Most Profitable Airbnb Locations: A Complete Guide to High-Return Markets in 2026

The most profitable Airbnb cities in 2026 are Charleston, SC ($375 ADR, 18%+ cash-on-cash), Gatlinburg, TN ($249 ADR, 19%+ returns), Savannah, GA ($299 ADR, 19%+ returns), Nashville, TN ($230 ADR, 68% occupancy), and Austin, TX ($224 ADR, 61% occupancy). This analysis covers 20 markets with complete ADR, occupancy, annual revenue, and ROI data across budget tiers from $100K to $1M+ entry points. I’ve built this ranking based on real performance data from 1,000+ 10XBNB students operating in these markets, combined with current market intelligence from AirDNA, Airbtics, and proprietary data from our portfolio managing over $100M in short-term rental properties.

Whether you’re starting with $5,000 for rental arbitrage or $500,000 to purchase property, this guide shows you exactly where the strongest returns are happening right now.

How We Evaluate Airbnb Market Profitability

Evaluating Airbnb market profitability requires looking beyond surface-level metrics. I’ve managed over $100M in short-term rental properties and analyzed hundreds of markets, and these are the metrics that actually predict success.

Average Daily Rate (ADR) is the average nightly price guests pay. Higher ADR markets like Charleston ($375) and Park City ($350) generate more revenue per booking, but they also typically require larger initial investments. ADR varies dramatically by season—Nashville’s ADR might be $180 during January but spike to $350 during CMA Fest in June.

Occupancy Rate measures what percentage of nights are booked. A property with 65% occupancy is booked roughly 237 nights per year. Markets like Boston (81%), Orlando (75%), and Kissimmee (72%) achieve high occupancy through consistent demand drivers—universities, theme parks, and year-round tourism. High occupancy markets provide more predictable cash flow but often have lower ADR.

RevPAR (Revenue Per Available Room) is the most important metric for comparing markets. RevPAR = ADR × Occupancy Rate. A market with $300 ADR at 50% occupancy ($150 RevPAR) underperforms a market with $200 ADR at 70% occupancy ($140 RevPAR), but the calculation is more nuanced when you factor in operating expenses. The highest RevPAR markets in our analysis are Charleston ($229), Gatlinburg ($162), and San Diego ($179).

Cash-on-Cash Return measures annual cash flow divided by total cash invested. For rental arbitrage, this includes your startup capital (first month’s rent, last month’s rent, security deposit, furniture, initial supplies). For property purchases, it includes down payment, closing costs, and startup expenses. Markets like Cleveland (18-22%), Gatlinburg (19%+), and Savannah (19%+) offer exceptional cash-on-cash returns because of favorable purchase prices or rent-to-revenue ratios.

Operating Expense Ratio typically ranges from 40-60% of gross revenue. Higher-end properties often run 45-50% (better economies of scale, premium pricing covers costs), while budget properties might hit 55-60%. Major expenses include cleaning (10-15% of revenue), utilities (5-8%), supplies (3-5%), maintenance (4-7%), property management if outsourced (15-25%), insurance (2-4%), and software/subscriptions (1-2%). Markets with higher utility costs (Miami air conditioning, Denver heating) or higher cleaning labor rates (San Francisco, Boston) compress margins.

STR Premium vs. Long-Term Rent measures how much more you can earn with short-term rentals versus traditional leasing. The national average STR premium in 2026 is 124%, down from 170% in 2021 as more operators entered the market. Markets with STR premiums above 150% represent strong opportunities—these include Gatlinburg (180%+), Charleston (160%+), and Kissimmee (155%+). Markets below 110% are increasingly difficult for arbitrage operators because the margin between rent paid and revenue generated becomes too thin after operating expenses.

Regulatory Environment determines whether you can operate legally and sustainably. Permissive markets (Texas cities, Florida markets, Scottsdale) have minimal restrictions and straightforward licensing. Moderate markets (Nashville, Austin, Charleston) require permits or licenses but don’t cap the number of operators. Restrictive markets (San Francisco, New York City, Santa Monica) impose severe limitations—90-day annual caps, owner-occupancy requirements, or near-total bans. I’ve watched students build six-figure businesses in permissive markets while others struggled in restrictive markets despite better ADR and occupancy data.

