How to Choose the Best Airbnb Markets for Investment

Introduction: The Smart Investor's Guide to Short-Term Rental Markets

The short-term rental market has rebounded strongly in 2024, with demand bouncing back as economic confidence improved, while high interest rates slowed supply growth by keeping new investors on the sidelines. This market stabilization creates unprecedented opportunities for savvy investors who know how to identify the right markets.

With over 95% of bookings made online and the rise of remote work driving extended stays, the fundamentals for Airbnb investing remain strong. However, success requires more than just buying property in a popular destination—it demands strategic market selection based on data-driven analysis.

The key to profitable Airbnb investing lies in finding markets that offer the perfect balance of high demand, reasonable entry costs, favorable regulations, and sustainable growth potential. Whether you're a first-time investor or looking to expand your portfolio, understanding how to evaluate and compare different markets will determine your investment success.

This comprehensive guide will walk you through the essential factors for choosing winning Airbnb markets, highlight the top-performing destinations for 2025, and show you how BRRRR Loans' specialized short-term rental financing can help you capitalize on these opportunities.

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Understanding the Current Short-Term Rental Landscape

The short-term rental industry has matured significantly since its early "gold rush" days. Looking ahead, occupancy is expected to keep climbing, getting closer to pre-pandemic levels of 56% by the end of 2025, while revenue per available rental (RevPAR) has returned to positive territory.

Market Dynamics and Trends

The pandemic created a perfect storm for the short-term rental market. Demand skyrocketed as professionals, who could work from anywhere, booked short-term rental stays amid the shutdown of international travel and cruises. However, as the market normalized, many oversaturated destinations experienced corrections.

Key 2024-2025 Market Trends:

✅ Market Stabilization - Occupancy rates have steadied after volatile pandemic years

✅ Demand Growth - 7% rise in demand finally outpacing supply growth

✅ Geographic Shifts - Small cities and rural towns posting fastest growth

✅ Regulatory Evolution - Many cities are tightening STR regulations to manage housing availability, neighborhood impact and safety standards

✅ Platform Consolidation - The big three — Airbnb, Booking.com, and Expedia/Vrbo — commanded 71% of the global short-term rental market in 2024, up from 53% in 2019

Why Market Selection Matters More Than Ever

The short-term rental industry is currently undergoing changes. While overall Airbnb demand continues to grow and tourism flourishes in the post-pandemic world, market dynamics are shifting. Success now requires sophisticated analysis rather than simply following popular trends.

Markets that seemed unstoppable during the pandemic, like Joshua Tree, have experienced significant corrections. A one-bedroom Mid Century Modern home was purchased for $600,000 amid the frenzy in September 2021. As mortgage rates spiked, Joshua Tree's short-term rental driven boom turned to bust. In December 2023, the home was resold for just $340,000.

This volatility underscores the importance of thorough market analysis and conservative investing approaches.

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Essential Factors for Evaluating Airbnb Markets

Successful Airbnb market selection requires analyzing multiple interconnected factors that determine both short-term performance and long-term sustainability. Here are the critical elements every investor must evaluate:

Tourist Attraction and Demand Drivers

The overall attractiveness of the location is one of the main drivers for bookings. Many guests choose traditional tourist destinations, such as areas around national parks. However, demand drivers extend beyond traditional tourism.

Primary Demand Drivers to Evaluate:

🎯 Tourist Attractions - National parks, beaches, ski resorts, historical sites

🏢 Business Travel - Corporate headquarters, conference centers, medical facilities

🎉 Event-Based Demand - Festivals, sports venues, concert halls

🎓 Educational Institutions - Universities, training centers (graduation, parents' weekends)

💼 Remote Work Appeal - High-speed internet, co-working spaces, lifestyle amenities

🏥 Medical Tourism - Specialized hospitals, treatment centers

Market Research Checklist:

✓ Identify primary and secondary demand drivers

✓ Assess seasonality patterns and off-peak demand

✓ Research upcoming developments that could impact demand

✓ Evaluate transportation accessibility (airports, highways, public transit)

✓ Consider the target demographic and their spending power

Financial Performance Metrics

The best short-term rental markets have a lot of features in common. For example, they attract numerous domestic and foreign visitors throughout the year, which drives high Airbnb occupancy rates. In addition, they are established markets with active listings which are not oversaturated yet, allowing for good nightly rates and rental revenue.

