- Factors to consider when looking for a profitable location
- Top 20 US cities where Airbnb business booms
- Taking the right decision
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.
Check the list of the best European cities for Airbnb.
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.
Factors to consider when looking for a profitable location
Choosing a location is based on a 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.
Discover how to find temporary staff for restaurant business on this site.
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
Located in the ultra-urban Los Angeles area on the Pacific coast, Manhattan is an iconic beach city in the nation. Famed for its astonishing beach-related opportunities, amazing scenery, and high-end restaurants, Manhattan is a strong market for Airbnb. The city’s ever-growing economy backed by a vibrant entertainment industry leads to a stable influx of travelers, escapists, and holiday-makers. So Airbnb in Manhattan, California, is destined for success.
|Rate of Occupancy||62%|
|Average per-day rate||$360|
|Average percentage of returns||2.3%|
|Average monthly income||$10,782|
2. Malibu, California
Establishing an Airbnb in Malibu is one of the best investments you can have in the entire USA. A coveted place to travel, Malibu is a sparkling gem of North America, blessed with a pleasurable Mediterranean-like climate and infinite natural beauty. Malibu is one of the ritziest cities in the world, and short-stay rental homes can command some of the highest prices in the country, making an Airbnb business extremely profitable here.
|Rate of Occupancy||48%|
|Average per-day rate||$715|
|Average percentage of returns||2%|
|Average monthly income||$8122|
3. Key West, Florida
A tropical paradise within the United States, Key West, Florida, is one of the most desirable travel destinations on the planet. The southernmost city in the continental USA, Key West, is cherished for its luxurious beaches, heart-stoppingly beautiful coral reefs, and relaxed urban vibe. The Airbnb market is flourishing here, and nothing stops you from jumping on this bandwagon.
|Rate of Occupancy||57%|
|Average per-day rate||$695|
|Average percentage of returns||5.5%|
|Average monthly income||$8822|
4. Northport, New York
A pretty little suburb of grand New York City, Northport in Suffolk County is one of the best places to travel to in the entire country. Jam-packed with cute restaurants, family-friendly entertainment facilities, and welcoming bars, Northport features a generous tourist offer on the shore of a scenic bay of Long Island. Starting an Airbnb business is never a bad idea in Northport, New York, and many real estate investors seize this financial opportunity.
|Rate of Occupancy||51%|
|Average per-day rate||$290|
|Average percentage of returns||3.2%|
|Average monthly income||$6393|
5. Southlake, Texas
A little piece of heaven on earth, Southlake is less than an hour’s drive away from the Dallas Fort-Worth metropolis and makes a wonderful gateway for all kinds of visitors. From tired escapists looking for a peaceful place to relax and extravagant shoppers ready to raid super malls to families with children needing quality entertainment and demanding foodies searching for premier dining, Southlake, Texas easily caters to the needs of different tourists. An Airbnb business in Southlake is a robust financial opportunity that you never want to miss out on.
|Rate of Occupancy||71%|
|Average per-day rate||$250|
|Average percentage of returns||4.2%|
|Average monthly income||$7055|
6. Long Beach, New York
A picturesque suburb of the marvelous New York City, Long Beach is home to nearly 35 thousand locals. Nestled in Nassau County, Long Beach is rightfully considered one of the safest and cleanest areas in the New York community. Traveling to Long Beach offers tourists the exquisite pleasure of enjoying a true urban feel, with immediate vicinity to one of the best metropolises in the world. With proper management, an Airbnb business in Long Beach will surely thrive.
|Rate of Occupancy||51%|
|Average per-day rate||$530|
|Average percentage of returns||2.2%|
|Average monthly income||$4670|
7. Wailuku, Hawaii
A lavish Garden of Eden on earth, the city of Wailuku in Hawaii has many compelling reasons to visit this magnificent place. The legendary Tropical Gardens of Maui, Hawaii’s Nature Center, and Kaahumanu Church are just a few of many-many attractions that make Wailuku a desirable holiday destination. Luxurious beaches and astonishing sunsets are also among the landmarks of this little corner of paradise. The tourism industry thrives in Wailuku, making it an ideal setting to launch an Airbnb business.
|Rate of Occupancy||64%|
|Average per-day rate||$204|
|Average percentage of returns||5.7%|
|Average monthly income||$5601|
Discover more about the Airbnb investment in Hawaii here.
