Short term rentals, also known as vacation rentals, have exploded in popularity throughout the United States and have become a key asset class for real estate investors looking to diversify their revenue streams. Websites like Airbnb and Vrbo have helped with this growth, creating a streamlined process for real estate owners to list their properties and earn passive income from the frequent short-term tenants found through these services. When deciding where to invest in short term rental property, it’s important to remember that short term rentals require a different set of criteria than long term rentals for determining which Airbnb locations will be the most profitable and will bring in the highest ROI.

With long term rentals, investors are concerned with the local economy and population growth, whereas short term rental investors are looking for consistent cyclical tenants that can be planned for month after month or year after year. For example, Disney World brings in more than 52 million annual visitors and not all of them can afford the inflated prices of the Disney branded resorts. Due to this consistent stream of potential tenants, the nearby Florida town of Kissimmee has become one of the biggest Airbnb hot spots for short term rentals in the entire country. In this scenario, it doesn’t matter too much what the local population and economic growth of Kissimmee is because the consistency of potential tenants is accounted for based on an incredibly popular nearby attraction. The Kissimmee short term rental property offers an affordable alternative to the millions of tourists every year and provides real estate investors a strong return on their investment.

After introducing our term rental loans in 2021, we’ve helped many real estate investors begin or expand their rental portfolios with short term rental loans. To help our borrowers understand the vacation rental market, we compiled some of the best states and most profitable Airbnb cities for short term rental property. This data comes from AirDNA, a service that tracks Airbnb and Vrbo vacation rental property in cities across the United States. While not every vacation rental is listed across these two services, the popularity and cultural zeitgeist of both websites help highlight which areas are booming or busting for the short-term rental market.

Florida

Famous for its warm weather, expansive beaches, and world-renowned theme parks, the Sunshine State attracts visitors from all over the globe who need short term rental property. In fact, the state boasts five different cities in the top 10 most Airbnb listings per capita, highlighting the strength of the rental market and the demand that supports it. Florida is a perfect example of why short-term rental property works for real estate investors and how to determine which spots are going to bring in consistent tenants.

As mentioned earlier, Kissimmee is one of the hottest spots in the entire country for vacation rentals, to the point where the city bills itself as the “Vacation Home Capital of the World”. Not only is it an affordable location for families visiting Walt Disney World with its 30-minute driving distance, but the nearby attractions of Universal Studios and large lakes for water activities help to bring consistent short-term tenants into the Kissimmee market. Plus, the city is part of the Orlando metro area which holds massive events and business conferences year-round, further solidifying the area as a vacation rental powerhouse.

Outside of the theme parks are some more relaxing vacation destinations for a different type of tourist, such as the beaches and golf courses of southern Florida. For example, Miami Beach has more than 3,400 Airbnb listings per 50,000 people, making it the number one city in the country for Airbnb rental properties. Its rows of authentic Cuban restaurants and breathtaking beaches has made Miami Beach one of the most popular vacation destinations in the country, boosting the local short term rental market in the process. Of course, warm weather beach vacations aren’t a new concept, so the market is rather competitive, and investors need to have reliable rental loan financing to secure property.

Jacksonville FL has seen over 117% growth in the number of Airbnb rental property since 2017, making it one of the fastest growing cities in the country for short term rentals. Other hot spots for Airbnb include Orlando, Daytona Beach, Fort Lauderdale, and Sarasota, which all find themselves in the top ten Airbnb listings per capita in the country. These cities are all unique but offer similar qualities that make them top rental markets: relaxing vacation destinations with warm weather and easy accessibility.

There is no better state than Florida for vacation rental property as far as number of unique annual visitors and consistent ROI for real estate investors, which also means its markets are already highly competitive for investors searching for their next project. That said, there are other states seeing large growth in their vacation rental markets that are starting to compete with Florida and currently offer less intense competition.