Key Financial Metrics to Analyze:

📊 OCCUPANCY RATES

• Target: 60%+ annual occupancy

• Should the average figures dip below the 50% threshold, they're considered low

• Review 12-month historical data to understand seasonal patterns

💰 AVERAGE DAILY RATE (ADR)

• Compare ADR across property types and bedroom counts

• Analyze monthly variations to understand pricing power

• Factor in local events and seasonal demand spikes

📈 REVENUE PER AVAILABLE RENTAL (RevPAR)

• Calculate: ADR × Occupancy Rate

• Best metric for overall market performance

• Track year-over-year trends for market health

🏠 PROPERTY APPRECIATION

• Research 3-5 year price trends

• Compare appreciation rates to national averages

• Consider impact of short-term rental demand on property values

Regulatory Environment and Future Risk

Look at local regulation. Consider both current regulatory risk for STR investors and the potential for future regulations in your assessment of top short-term rental locations. Understanding the regulatory landscape is crucial for long-term success.

Regulatory Risk Assessment:

⚠️ High-Risk Regulations:

• Caps on rental days (less than 90 days annually)

• Primary residence requirements

• Hosted-only restrictions

• Moratoriums on new permits

✅ Investor-Friendly Policies:

• Clear licensing procedures

• Reasonable safety requirements

• Moderate occupancy limits

• Grandfathering provisions

Due Diligence Steps:

1. Research Current Laws - Licensing, taxation, safety requirements

2. Monitor Proposed Changes - Attend city council meetings, track ballot measures

3. Understand Enforcement - How strictly are rules enforced?

4. Plan for Compliance - Budget for permits, inspections, required upgrades

5. Consider Exit Strategies - How easily could you convert to long-term rental?

Market Saturation and Competition Analysis

They also offer affordable property prices to push up returns. This is a lot of information to factor in, which renders the question: How do you find the best Airbnb markets for investing? Part of the answer lies in identifying markets with growth potential rather than oversaturation.

Competition Analysis Framework:

📊 SUPPLY METRICS

• Number of active listings per 1,000 residents

• New listing growth rate (avoid markets with >20% annual growth)

• Listing absorption rate vs. demand growth

🎯 MARKET POSITIONING

• Analyze competitor properties (pricing, amenities, reviews)

• Identify underserved segments or property types

• Assess differentiation opportunities

💡 MARKET MATURITY INDICATORS

• Established markets with proven demand

• Reasonable competition levels

• Room for quality improvements and premium positioning

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Top Airbnb Markets for 2025 Investment

Based on comprehensive market analysis, occupancy rates, revenue potential, and regulatory environments, these markets offer exceptional opportunities for 2025 investment:

Tier 1: Premium Coastal and Resort Markets

🏖️ CHARLESTON, SOUTH CAROLINA

AirDNA provides an extremely strong market score of 89/100 as of November 2024, highlighted by strong markets in investability (measuring balance between cost to purchase and financial returns), rental demand and revenue growth. The Average Daily Rate of $463 is tremendous, and taken in context with an overall strong average occupancy rate of 63%.

Investment Highlights:

• Average Daily Rate: $463

• Occupancy Rate: 63%

• Strong year-round demand from tourism and business travel

• Favorable regulatory environment

• Historic charm and cultural attractions

🌊 GULF SHORES, ALABAMA

For short term rental investors that don't mind low seasonality scores – i.e. earning the vast majority of rental income during a select few months, in this case the summer months for a beach-based market – Gulf Shores, Alabama is shaping up to be a top market for 2025.

Investment Highlights:

• AirDNA Market Score: 93/100

• Average Annual Revenue: $67,000+ (up 14%)

• ADR: $380 (up 12%)

• Strong summer seasonality with growing off-season demand

🌴 NEW ORLEANS, LOUISIANA

With its world-famous festivals, rich culture and unmistakable charm, New Orleans continues to be one of the best STR markets in the U.S. in 2025. Every year, over 18 million visitors flock to the city for events like Mardi Gras, the Jazz & Heritage Festival and the Essence Music Festival — creating consistent demand for short-term rentals and high occupancy rates across all seasons.

Investment Highlights:

• 18+ million annual visitors

• Multiple major events throughout the year

• Strong cultural tourism base

• Diverse neighborhoods with varying price points

Tier 2: Emerging High-Growth Markets

🏔️ FLAGSTAFF, ARIZONA

AirDNA, widely considered the top data provider for cutting-edge short term rental analytics and performance projections, projects Flagstaff with a top-of-the-line "overall market score" of 98/100 as of November 2024.

Investment Highlights:

• Market Score: 98/100

• Low seasonality (consistent year-round demand)

• Revenue and ADR increasing steadily

• Reasonable property prices for entry

• Proximity to Grand Canyon and outdoor recreation

🏜️ JOSHUA TREE, CALIFORNIA

Perhaps a surprising choice on this list for long-time short term rental investors, Joshua Tree might be a sneaky stupendous market for 2025. The desert oasis, located near its namesake National Park, experienced a massive boom in the 2020 and 2021 Covid era... However, according to cutting-edge data watchers such as AirDNA, the numbers have been ticking back up in 2024 and Joshua Tree appears to be a top market for 2025.

