So, you want to invest in a short-term rental. Maybe you’re a seasoned pro, or maybe this is your first one; regardless of who you are, the question we get all the time is: where should I invest? What’s a top Airbnb market?
It’s a good question, real estate is all about location, and it matters even more so when renting the property as an Airbnb. We went through the exercise of analyzing market performance of markets we operate in and pairing that data with other market research to compile the most accurate and comprehensive list. Before we dive into Rabbu’s Top Airbnb Markets of 2022, let’s dive a little deeper into the factors that set great Airbnb markets apart from “good” Airbnb markets, or “maybe best avoided” ones.
When evaluating the possible success of an Airbnb investment in a particular market, we like to keep it simple. For general and initial market research, we lean on a few key stats to help us identify top contenders: occupancy, ADR, RevPAR, and gross yield.
The location of the Airbnb and the general market plays a major factor in the potential success of that short-term rental. What’s it near – are there a lot of attractions around it? How walkable, bikeable, or transit-able is that market? Is it safe? Are there major events that draw crowds throughout the year? We did a full write-up of what makes a good Airbnb home, and part of that is the geographical market locale it is situated in.
In order to judge markets objectively, we’ve taken a look at the niche.com score for various markets nationwide and given them a Rabbu Location Score based on the various data points Niche provides, as well as some of our own markers (tourist activity, event calendar, etc.). A higher Rabbu Location Score = a better Airbnb market investment opportunity.
A stellar location is great, but what if not a lot of people will actually book your place? This could be due to a few things – over saturation in the market, lack of tourist attractions, extreme seasonality, etc. An Airbnb market with a high demand of stays for travelers, or where the demand for stays exceeds the existing supply, will have a high rate of occupancy, contributing to profits throughout the year.
Average daily rate is the rate at which Airbnbs, or short-term rentals, are listed and rented for. A market with high ADRs is a good investment, but only if the occupancy rate is also high and the Airbnbs in that market are in high demand at the given ADR. Which brings us to…
RevPAR takes into account both occupancy and ADR by multiplying the two. For example, a market that averages $500 ADR, but only has 30% occupancy, nets a RevPAR of $150. Conversely, a market that averages a more conservative ADR of $200, but has 80% occupancy, nets a RevPAR of $160. While occupancy and ADR are important markers when investing in an Airbnb market, RevPAR will be the ultimate KPI to highlight earnings potential.
Every market has vastly different home prices associated with it. While occupancy, ADR, and RevPAR provide really great statistics of how an Airbnb performs, what it fails to do is factor in the local housing market and home values. Gross yield takes into account both annual revenue and market value of a home to calculate a gross yield percentage. Approximately 6-8% is considered a “good” gross yield, but we’re always on the hunt for numbers even higher than that. This stat helps you analyze how impressive the above stats (occupancy, ADR, RevPAR) are in comparison to the investment in the property itself. In order to calculate gross yield, we needed the average home price in each respective market. We leaned on Zillow.com to provide us with this data.
If you’re in the market for an Airbnb investment that will set you back $750,000 or more, we’ve got the list for you. These Airbnb markets are in vacation-worthy destinations and enjoy impressive RevPARs and gross yields. While these may be priced the highest of any options on our list, the investment is well worth it.
Key West is Florida’s southernmost point and is a major draw for tourists who seek beautiful beaches, a unique downtown, lively nightlife, and more. Bringing in tourist activity year-round with a packed event calendar, Key West is a stellar market in which to invest. Only miles from the nearest major airport, Key West is a convenient vacation destination to get to and explore.
Hawaii is the holy grail of vacation destinations, and this spot on the main island of Maui is no exception. With beautiful beaches, impressive mountains, stellar short-term rental stats, and close proximity to a major airport, Lahaina is an easy to access, luxurious vacation spot. With the opportunity to lean into local culture or embrace a paradise theme in your short-term rental, this location boasts endless opportunities to host a unique short-term rental that will be well worth its investment.
Sedona is the epitome of desert chic, the perfect mix of off-the-beaten-path, yet a hot vacation spot as of late. Highly impressive occupancy rates make this market a can’t miss – between the can’t miss nature, the world-class spas, the food and wine scene, and more, Sedona is a place that tourists flock to year-round. The location gets a minor ding given its inconvenient proximity to a major airport, but that fact doesn’t seem to detract from its booming tourist economy, still making it a sound and lucrative short-term rental market opportunity.
If you’re in the market for an Airbnb investment that will cost between $500,000 – $750,000, look no further! These three markets include cities in highly sought-after areas, and have outstanding RevPAR and gross yield, in some cases even outpacing the $750,000+ markets.