Georgia

Georgia is another strong market for short term rentals for a variety of reasons, bringing in a wide range of tourists with the state’s eclectic mix of mountainous attractions and modern city living. The number of social events and fun attraction options found in the Peach State helps raise its value and attendance from outside visitors, boosting the viability of short-term rentals in the area. Georgia also shares borders with other top states for rental property such as Florida and South Carolina, making it a great option for investors looking for multi-state portfolios.

Atlanta is currently one of the best Airbnb markets in the country for vacation rentals. As of June 2019, there were more than 11,000 available Airbnbs in Atlanta which puts it in the top 10 largest cities for Airbnb rentals. In fact, the city has 1,017 Airbnb listings per 50,000 people, meaning there’s plenty of active demand to facilitate the short-term rental market. Tourist attractions in Atlanta have increased over the years, as have movie production thanks to various tax breaks and incentives Georgia has offered to film and television productions. These types of projects come with short-term employees who require short-term leases to work on the project, which is perfect for vacation rentals and Airbnbs.

Stricter regulations are set to begin in Atlanta as early as March 1, 2022, that will impose a tax on short term rentals identical to hotel tax rates in the area, as well as require a $150 certificate from the city to operate a short-term rental business. While these new laws and regulations will eat into some of the profit, Atlanta short term rental property is still an incredibly viable and profitable investment opportunity that shows no signs of losing popularity.

Savannah is another top city in the country for short-term rental property. The city has 608 Airbnb listings per 50,000 people, placing it into the top 25 for the country and boasting 1,824 active listings. Outsider demand to visit Savannah has risen over the last decade, as the city becomes more well known for its southern charm and old-timey feel compared to other modern cities in the south. With a rising presence on lists for being one of the best cities in the south for family vacations, Savannah will remain a strong option for investing in short term rental property.

Surprisingly, Cherry Log has also become a top spot for vacation rental property. The town is much more focused on the wilderness and mountainous aspects of tourism, offering a variety of hiking trails and outdoor activities. Cherry Log has been a growing Airbnb spot for a few years now, boasting 7% quarterly growth over the past three years. Currently there are 184 active Airbnb rentals in the area which represents nearly doubling the listing volume over the last few years, with approximately 100 listings back in Q3 2018 up to nearly 200 active listings in Q4 2021.

These are just a few of the top performing cities in the Peach State, making Georgia one of the best areas in the country for real estate investors looking at vacation rental property. The state is less competitive than Florida overall and its strongest markets have only grown in recent years, making it an excellent option for buy and hold investors that want to dive into the short-term rental market.

The Carolinas

While North Carolina and South Carolina have differences in their tourist attractions and real estate markets, the reasons for their short-term rental market growth are closely related and can be combined into their own highlight section. Beaches, unique museums, music festivals, and historical attractions invite visitors from out of state to stay in the Carolinas by using short term rental property.

Charlotte North Carolina has become a major hot spot for vacation rentals, with a 120% growth in the number of Airbnb listings in the area since 2017. The Queen City is one of the fastest growing real estate markets in the country period, especially amongst millennials. Being the home for major sports franchises like the Carolina Panthers helps bring in visitors every year, boosting the value and consistency of Charlotte short term rental property. Additional attractions such as the large water theme park Carowinds and the NASCAR Hall of Fame raises the level of consistent out-of-state visitors ever year, increasing the viability of local Charlotte rental property.

Asheville North Carolina is another top city for short term rentals with 1,041 Airbnb listings per 50,000 people, placing it into the top 10 cities in the country for Airbnb rental property. The city boasts a few unique tourist attractions that helps to explain why there’s such a large amount of Airbnb rental property for the area. For example, Asheville is home to the Biltmore Estate, which is practically a palace built in 1889 and measured at 178,000 square feet! This attraction alone accounts for over one million unique visitors each year, and these visitors need temporary accommodations in the city, leading to a boost for the area’s Airbnb rentals. The Blue Ridge Mountains are a natural attraction for the more outdoorsy visitors, accounting for another hundreds of thousands of visitors each year.