Investment Highlights:

• AirDNA Overall Score: 100/100 (best in the United States)

• Market correction has created buying opportunities

• Strong recovery trajectory in 2024

• Unique desert experience attracts premium pricing

Tier 3: Budget-Friendly Entry Markets

🏭 AKRON, OHIO

For investors working with a $200,000 budget, Akron, Stanton, Pittsburgh, and Peoria offer affordable entry points with strong return potential. Akron has experienced a 15% increase in annual revenue since 2023, with demand consistently outpacing supply—even as listings have grown by 20% in the last year.

Investment Highlights:

• Ideal for $200,000 budget range

• 15% revenue increase since 2023

• Demand outpacing supply growth

• Strong fundamentals for new investors

🎶 NASHVILLE, TENNESSEE

Nashville continues to be a thriving market with nearly 6,000 active Airbnb listings. The city's vibrant music scene and strong tourism draw make it a consistent performer in terms of occupancy and revenue generation.

Investment Highlights:

• Nearly 6,000 active listings (established market)

• Music tourism and business travel

• Multiple entertainment districts

• Strong rental regulations framework

🏰 KISSIMMEE, FLORIDA

With over 10,000 active Airbnb listings, Kissimmee, located near major attractions like Disney World, remains a leader in the short-term rental market. This makes it a prime location for Airbnb hosts looking to capitalize on the constant flow of tourists to the Orlando area.

Investment Highlights:

• Over 10,000 active listings

• Proximity to Disney World and Universal Studios

• Year-round family tourism

• Established vacation rental infrastructure

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Financial Analysis and Investment Criteria

Successful Airbnb investing requires establishing clear financial criteria and conducting thorough property analysis. One of the most critical metrics to define is the gross rental income to purchase price ratio. In Airbnb investments, this ratio gives you a clear sense of a property's potential for generating income relative to its cost. As a rule of thumb, aim for a ratio of at least 15% to ensure that the property has solid revenue potential.

Key Financial Metrics and Benchmarks

💰 REVENUE-TO-PRICE RATIO

• Target: Minimum 15% (annual gross rental income ÷ purchase price)

• Example: $75,000 annual revenue ÷ $500,000 purchase price = 15%

• This ensures solid ROI potential and debt service coverage

📊 OCCUPANCY TARGETS BY MARKET TYPE

• Resort/Vacation Markets: 50-70% (seasonal variation expected)

• Urban/Business Markets: 60-80% (more consistent year-round)

• Event-Driven Markets: 45-65% (depends on event calendar)

🏠 PROPERTY ACQUISITION CRITERIA

• Maximum purchase price based on financing capacity

• Factor in renovation and furnishing costs (typically 10-20% of purchase price)

• Consider ongoing operational expenses (property management, cleaning, maintenance)

BRRRR Loans Short-Term Rental Financing

BRRRR Loans offers specialized financing solutions designed specifically for short-term rental investors, making it easier to acquire properties in competitive markets.

🏦 SHORT-TERM RENTAL LOAN FEATURES:

Loan Specifications:

• Loan Amount: $75,000 to $2 million+

• Loan-to-Value: Up to 75% LTV

• Down Payment: Minimum 25%

• Credit Score: Preferred 620+, but individual cases considered

• Term: 1-5 years (or longer in some situations)

Key Advantages:

✅ Asset-Based Lending - Loans secured on property value and income potential

✅ No Personal Income Verification - No tax returns or employment validation required

✅ Fast Closing - 28 days or less processing time

✅ Simplified Application - Streamlined process with minimal paperwork

✅ Flexible Underwriting - Individual circumstances considered

Because we secure the loan on the property value and potential income, rather than creditworthiness or income, you'll find that applying for a BRRR Loans short-term rental loan is a lot easier than you might think.

Calculating Investment Returns

CASH-ON-CASH RETURN CALCULATION:

Annual Net Cash Flow ÷ Total Cash Invested = Cash-on-Cash Return

Example:

• Annual Revenue: $60,000

• Annual Expenses: $35,000

• Net Cash Flow: $25,000

• Total Cash Invested: $125,000 (down payment + costs)

• Cash-on-Cash Return: 20%

TOTAL RETURN ANALYSIS:

• Cash flow returns

• Property appreciation

• Tax benefits (depreciation, expense deductions)

• Principal paydown from rental income

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Market Research Tools and Resources

This is a lot of information to factor in, which renders the question: How do you find the best Airbnb markets for investing? With the help of the Awning Top Markets tool. Professional market analysis requires leveraging multiple data sources and analytical tools.