Competitive Saturation is measured by year-over-year listing growth. Healthy markets show 5-15% annual listing growth with stable or increasing ADR. Oversaturated markets show 20%+ listing growth with declining ADR—this combination indicates too many operators chasing the same demand. Markets like Scottsdale (+8% listings, +6% ADR) remain healthy, while some previously hot markets like Sedona (+28% listings, -4% ADR) show saturation warning signs.

The 20 Most Profitable Airbnb Cities (2026 Rankings)

This table represents real-world performance data aggregated from AirDNA market reports, Airbtics revenue analyses, Rabbu regulatory databases, iGMS benchmarking data, and performance data from our 1,000+ student community. Cash-on-Cash returns reflect properly operated properties with professional management and optimized pricing.

Rank	City	ADR	Occupancy	Annual Revenue	Entry Cost	Cash-on-Cash	Regulation	Best For
1	Charleston, SC	$375	61%	$55,000-$65,000	$350K-$500K	18%+	Moderate	Premium guests
2	Gatlinburg, TN	$249	65%	$55,000-$60,000	$250K-$400K	19%+	Permissive	Vacation rental
3	Savannah, GA	$299	57%	$45,000-$55,000	$250K-$350K	19%+	Moderate	Historic charm
4	Nashville, TN	$230	68%	$45,000-$55,000	$300K-$450K	15-18%	Moderate	Year-round events
5	Austin, TX	$224	61%	$40,000-$50,000	$350K-$500K	12-16%	Moderate	Tech + events
6	Kissimmee, FL	$195	72%	$40,000-$50,000	$250K-$400K	15-18%	Permissive	Disney tourism
7	San Diego, CA	$279	64%	$50,000-$60,000	$500K-$800K	10-14%	Restrictive	Coastal premium
8	Miami, FL	$250	67%	$45,000-$55,000	$400K-$700K	12-15%	Moderate	International tourism
9	Denver, CO	$185	66%	$35,000-$45,000	$350K-$500K	12-15%	Moderate	Outdoor + business
10	Scottsdale, AZ	$275	62%	$45,000-$55,000	$400K-$600K	13-16%	Permissive	Winter snowbirds
11	Orlando, FL	$180	75%	$38,000-$48,000	$250K-$400K	14-17%	Permissive	Theme parks
12	Dallas, TX	$192	63%	$35,000-$42,000	$250K-$400K	13-16%	Permissive	Business travel
13	New Orleans, LA	$207	60%	$35,000-$45,000	$200K-$350K	15-18%	Moderate	Festivals + culture
14	San Antonio, TX	$175	65%	$32,000-$40,000	$200K-$350K	14-17%	Permissive	Tourism + military
15	Cleveland, OH	$165	62%	$30,000-$38,000	$100K-$200K	18-22%	Permissive	Budget entry
16	Sacramento, CA	$185	68%	$37,000-$45,000	$350K-$500K	11-14%	Moderate	State capital
17	Pensacola, FL	$210	64%	$37,000-$45,000	$200K-$350K	16-19%	Permissive	Beach tourism
18	Boston, MA	$168	81%	$38,000-$48,000	$500K-$700K	8-12%	Restrictive	High occupancy
19	Park City, UT	$350	55%	$50,000-$65,000	$500K-$1M+	10-14%	Moderate	Ski resort premium
20	Whittier, CA	$140	86%	$35,000-$42,000	$400K-$600K	10-13%	Moderate	Emerging market

Charleston, SC commands the highest ADR on our list at $375 per night, driven by limited inventory in the historic district, strong corporate travel demand, and consistent leisure tourism to one of America’s top-rated cities. The 61% occupancy rate reflects seasonal variation—summers and spring wedding season drive 75%+ occupancy while January-February dip to 45-50%. Properties within a 10-minute walk of King Street generate premiums of $50-$100 over suburban listings. Entry costs range from $350K for a 1-bedroom condo to $500K+ for a 2-3 bedroom home. Charleston requires a business license ($50) and short-term rental permit, with relatively straightforward approval processes compared to other coastal cities. I’ve had students achieve 20%+ cash-on-cash returns by purchasing properties just outside the downtown peninsula where prices are 25-30% lower but still achieve $300+ ADR.