8. Princeton, New Jersey
Princeton is worldwide-known for its Ivy League University, but the list of merits of this amazing New Jersey town does not stop at this. Apart from a prestigious education system and breathtaking architecture, Princeton, New Jersey, is blessed with an array of other incredible attractions. Fine art exhibits, theater performances, and a slew of opportunities for active holidays render Princeton, New Jersey great for an Airbnb business.
|Rate of Occupancy||56%|
|Average per-day rate||$260|
|Average percentage of returns||2.8%|
|Average monthly income||$4723|
9. San Marcos, California
The city is often dubbed the Valley of Discovery and for good reason. Double Peak Park, the Buena Creek Gardens, and Discovery Lake are just some of the countless natural attractions of San Marcos, California. The city offers some of the country’s best opportunities for holidays, both active and relaxed ones. But the greatest allure behind San Marcos is a 20-minute-drive distance from the LEGOLAND California Resort. LEGO fans are always interested in comfortable short-stay rentals near LEGOLAND, and San Marcos is among the best recommendations.
|Rate of Occupancy||59%|
|Average per-day rate||$148|
|Average percentage of returns||3.9%|
|Average monthly income||$4900|
10. Carmel, New York
Carmel is a peaceful town in Putnam County, New York. It has great people and great environments. One of the safest locations in the New York community, Carmel is a town of choice for families with kids and retirees to live in. Opportunities for sports and fun are provided through parks and recreation facilities, which makes Carmel a fine weekend escape destination. It is not as busy and noisy as New York City, but Carmel does have natural beauty and a laid-back suburban atmosphere, making it well worth visiting, and thus suitable for Airbnb companies.
|Rate of Occupancy||70%|
|Average per-day rate||$160|
|Average percentage of returns||5.6%|
|Average monthly income||$5750|
11. Springfield, Virginia
Welcome to a happy, picturesque location in the very heart of Fairfax County. Springfield, Virginia, is a place where you can plunge into thrilling activities and discover a slew of great outdoors. Utterly scenic and peaceful, Springfield is often selected to hold weddings, conferences, and other important social and family events. The city got its name due to the countless amounts of streams in the region, so the natural charm is irresistible here. A good mixture of food, fitness, fun, and entertainment makes Springfield a popular tourist destination.
|Rate of Occupancy||60%|
|Average per-day rate||$180|
|Average percentage of returns||4.1%|
|Average monthly income||$4391|
12. Plymouth, Massachusetts
The tranquil seaside town, Plymouth, Massachusetts, also brims with history. It is the spot where the first Pilgrims settled in 1620. There is also Plymouth Rock, an important symbol of America in Pilgrim Memorial State Park that indicates the place where settlers from abroad are supposed to have landed on shore. The town of Plymouth makes some of the world’s best sites for whale watching, dining, shopping, and sightseeing in an authentic New England atmosphere. Tourists massively flock to this area, willing to touch on the history of the early days of the USA.
|Rate of Occupancy||47%|
|Average per-day rate||$142|
|Average percentage of returns||5.6%|
|Average monthly income||$4900|
13. Arlington Heights, Illinois
Not many cities in the USA have that wow factor, but Arlington Heights can indeed boast of one. Arlington Heights is a pretty suburban neighborhood in Illinois. It is just a short drive away from Downtown Chicago, meaning it is cool and chick, but life here is not as hectic as in the big city. This well-groomed suburb is becoming a trendy tourist destination, and many travelers eagerly include Arlington Heights in their itinerary. Why not seize this opportunity and open an Airbnb business in Arlington Heights?
|Rate of Occupancy||78%|
|Average per-day rate||$100|
|Average percentage of returns||5.8%|
|Average monthly income||$4590|
14. Pike Road, Alabama
Pike Road is a tiny and charming area in the state of Alabama found in Montgomery County. The area has experienced rapid growth of new residents over recent years, becoming one of the fastest-growing towns in the country. Its current population hardly reaches the 10 thousand mark, but the figure is ever-increasing. Despite its smallness, Pike Road is a very desirable tourist destination. It primarily appeals to those who want to bask in the true small-town vibe because it provides a relaxing respite from the bustle of the neighboring metropolis of Montgomery.
