In recent years, Airbnb rentals have become a well-liked alternative to hotels for tourists who prefer the comfort and space that a house can offer. This has made it easier for investors to profit from the expanding short-term rental sector. However, not every place is suitable for this kind of market.
Important Business Elements for Airbnb Rentals
It’s all about location, location, location in real estate, as in everything. For individuals that list on the site, some American towns can produce large earnings. In certain locations, finding rental revenue has been a little trickier. These differences are caused by a variety of variables.
For instance, the cost of Airbnb tends to rise when a city has a limited supply of hotel rooms. However, investors are forced to maintain their rates low in areas where hotels are easily accessible and inexpensive. Another significant factor in the equation is the cost of housing. The genuine sweet spot is found in areas where investors can rent or buy for very little money but where there is a consistent demand from tourists.
The Best Cities to Rent on Airbnb
Based on information acquired by Airdna, an analytics business that specializes in Airbnb data, these are the best and worst places for investors (based on Airdna’s own scoring methodology, which considers investability, rental demand, and revenue growth).
Slade, Kentucky, is the finest city for emerging markets. The city has a potential annual revenue of $39,124 and an Airdna investor score of 96.6. Other ratings from Airdna include 100 for investability, 92 for rental demand, and 95 for revenue growth.
U.S. Virgin Islands: St. John
St. John in the United States Virgin Islands is the finest city for medium-sized markets. The city has a $95,030 in potential revenue and an Airdna Score of 93. It has a score of 76 for revenue growth, 96 for rental demand, and 100 for investability.
California’s Palm Springs
Palm Springs, California, which has an investor score of 89.7, is the top city in terms of major markets. It has a $64,571 in potential revenue, a score of 99 for revenue growth, 60 for rental demand, and 100 for investability.
California’s Palm Springs benefits from winter travelers looking for a warm, sunny location. Coachella and Stagecoach, two significant music events, are held there. Major cities like New York City, Los Angeles, and Chicago are conspicuously missing from the list because they are typically overrun with Airbnb listings.
The Cities to Avoid for Airbnb Rentals
The worst places to host an Airbnb are in well-known towns with significant marketplaces, including Charleston, South Carolina, and Las Vegas, Nevada. The top three cities with the poorest reviews on Airbnb are Savannah, Georgia; Sedona, Arizona; and Miramar Beach, Florida.
Savannah is constrained by a lack of rental demand, whereas Sedona is constrained by its investability despite experiencing some of the best growth in rental revenue. Home costs drastically restrict some of the greatest locations in terms of prospective revenue. Although Miramar Beach has excellent investability, it suffers greatly from low rental demand and slow revenue growth.
Avoid going with the typical suspects if you plan to invest in Airbnb rentals. If property costs are too high or there are plenty of inexpensive motels available, some cities that seem like fantastic tourist destinations may turn out to be duds. As shown by our list, some of the best offers can be found in less well-known areas. In particular, if you won’t be residing there yourself, remember to account for the expense of managing the home.