Short-term rentals, commonly known as holiday rentals, have become a popular asset class among real estate owners eager to diversify their revenue streams. Websites like Airbnb and Vrbo have aided this expansion by making it easier for property owners to list their houses and earn passive revenue from the regular short-term tenants discovered via these services. When considering where to invest in short-term rental property, keep in mind that short-term rentals have a different set of criteria than long-term rentals when it comes to evaluating which places would provide the best return on investment.

Investors in long-term rentals are concerned about the local economy and population growth, but short-term rental investors are searching for predictable cyclical renters who can be scheduled month after month or year after year. For example, Disney World attracts more than 52 million people each year, and not all of them can pay the Disney-branded resorts’ inflated pricing. Because of this steady influx of potential tenants, Kissimmee, Florida, has become one of the country’s most popular short-term rental destinations. In this case, it doesn’t matter too much about Kissimmee’s population or economic growth because the consistency of potential tenants is accounted for by a hugely popular nearby destination. The Kissimmee short-term rental property gives an economical alternative to the millions of tourists who visit each year, as well as a great return on investment for real estate owners.

We’ve helped numerous real estate owners start or extend their rental portfolios with short term rental loans since launching our term rental loans in 2021. We prepared a list of the finest states and cities for short-term rental property to help our borrowers understand the vacation rental market. AirDNA, a firm that records Airbnb and Vrbo vacation rental property in cities across the United States, provided this information. While not every vacation property is featured on both platforms, their popularity and cultural zeitgeist help to show which places are flourishing or collapsing in the short-term rental market.

Florida

The Sunshine State attracts visitors from all over the world who require short-term rental property due to its warm weather, large beaches, and world-renowned theme parks. In fact, five separate cities in the state are among the top ten cities with the most Airbnb listings per capita, demonstrating the strength of the rental sector and the demand that drives it. Florida is a great illustration of why short-term rental properties work for real estate investors and how to figure out which areas would attract long-term tenants.

As previously said, Kissimmee is one of the top vacation rental destinations in the country, with the city billing itself as the “Vacation Home Capital of the World.” With a 30-minute drive to Walt Disney World, it is not just an economical location for families, but the adjacent attractions like Universal Studios and vast lakes for water sports assist to bring steady short-term tenants into the Kissimmee market. Furthermore, the city is part of the Orlando metro region, which hosts major events and corporate conferences all year, reinforcing the area’s position as a vacation rental powerhouse.

Aside from amusement parks, there are also more peaceful holiday locations for a different type of tourist, such as southern Florida’s beaches and golf courses. For example, Miami Beach has almost 3,400 Airbnb listings per 50,000 residents, making it the country’s most popular Airbnb rental destination. Miami Beach has become one of the most popular holiday destinations in the country, increasing the local short-term rental market in the process, thanks to its rows of traditional Cuban eateries and magnificent beaches. Of course, warm-weather beach vacations aren’t a new concept, so the market is crowded, and investors need to secure property with reputable rental loan financing.

Since 2017, the number of Airbnb rental properties in Jacksonville FL has increased by over 117 percent, making it one of the fastest growing cities in the US for short-term rentals. Orlando, Daytona Beach, Fort Lauderdale, and Sarasota are among the top 10 cities with the most Airbnb listings per capita in the US. These cities are all different, but they all have the same attributes that make them popular rental destinations: calm holiday spots with pleasant weather and easy access.

In terms of number of unique annual visitors and constant ROI for real estate investors, no state compares to Florida for vacation rental property, which means its markets are already highly competitive for investors looking for their next project. However, other states that are experiencing significant expansion in their vacation rental sectors are beginning to compete with Florida and currently provide less strong competition.

Georgia

Georgia is another popular destination for short-term rentals for a variety of reasons. The state’s varied combination of mountainous attractions and modern city living attracts a diverse range of visitors. The Peach State’s abundance of social events and entertaining attraction options serves to improve its value and attract outside visitors, enhancing the feasibility of short-term rentals in the area. Georgia also shares boundaries with other top rental property states like Florida and South Carolina, making it an excellent choice for multi-state portfolios.

Atlanta is currently one of the greatest vacation rental markets in the country. Atlanta had over 11,000 available Airbnbs as of June 2019, placing it among the top ten largest cities for Airbnb rentals. In fact, there are 1,017 Airbnb listings per 50,000 persons in the city, indicating that there is enough active demand to support the short-term rental industry. Thanks to different tax exemptions and incentives Georgia has granted to film and television productions, tourist attractions in Atlanta have increased throughout time, as has movie production. These projects are ideal for vacation rentals and Airbnbs since they require short-term staff who require short-term leases to work on the project.

Stricter rules are planned to take effect in Atlanta on March 1, 2022, and will levy a tax on short-term rentals that is equal to the area’s hotel tax rates, as well as a $150 certificate from the city to operate a short-term rental business. While these new laws and restrictions will reduce profits, Atlanta short-term rental property remains a highly viable and profitable investment option that shows no signs of dwindling.

Savannah is another popular short-term rental destination in the United States. The city has 608 Airbnb listings per 50,000 residents, ranking it in the top 25 cities in the country, with 1,824 active listings. Outsider demand for Savannah has increased in the recent decade, as the city has become increasingly widely known for its southern charm and old-fashioned vibe in comparison to other southern cities. Savannah will continue to be an excellent option for investing in short term rental property as it rises in popularity as one of the best places in the south for family vacations.