Gatlinburg, TN offers the highest cash-on-cash return in our top 5 at 19%+ because of affordable property prices ($250K-$400K) combined with strong demand from Great Smoky Mountains tourism. The market generates 14 million visitors annually, creating year-round demand with peaks during fall foliage (October-November) and summer vacation season. Properties with mountain views command $50-$75 ADR premiums over standard units. Gatlinburg has minimal STR restrictions—no permits required, just standard business licenses. The 65% occupancy rate is remarkably consistent across property types, from 1-bedroom cabins to 6-bedroom luxury lodges. Sevier County (which includes Gatlinburg and Pigeon Forge) has over 17,000 STR listings, but demand continues growing faster than supply. Students entering this market should focus on properties within 10 minutes of downtown or featuring premium amenities (hot tubs, game rooms, theater systems) to justify higher nightly rates.

Savannah, GA combines historic charm with festival-driven demand spikes. Base occupancy runs 57% annually, but this includes significant seasonal variation—March (St. Patrick’s Day), October (fall tourism), and November-December (holiday season) can achieve 80-90% occupancy with ADR spiking to $450-$600 during peak weekends. Properties in the Historic District or Victorian District command the highest rates ($350-$400 ADR), while Southside locations 15-20 minutes from downtown still achieve $225-$275 ADR. Savannah requires a business license and Certificate of Occupancy for STRs, with straightforward approval in most residential zones. The 19%+ cash-on-cash return reflects purchase prices that remain 30-40% below comparable coastal markets like Charleston. I recommend focusing on 2-3 bedroom properties that can accommodate families and small groups, as these achieve the strongest occupancy rates year-round.

Nashville, TN delivers consistent 68% occupancy through diverse demand drivers—music tourism, bachelorette parties, business travel, sporting events, and concerts. Unlike resort markets with extreme seasonality, Nashville maintains 60%+ occupancy in all months except January-February. The city implemented STR permits in 2019 with caps in certain neighborhoods, but permits remain available for non-owner-occupied properties in most zones. Properties within 2 miles of Broadway command $275-$325 ADR, while neighborhoods like The Gulch, East Nashville, and Germantown achieve $200-$250 ADR. CMA Fest (June), NFL season (September-January), and major concerts create predictable rate spikes where optimized dynamic pricing can achieve $400-$600 nightly rates. Students entering Nashville should secure STR permits early—the city has stopped issuing new permits in oversaturated zones, making existing permits increasingly valuable.

Austin, TX offers 61% occupancy driven by SXSW (March), Formula 1 (October), UT Austin football season (September-November), and consistent tech industry business travel. The market has matured significantly—listing growth has slowed to 6% annually while ADR has remained stable, indicating healthy supply-demand balance. Austin requires a Type 2 STR license for non-owner-occupied properties with a cap on total licenses, but licenses remain available as of early 2026. Properties near UT campus, downtown, or South Congress achieve $250-$275 ADR, while suburban locations in Pflugerville or Round Rock run $175-$200 ADR. The $350K-$500K entry cost reflects Austin’s strong real estate appreciation—I’ve watched properties purchased in 2020 for $350K now valued at $450K+, providing equity growth alongside cash flow. Students should focus on neighborhoods with walkability to entertainment districts or proximity to major employers (Apple, Tesla, Oracle campuses).

