 2025)
- Year-Over-Year Growth in Airbnbs: 99%
Find Airbnbs For Sale in Custer, SD →
3. Rapid City, SD
Rapid City, SD, a gem in the Black Hills, is a thriving destination for tourists seeking adventure at Mt. Rushmore, Crazy Horse Memorial, and Badlands National Park. With its vibrant short-term rental market, real estate investors can enjoy good returns and healthy cash flow from vacation homes. The city hosts events like the Black Hills Stock Show, while the unique mix of sports teams and cultural attractions draws year-round visitors. Real estate investing in Rapid City's vacation rentals presents a great opportunity for investors aiming for lucrative rental income.
Key STR Metrics:
- Average Gross Yield: 9.5%
- Average Property Value: $532,363 (as of December 2024)
- Average Annual Revenue: $50,643 (past 12 months)
- Average Occupancy Rate: 48% (past 12 months)
- Qualifying Airbnbs: 406 (as of January 2025)
- Year-Over-Year Growth in Airbnbs: 90%
Find Airbnbs For Sale in Rapid City, SD →
4. Lead, SD
Lead, SD, nestled in the heart of the Black Hills, stands out as a prime destination for short-term rental properties, attracting tourists year-round. With proximity to historic Deadwood, outdoor enthusiasts are drawn to skiing at Terry Peak and exploring Spearfish Canyon. Lead’s lively events, like Winterfest, boost rental income potential for real estate investors. The thriving tourism scene and stunning natural attractions make it one of the best places for a good return on investment properties, ideal for Airbnb hosts aiming for strong cash flow.
Key STR Metrics:
- Average Gross Yield: 8.1%
- Average Property Value: $719,414 (as of December 2024)
- Average Annual Revenue: $58,126 (past 12 months)
- Average Occupancy Rate: 37% (past 12 months)
- Qualifying Airbnbs: 278 (as of January 2025)
- Year-Over-Year Growth in Airbnbs: 62%
Find Airbnbs For Sale in Lead, SD →
5. Sioux Falls, SD
Sioux Falls, SD, offers a compelling short-term rental market for 2025, attracting tourists with its vibrant blend of attractions like Falls Park, the Great Plains Zoo, and the Washington Pavilion. Home to minor league teams such as the Sioux Falls Canaries, the city is alive with sports and hosts events like the Sioux Empire Fair. These diverse attractions make Sioux Falls a hotspot for vacation rentals, appealing to real estate investors seeking good rental income and strong cash flow. Investing in Sioux Falls' Airbnb scene can provide a great return for savvy investors.
Key STR Metrics:
- Average Gross Yield: 6.3%
- Average Property Value: $479,094 (as of December 2024)
- Average Annual Revenue: $30,082 (past 12 months)
- Average Occupancy Rate: 44% (past 12 months)
- Qualifying Airbnbs: 268 (as of January 2025)
- Year-Over-Year Growth in Airbnbs: 69%
Find Airbnbs For Sale in Sioux Falls, SD →
6. Spearfish, SD
Spearfish, SD, is a hidden gem for real estate investors eyeing the short-term rental market. Nestled in the stunning Black Hills, it offers vacation homes with promising rental income potential. Spearfish's vibrant attractions like the scenic Spearfish Canyon, Spearfish Aquatics Center, and the High Plains Heritage Center draw numerous tourists annually. With annual events such as the Black Hills Film Festival and Black Hills State University sports, this town is among the best places for Airbnb hosts to capture a good return on their investment property.
Key STR Metrics:
- Average Gross Yield: 5.7%
- Average Property Value: $694,972 (as of December 2024)
- Average Annual Revenue: $39,480 (past 12 months)
- Average Occupancy Rate: 39% (past 12 months)
- Qualifying Airbnbs: 117 (as of January 2025)
- Year-Over-Year Growth in Airbnbs: 68%