Essential Market Research Platforms

📊 DATA ANALYSIS TOOLS

AirDNA - Industry-leading STR market analytics

• Market scores and performance rankings

• Revenue and occupancy projections

• Competitor analysis and pricing insights

• Regulatory risk assessments

Mashvisor - Comprehensive real estate analytics

• Property finder with STR analysis

• Market comparisons and neighborhood insights

• Dynamic pricing recommendations

• Long-term and short-term rental comparisons

Rabbu - Free Airbnb calculator and market data

• Revenue projections for any address

• Market finder with ROI scoring

• Property alerts for investment opportunities

• Comparative market analysis

Step-by-Step Market Research Process

🔍 PHASE 1: BROAD MARKET IDENTIFICATION

1. Set Investment Criteria

o Budget range and financing capacity

o Target cash-on-cash returns

o Geographic preferences and constraints

o Risk tolerance and timeline

2. Screen Markets Using Tools

o Use AirDNA or similar platforms to identify high-scoring markets

o Filter by occupancy rates, ADR, and revenue growth

o Consider regulatory environment and market maturity

3. Create Market Shortlist

o Select 5-10 markets for detailed analysis

o Ensure geographic and market-type diversification

o Verify financing availability in target markets

🎯 PHASE 2: DETAILED MARKET ANALYSIS

1. Financial Performance Deep-Dive

o Keep in mind that a comprehensive rental analysis of a specific market requires you to review historical rental data over an extended period, typically 12 months, to grasp the Airbnb demand fluctuations across different seasons and observe changes over the years

o Analyze seasonal patterns and year-over-year trends

o Compare performance across different property types

2. Regulatory Investigation

o Research current short-term rental laws

o Contact local planning departments

o Join investor groups and forums

o Consult with local real estate professionals

3. Competition Assessment

o Analyze active listings in target price ranges

o Identify successful properties and their strategies

o Assess market saturation levels

o Evaluate differentiation opportunities

Professional Support Resources

🏠 REAL ESTATE INVESTMENT HELP LINE

For personalized guidance on market selection and investment strategy, contact the Real Estate Investment Help Line at 732-851-6900 during normal business hours. This free service provides:

• Market analysis consultation

• Financing strategy guidance

• Regulatory compliance assistance

• Connection with local market experts

🤝 PROFESSIONAL NETWORK

Building relationships with local professionals is crucial for success:

• Real Estate Agents specializing in investment properties

• Property Managers with STR experience

• Contractors for renovations and maintenance

• Accountants familiar with STR taxation

• Insurance Agents offering STR coverage

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Conclusion: Building Your Short-Term Rental Portfolio

The short-term rental market in 2025 offers tremendous opportunities for informed investors who understand how to evaluate markets, analyze properties, and execute strategic acquisitions. Good news for short-term rental hosts—things are finally stabilizing. According to AirDNA's 2025 Outlook Report, demand started bouncing back in 2024 as economic confidence improved.

Success in Airbnb investing requires more than just buying property in popular destinations. It demands systematic market analysis, conservative financial planning, regulatory awareness, and access to specialized financing solutions. The markets and strategies outlined in this guide provide a foundation for building a profitable short-term rental portfolio.

🎯 KEY TAKEAWAYS FOR SUCCESS:

✅ Focus on Fundamentals - Prioritize markets with strong demand drivers, reasonable competition, and favorable regulations

✅ Maintain Conservative Metrics - Target 15%+ revenue-to-price ratios and maintain adequate cash reserves

✅ Leverage Specialized Financing - Use BRRRR Loans' short-term rental products for competitive advantages

✅ Stay Informed - Monitor market trends, regulatory changes, and performance metrics continuously

✅ Build Professional Networks - Develop relationships with local experts and industry professionals

🚀 READY TO GET STARTED?

Take the first step toward building your short-term rental portfolio:

📞 Contact the Real Estate Investment Help Line at 732-851-6900 during business hours for personalized guidance on:

• Market selection strategies

• Property analysis and due diligence

• Financing options and pre-qualification

• Regulatory compliance and risk management

💰 Explore BRRRR Loans' Short-Term Rental Financing for:

• Up to 75% LTV on investment properties

• Fast 28-day closing timelines

• Asset-based underwriting with flexible requirements

• Loan amounts from $75,000 to $2 million+

🔍 Begin Your Market Research with professional tools and guidance to identify the best opportunities in your target markets.

The short-term rental market rewards prepared investors who take systematic approaches to market selection and property acquisition. With the right knowledge, financing, and professional support, you can build a profitable portfolio that generates passive income and long-term wealth.

Don't wait for market conditions to become even more competitive. The best time to invest in carefully selected Airbnb markets is now, when stabilization creates opportunities for strategic investors who understand how to evaluate and capitalize on market fundamentals.

Start your journey today by contacting our expert team and exploring the financing solutions that can make your short-term rental investment goals a reality.

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