South Carolina is another state with an eclectic mix of relaxing vacation options with two of the best cities for short term rentals in the country. For example, Charleston has 635 Airbnb listings per 50,000 people, securing its spot in the top 25 Airbnb cities in the country. Currently Charleston has 1,563 active Airbnb listings, making it one of the most densely populated cities for vacation rentals and one of the best spots to acquire vocational rental property.

The jewel of South Carolina vacation rental property must be Myrtle Beach, a relaxing beach town that has exploded in popularity over the last decade. According to the data, the average revenue per booking for Airbnbs in Myrtle Beach is $2,618 and fluctuates depending on the seasonality, with the peak summer season seeing an average $5,643 per booking with an occupancy rate of 97%! Currently this is one of the best, most competitive markets for Airbnb and short-term rentals, with over 7,000 active listings in the area, but if an investor can obtain a desirable property than the potential returns over time would be worth the effort.

Artists, musicians, hikers, beach goers and beer lovers are frequent visitors to these Carolina vacation destinations, and these visitors need short term accommodations to stay in. Having an affordable option with short term rentals make their trips possible and provides a consistent ROI for savvy real estate investors that understand these cyclical tenants. By researching the local market and trends within the market, real estate investors can utilize Airbnb loans to their maximum potential and begin generating passive monthly income.

Texas

Our final top spot for rental investors is Texas, which has become a major destination for vacation rentals in the last decade. The short-term rental market picked up even more steam in recent years with the explosion of Austin as an arts and tech community. Texas has seen growth in its real estate market across the board, so it makes sense that the short-term rental properties have also increased in both value and popularity.

Austin has been on the forefront of real estate for the last few years, bringing in many large tech companies and artist communities that have started a cascading effect of large population growth in the city and the rest of the Lonestar State. South By Southwest, Moontower, and other major arts festivals are among the biggest gatherings of their type in the country and require lodging for hundreds of thousands of people each year. Add those cyclical visitors to the increased tourism interest for Austin and the state of Texas in general, and you’re looking at one of the most solid ROI cities for short term rental property.

The other two major cities in Texas for vacation rental property are Fort Worth and Dallas. With these cities sharing a major travel hub it makes sense that both would rank highly together in the short-term rental market. Fort Worth has seen more than 101% growth in its Airbnb property count since 2017, making it one of the fastest growing areas in the country. Dallas follows close behind with growth of more than 95%, putting it right behind Fort Worth for fastest growing Airbnb count.

The area features several unique art and sciences museums along with a zoo housing over 7,000 animals making it a great destination for families entering the Dallas-Fort Worth area or just visiting Texas in general. Historical significance, modern city amenities, and year-round warm weather make the state a top vacation destination and therefore an excellent choice to invest in short term rental property. Having an airport directly connected to the area makes it an easy and simple vacation choice as well, increasing the potential visitors and therefore increasing the potential ROI on the local vacation rental property.

Final Thoughts

Look at the common features between these top cities for vacation rentals and hottest Airbnb markets- beaches, tourist attractions, historical significance, art festivals, relaxing activities like golf courses and hiking trails, etc. Finding rental property in areas with these features that can consistently attract outsiders who need a place to stay is the key to holding a successful vacation rental- that and finding the proper financing! With the short-term rental market continuing to grow year after year and more investors becoming familiar with the revenue stream, its important to have fast and reliable rental loans to ensure you remain competitive in the market. Finding a direct lender that offers Airbnb loans can be tough, but luckily ABL is here to help.

Asset Based Lending proudly offers Airbnb rental loans for real estate investors in Florida, Texas, the Carolinas, and all throughout the east coast. We do not lend on owner-occupied properties or help fund the purchase of people’s vacation homes, but we do help real estate investors acquire rental property and start using it as an income-producing asset. Whether you want to use these term rental loans for Airbnb, Vrbo, or market the properties on your own, our team is ready to provide you with the most reliable and competitive rental loans on the market. If you’re a real estate investor looking to begin or expand your short-term rental portfolio, then contact us today to discuss how we can help finance your investment with our Airbnb loan program.