There’s something in Big Sky for everyone. Nature lovers flock to the area in the summer season for the high concentration of national parks and hiking opportunities nearby, whereas winter sports enthusiasts flock during the winter for world-class skiing and snowboarding. This destination is a tried and true vacation spot for young couples, families, and retirees alike, making it a lucrative investment for decades to come.
Gatlinburg, TN proves itself to be a top-notch Airbnb market time and time again for its proximity to the Smoky Mountains, and even other vacation destinations like Asheville, NC in the area. Proving to be a popular destination for not only families and couples, but also bachelor and bachelorette parties, this market enjoys higher than average occupancy rates and solid RevPAR. With a couple of airport options nearby, Gatlinburg is relatively easy to access for all.
A quick drive or train ride from Manhattan drops city dwellers in a completely juxtaposed location than they’re used to: quiet, serene, and relaxing. The Hamptons and Montauk have long been known to be the getaway for Manhattan elites, but Long Beach, NY is a more convenient and accessible vacation destination for city folk looking to escape. This location experiences higher seasonality due to a high influx of tourist traffic in the summer, while the winter shuts down a bit, but the ADR from those months more than make up for the lost time. Though a stellar vacation for locals, Long Beach takes a minor hit in the Rabbu Location Score department simply because it tends to draw locals over national tourists.
If you’re in the market for an Airbnb investment that will cost between $500,000 – $750,000, we’ve got great options for you. The markets in this price range all enjoy highly impressive gross yields, even compared to markets in higher price ranges. That’s a win!
Nestled in the Blue Ridge Mountains, this quaint town is aptly named. Drawing interest from all demographics, this town is a great investment if you’re hoping to bring in nature lovers and art lovers alike. With convenient access to the Chattahoochee National Forest, as well as the famous Blue Ridge Scenic Railway, there is much history and nature to be explored here. Though occupancy is quite level year-round, the out-of-this-world colors of the trees in the Blue Ridge Mountains in the Fall offer a bit of a lift in occupancy months in October & November due to leaf peepers. While Blue Ridge, GA may be less commonly known than some of its other Blue Ridge Mountain town counterparts, it’s a lucrative investment in a booming town that’s bound to continue to grow.
Located on the northern border of Georgia, Clayton is a quaint town situated in the Blue Ridge Mountains. Offering stellar views and access to all of the nature that this region has to offer, visiting Clayton provides guests with a chance to take a step away from it all and fully soak in the natural beauty that this area has to offer. While situated in Georgia, Clayton is only 15-min from the North Carolina border, offering guests the opportunity to knock two states off their bucket lists at once. While a bit under the radar, guests that visit this town pay an impressive ADR to enjoy all it has to offer, making it a stellar investment.
Calling all Disney lovers, this one’s for you! Kissimmee is known for its close proximity to Disney World and other nearby parks, offering a more affordable, yet still convenient, lodging option for families who come to visit the parks. While occupancy stays relatively consistent year-round, Airbnbs in this market enjoy a moderate spike in March and July when families are on Spring break and Summer break, respectively. Families are always going to take vacations to Disney World, so Kissimmee will always continue to be a good investment decision.
For those looking to invest in an Airbnb with a budget of up to $250,000, look no further. Great for those just getting started in investing, or those that want to scale quickly, these markets are our most approachable batch in terms of investment capital, while not sacrificing returns. Each of these markets has a gross yield of over 16% or more, talk about stellar opportunities!
Hot Springs has a little bit for everyone – there’s a National Park in the middle of the city (yes, you read that right!) which is a main tourist attraction here, but even more uniquely, the town is full of bath houses that function as high-end spas. Hot Springs used to be the Vegas before Vegas, and this is a relic of that time! Though it seems like “just any other town” in the area, this town boasts impressively high occupancy rates and outstanding gross yields, making it a great bang for your buck to invest in.
With an impressive roster of corporations and headquarters and a Big 10 university in the middle of the city, Columbus, OH is a lucrative market to invest in to capture demand from business and pleasure travelers alike. With an airport within close proximity, Airbnbs in this market attract interest from tourists, business travelers, and families visiting students in college – making it a prime location nearly all times of the year. Situated within an affordable market with stellar yields, Columbus is a great investment by all markers.
Known as the nation’s most haunted city, Savannah surely has plenty of quirks to draw interest from diverse tourists, making it a hot market to invest in. Brimming with history, natural beauty, and striking architecture, Savannah is a hot vacation destination for history buffs, foodies, artsy folks, and paranormal enthusiasts. With an airport nearby and a highly walkable city layout, Savannah is a prime location for an Airbnb investment that will return impressive yields.
And that’s that, Rabbu’s top Airbnb markets to invest in for every budget. With this info in hand, you’re equipped to narrow your search and start the process of buying a short-term rental to make passive income. Need help? That’s what we’re here for.
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