Best cities for Airbnb

The Best US Cities for Airbnb Business in 2021

The short-term rental business has seen good growth in the past decade. Since the launch of Airbnb in 2008, the rental business has reached new heights. Currently, short-term rentals have emerged as a more profitable business in the market compared to other rental programs. Initially, homeowners would rent out a room or two in their house. This was a means of some secondary income. Soon, homes for single families were included in the rental model. Today house owners and property dealers are making hefty profits by renting out beautiful houses on Airbnb for families on vacation.   

Running a rental business on Airbnb requires a lot of paperwork. A lot of hard work goes into making the business successful. All the effort is worth it when the business can generate decent revenue. When starting an Airbnb business there are multiple factors to be considered. The location of the rental properties is one such factor. Some locations in the US can fetch you a good profit easily, while other locations are not very profitable. It makes no sense to invest your time and effort in a place where the chances of making a profit are meek. Therefore, the first step to starting an Airbnb business is to look for a location where the business will thrive.   

Read also how to buy Airbnb business property: a step-by-step guide.

Factors to consider when looking for a profitable location

Choosing a location is based on few factors. There are certain numbers and figures associated with a rental business that differ from location to location. When you are thinking of making an Airbnb investment, it is important to look beyond just the rental income. Rate of Occupancy, the average percentage of returns, and average daily rate are some other factors related to location for Airbnb business.   

Airbnb Occupancy Rate

The cities that have a boosting economy will naturally attract more tourists. There will be a large number of business travelers as well. It implies the number of Airbnb guests will be high all the time. The demand for short-term rental homes will be constant in these locations. The Rate of Occupancy will be high in these developing cities of the US. Making an Airbnb investment in a location with a high occupancy rate will result in high profits for most of the year.   

Airbnb Return on Expense

A business succeeds when the return on investment is high. Cities that have a high return on investment will have occupancy rates much above the average. You can also have high nightly charges for houses in such cities. One popular way to measure the return on investment is the capitalization rate. Using this rate, you can compare the rental properties in different markets and choose the best one.   

Airbnb standard daily price

The average daily rate of rental properties is different in different US cities. The higher the average daily rate in a location, the better will be the rental income. A high average daily rate combined with a high occupancy rate will make for a profitable business.   

Rules and regulations in the city

With the Airbnb business becoming popular in various cities across the world, multiple strict rules and regulations have been imposed on short-term rental businesses to avoid the downfall of the local housing market. Airbnb business has a greater chance of succeeding in locations with few or no restrictions on the rental business by non-owners or investors. These cities have tourists and business people coming in from all over the world which increases the occupancy rates of Airbnb homes.   

Top 20 US cities where Airbnb business booms

Based on the factors mentioned above, some cities have been shortlisted as being the best for Airbnb business.   

1. Manhattan, California

  • Standard price: $2,575,475
  • Rate of Occupancy: 62%
  • Average per-day rate: $360
  • Average percentage of returns: 2.3%
  • Average monthly income: $10,782

2. Malibu, California

  • Standard price: $2,271,796
  • Rate of Occupancy: 48%
  • Average per-day rate: $715
  • Average percentage of returns: 2%
  • Average monthly income: $8122

3. Key West, Florida

  • Standard price: $996,594
  • Rate of Occupancy: 57%
  • Average per-day rate: $695
  • Average percentage of returns: 5.5%
  • Average monthly income: $8822

4. Northport, New York

  • Standard price: $906,505
  • Rate of Occupancy: 51%
  • Average per-day rate: $290
  • Average percentage of returns: 3.2%
  • Average monthly income: $6393

5. Southlake, Texas

  • Standard price: $832,493
  • Rate of Occupancy: 71%
  • Average per-day rate: $250
  • Average percentage of returns: 4.2%
  • Average monthly income: $7055

6. Long beach, New York

  • Standard price: $854,000
  • Rate of Occupancy: 51%
  • Average per-day rate: $530
  • Average percentage of returns: 2.2%
  • Average monthly income: $4670

7. Wailuku, Hawaii

  • Standard price: $752,317
  • Rate of Occupancy: 64%
  • Average per-day rate: $204
  • Average percentage of returns: 5.7%
  • Average monthly income: $5601