|Rate of Occupancy||49%|
|Average per-day rate||$200|
|Average percentage of returns||6.4%|
|Average monthly income||$4115|
15. Benson, Arizona
Benson is a teensy-weensy town in the state of Arizona, which is found in Cochise County. There are just 5 thousand locals in Benson, but tiny cities have a big charm around them. It can boast of a tight-knit community, and by a good deal of metrics, Benson is a great place to live. Those who cannot stay here forever prefer to spend relaxed weekends amid the cozy rural settings of the quintessential American small town. Both new residents and visitors cannot help but adore the general attitude of locals that are always inviting and amiable.
|Rate of Occupancy||58%|
|Average per-day rate||$140|
|Average percentage of returns||7.3%|
|Average monthly income||$484|
16. Bridgeport, Connecticut
Unable to resist a strong onslaught of nature, Bridgeport is alternatively called Park City because it incorporates over 1,300 acres of public parklands. Apart from its famous parks like Pleasure Beach and Seaside Park, almost every neighborhood in Bridgeport features its own pocket park. The city offers great opportunities for outdoor joys, including the Discovery Museum and Planetarium, Beardsley Zoo, Captain’s Cove Seaport, and lots of other attractions. There are many reasons why tourists want to put Bridgeport on their list of places to visit. So are the reasons to start an Airbnb business in Bridgeport!
|Rate of Occupancy||48%|
|Average per-day rate||$155|
|Average percentage of returns||3.6%|
|Average monthly income||$4330|
17. North Canton, Ohio
North Canton is a small town in Stark County, Ohio. It is here where the classic Hoover vacuum was invented. Today, North Canton is a hub for many manufacturing companies and production facilities, so the economy here is robust and steadily growing. The area is also known for its high-quality college system, and many young people relocate to North Canton in hopes of getting a stellar education. Things to do are plentiful in this area as well, so it is reasonable to try starting an Airbnb business in North Canton.
|Rate of Occupancy||75%|
|Average per-day rate||$85|
|Average percentage of returns||5.3%|
|Average monthly income||$3810|
18. Columbus, Ohio
The capital city of Ohio State, Columbus has more than two centuries of glorious history. The city got its name after Christopher Columbus, the world’s most prominent explorer. Today, Columbus consists of more than 900,000 local people, making it one of the most populous and bustling locations in the entire state. Starting an Airbnb business in Columbus can be a lucrative opportunity because capital cities always attract crowds of visitors.
|Rate of Occupancy||57%|
|Average per-day rate||$192|
|Average percentage of returns||6%|
|Average monthly income||$2310|
19. Florissant, Missouri
Florissant is a medium-sized town in Missouri State, situated in Saint Louis County. Florissant is a charming location with lots of sights to see, parks to explore, and recreation centers to have fun. Florissant has everything one needs to lead a quality life, while non-residents will find lots of attractions here to spend memorable holidays. John F Kennedy Community Center is an entertainment hub in Florissant, but there are many other compelling reasons behind the city’s huge touristic popularity.
|Rate of Occupancy||68%|
|Average per-day rate||$90|
|Average percentage of returns||7%|
|Average monthly income||$2370|
20. Milwaukee, Wisconsin
Milwaukee is a large, well-developed city in Wisconsin State, being home to over 600 thousand people. The city is best known for its incredible river scenery, lakefront views, boisterous nightlife, bold urban architecture, and vibrant city vibe. The tourism industry is flourishing in Milwaukee because the city makes an ideal holiday destination for both nature lovers and partygoers. Many real estate investors buy Airbnb property in Milwaukee and get their money’s worth.
|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 from other cities.
The table shows a comparison of some metrics in 2021 and 2022.
|Cities||Rate of Occupancy||Average per-day rate||Average monthly income|
|Malibu, California||48%||74%||$715||$846||$8122||$12, 500|
|Key West, Florida||57%||81%||$695||467$||$8822||$7,875|
|Northport, New York||51%||64%||$290||316$||$6393||2,975$|
|Long beach, New York||51%||80%||$530||$197||$4670||$3,307|
|Princeton, New Jersey||56%||74%||$260||$276||$4723||$3,332|
|San Marcos, California||59%||77%||$148||$220||$4900||$3,200|
|Carmel, New York||70%||84%||$160||$510||$5750||$8,532|
|Arlington Heights, Illinois||78%||58%||$100||$125||$4590||$1,322|
|Pike Road, Alabama||49%||69%||$200||$200||$4115||$2,374|
|North Canton, Ohio||75%||55%||$85||$115||$3810||$1,444|
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.
More about the best Сanadian cities for investing in Airbnb rentals read here.