Cherry Log has unexpectedly become a popular vacation rental destination. The town is much more focused on wilderness and mountain tourism, with a choice of hiking paths and outdoor activities to choose from. Cherry Log has been a popular Airbnb destination for some years, with a 7 percent quarterly growth rate over the last three years. There are currently 184 active Airbnb properties in the neighborhood, roughly doubling the listing number in the last two years from over 100 listings in Q3 2018 to nearly 200 active listings in Q4 2021.

These are just a few of Georgia’s highest-performing cities, making it one of the greatest places in the country for real estate investors searching for vacation rental properties. The state is less competitive than Florida overall, and its strongest markets have only gotten stronger in recent years, making it a great option for buy-and-hold investors looking to get into the short-term rental market.

South Carolina

While the tourist attractions and real estate markets in North and South Carolina differ, the causes for their short-term rental market growth are closely related and can be integrated into their own feature section. Visitors from out of state are drawn to the Carolinas by beaches, distinctive museums, music festivals, and historical attractions.

Charlotte, North Carolina, has become a significant vacation rental hotspot, with an increase of 120 percent in the number of Airbnb listings since 2017. The Queen City is one of the country’s fastest-growing real estate markets, particularly among millennials. The fact that big sports organizations such as the Carolina Panthers call Charlotte home helps bring in guests year after year, increasing the value and consistency of Charlotte short term rental property. Additional attractions such as Carowinds, a big water theme park, and the NASCAR Hall of Fame increase the number of out-of-state tourists each year, making local Charlotte rental property more viable.

With 1,041 Airbnb listings per 50,000 inhabitants, Asheville, North Carolina is another hotspot for short-term rentals, ranking among the top ten cities in the US. The city has a number of distinct tourist attractions, which may explain why there is so much Airbnb rental property in the neighborhood. For example, the Biltmore Estate, which was erected in 1889 and measures 178,000 square feet, is located in Asheville. This attraction alone attracts over one million people each year, and these visitors require temporary lodging in the city, resulting in an increase in Airbnb rentals in the vicinity. The Blue Ridge Mountains are a popular destination for outdoor enthusiasts, attracting hundreds of thousands of visitors each year.

South Carolina is another state offers a diverse range of peaceful holiday alternatives, including two of the country’s greatest cities for short-term rentals. Charleston, for example, has 635 Airbnb listings per 50,000 residents, making it one of the top 25 Airbnb cities in the US. Charleston now has 1,563 active Airbnb listings, making it one of the most highly populated holiday rental cities and one of the greatest places to find vocational rental property.

Myrtle Seaside, a tranquil beach town that has surged in popularity over the last decade, has to be the crown jewel of South Carolina vacation rental property. According to the data, the average revenue per booking for Airbnbs in Myrtle Beach is $2,618 and varies depending on the season, with an average of $5,643 per booking during the high summer season and a 97 percent occupancy rate! With over 7,000 active listings in the area, this is currently one of the most competitive areas for short-term rentals, but if an investor can find a suitable property, the potential profits over time would be worth the effort.

Visitors to these Carolina vacation destinations include artists, musicians, hikers, beachgoers, and beer drinkers, all of whom require short-term lodging. Short-term rentals give an economical choice for their visits, as well as a constant ROI for savvy real estate investors who understand these cyclical tenants. Real estate investors can maximize the potential of Airbnb loans and start producing passive monthly income by understanding the local market and trends within it.

Texas

Our final top pick for rental investors is Texas, which has exploded in popularity as a holiday rental destination over the previous decade. With Austin’s development as an arts and tech town in recent years, the short-term rental industry has gained even more traction. Because Texas’ real estate market has grown across the board, it’s only natural that short-term rental homes have grown in value and popularity.

For the past few years, Austin has been at the vanguard of real estate, attracting many significant tech businesses and creative communities, resulting in a cascade effect of large population expansion in the city and throughout the Lonestar State. South By Southwest, Moontower, and other major arts festivals are among the country’s largest gatherings of their kind, requiring hundreds of thousands of people to stay in hotels each year. When you combine those cyclical guests with the rising tourism interest in Austin and Texas in general, you have one of the best ROI places for short-term rental property.

Fort Worth and Dallas are the other two major cities in Texas with vacation rental properties. Given their proximity to a major travel hub, it’s no surprise that both cities rank highly in the short-term rental market. Since 2017, the number of Airbnb properties in Fort Worth has increased by more than 101 percent, making it one of the fastest growing areas in the country. Dallas is directly behind Fort Worth in terms of fastest rising Airbnb count, with a growth rate of almost 95 percent.

The neighborhood is home to various distinct art and scientific institutions, as well as a zoo with over 7,000 animals, making it a fantastic destination for families visiting the Dallas-Fort Worth area or Texas in general. The state’s historical significance, modern city facilities, and year-round mild weather make it a prominent tourist destination and, as a result, a good choice for short-term rental property investment. With an airport directly connected to the area, it becomes a convenient and easy holiday option, boosting the number of possible visitors and thus the potential ROI on the local vacation rental property.

Last Thoughts
Take a look at what these top vacation rental cities have in common: beaches, tourist attractions, historical significance, art festivals, relaxing activities like golf courses and hiking trails, and so on. Finding rental property in these regions that can continuously attract outsiders in need of a place to stay is the key to running a profitable holiday rental—that, and obtaining the necessary finance! With the short-term rental industry growing year after year and more investors becoming acquainted with the revenue stream, it’s critical to have quick and dependable rental loans to stay competitive. It can be difficult to find a direct lender that offers Airbnb loans, but JS Lenders is here to help.