8. Princeton, New Jersey

  • Standard price: $706,100
  • Rate of Occupancy: 56%
  • Average per-day rate: $260
  • Average percentage of returns: 2.8%
  • Average monthly income: $4723

9. San Marcos, California

  • Standard price: $660,707
  • Rate of Occupancy: 59%
  • Average per-day rate: $148
  • Average percentage of returns: 3.9%
  • Average monthly income: $4900

10. Carmel, New York

  • Standard price: $504,126
  • Rate of Occupancy: 70%
  • Average per-day rate: $160
  • Average percentage of returns: 5.6%
  • Average monthly income: $5750

11. Springfield, Virginia

  • Standard price: $545,695
  • Rate of Occupancy: 60%
  • Average per-day rate: $180
  • Average percentage of returns: 4.1%
  • Average monthly income: $4391

12. Plymouth, Massachusetts

  • Standard price: $443,902
  • Rate of Occupancy: 47%
  • Average per-day rate: $142
  • Average percentage of returns: 5.6%
  • Average monthly income: $4900

13. Arlington Heights, Illinois

  • Standard price: $340,819
  • Rate of Occupancy: 78%
  • Average per-day rate: $100
  • Average percentage of returns: 5.8%
  • Average monthly income: $4590

14. Pike Road, Alabama

  • Standard price: $378,556
  • Rate of Occupancy: 49%
  • Average per-day rate: $200
  • Average percentage of returns: 6.4%
  • Average monthly income: $4115

15. Benton, Arizona

  • Standard price: $283,898
  • Rate of Occupancy: 58%
  • Average per-day rate: $140
  • Average percentage of returns: 7.3%
  • Average monthly income: $4840

16. Bridgeport, Connecticut

  • Standard price: $255,300
  • Rate of Occupancy: 48%
  • Average per-day rate: $155
  • Average percentage of returns: 3.6%
  • Average monthly income: $4330

17. North Canton, Ohio

  • Standard price: $270,890
  • Rate of Occupancy: 75%
  • Average per-day rate: $85
  • Average percentage of returns: 5.3%
  • Average monthly income: $3810

18. Columbus, Ohio

  • Standard price: $222,200
  • Rate of Occupancy: 57%
  • Average per-day rate: $192
  • Average percentage of returns: 6%
  • Average monthly income: $2310

19. Florissant, Missouri

  • Standard price: $167,721
  • Rate of Occupancy: 68%
  • Average per-day rate: $90
  • Average percentage of returns: 7%
  • Average monthly income: $2370

20. Milwaukee, Wisconsin

  • Standard price: $161,500
  • Rate of Occupancy: 54%
  • Average per-day rate: $161
  • Average percentage of returns: 7%
  • Average monthly income: $1940

More information about legal issues and statistics by other city.

Taking the right decision

The list above gives an overview of the wide range of listing price that is available in different states all over the USA. Once you have fixed the budget, you can sort out the cities based on the listing price. Next, look into the occupancy rate and average daily and monthly income that can be generated from rental houses in the city.   

The rate of return is also important when you are making a huge investment. According to property experts, investment in rental businesses is a good plan when the profit on the property is 8% or more. Anything below this might not be considered very profitable. The values stated in the above listing are just averages. So, if you are really involved in investing in a particular location, get the current percentage of return on investment.   

While the prices and returns rule the decision of picking a city, the area of the property within the city also plays a part. It is necessary to perform a detailed examination of the neighborhood. Guests will look for a safe neighborhood with all facilities around. Tourists usually prefer living close to main markets or transportation mediums. Letting out properties in these areas can be good for business.   

Owning a short-term rental business is legal in all the cities mentioned. However, you are expected to follow certain rules and regulations imposed by Airbnb and the state government. Before investing, do thorough research about the restrictions. You wouldn’t want to violate any rule after buying the property. For such tasks, it is always advised that you hire some regional real estate representative or communicate with other Airbnb owners in the area. Make sure to start the business with a full understanding of all terms and conditions that are there for Airbnb business in the city that you choose.