Kissimmee, FL achieves 72% occupancy—the second-highest on our list—because of proximity to Walt Disney World, Universal Studios, and SeaWorld. Properties within 10 minutes of Disney parks command $225-$250 ADR during peak seasons (December-January, March-April, June-August) while maintaining 85%+ occupancy. The market caters primarily to families, making 3-5 bedroom properties with pools and themed rooms the strongest performers. Entry costs range from $250K for a 3-bedroom townhome to $400K for a 5-bedroom single-family home with a private pool. Kissimmee and Osceola County have permissive STR regulations requiring only business tax receipts and resort dwelling licenses. The 15-18% cash-on-cash return reflects the combination of high occupancy, manageable property prices, and relatively low operating expenses (cleaning averages $90-$120 per turnover). Students should focus on communities like Windsor at Westside, Solara Resort, or Margaritaville Resort (short-term rental-approved communities) for the strongest performance and easiest management.

San Diego, CA delivers $279 ADR and 64% occupancy through year-round coastal tourism, convention business, and military travel. Properties near La Jolla, Pacific Beach, or Gaslamp Quarter command premium rates ($325-$450 ADR) while neighborhoods like Ocean Beach or North Park achieve $225-$275 ADR. San Diego implemented STR regulations in 2023 allowing whole-home rentals only in Mission Beach and Pacific Beach (limited to 30-day minimum rentals elsewhere), making existing permitted properties increasingly valuable. The $500K-$800K entry cost reflects California real estate prices, and the 10-14% cash-on-cash return is lower than other markets on this list but still strong compared to traditional real estate investments. I’ve had students purchase properties in Pacific Beach for $650K generating $60,000 annual revenue, creating solid cash flow plus appreciation in a supply-constrained market. Operators should focus on obtaining the limited STR permits available or purchasing properties with existing permits already approved.

Miami, FL combines international tourism (42% of visitors are international travelers), cruise port business, and South Beach nightlife demand. The market achieves $250 ADR and 67% occupancy with peak seasons during winter (December-March) when northern visitors escape cold weather. Properties in South Beach, Brickell, or Wynwood command $300-$400 ADR, while neighborhoods like Little Havana or Allapattah achieve $175-$225 ADR. Miami-Dade County requires a Resort Dwelling license with relatively straightforward approval, though some neighborhoods and condo buildings prohibit or restrict short-term rentals. Entry costs range from $400K for a 1-bedroom condo to $700K+ for a 2-3 bedroom property in prime locations. The 12-15% cash-on-cash return reflects higher operating expenses (utilities for air conditioning, condo association fees, higher insurance costs) but strong revenue potential. Students should verify STR allowance with condo associations before purchase and focus on buildings that explicitly permit short-term rentals.

Denver, CO generates $185 ADR and 66% occupancy through business travel, convention activity, and outdoor recreation tourism. The market maintains consistent year-round demand—ski season (December-March) drives leisure travel while summer (June-September) attracts hiking and outdoor enthusiasts. Properties near downtown or RiNo Arts District achieve $210-$240 ADR, while neighborhoods near DIA airport cater to extended-stay business travelers at $150-$175 ADR. Denver requires a short-term rental license with annual renewal, allowing up to two non-owner-occupied STRs per person. Entry costs range from $350K for a 1-bedroom condo to $500K for a 2-3 bedroom home. The 12-15% cash-on-cash return reflects moderate property prices with solid revenue potential. I recommend focusing on properties with parking (a premium in Denver), walkability to restaurants and breweries, and proximity to light rail stations for airport access.

Scottsdale, AZ commands $275 ADR with 62% occupancy driven by winter snowbird season (January-April), golf tourism, and spa resort demand. Properties with private pools, mountain views, or proximity to Old Town Scottsdale achieve premium rates ($325-$450 ADR) while suburban locations run $200-$250 ADR. Scottsdale has permissive STR regulations requiring only a Transaction Privilege Tax license and compliance with HOA rules. Entry costs range from $400K for a 2-bedroom condo to $600K+ for a single-family home with a pool. The 13-16% cash-on-cash return reflects strong winter season revenue (often 85%+ occupancy from January-March) offsetting slower summer months (May-September typically run 40-50% occupancy). Students entering Scottsdale should focus on properties with pools (essential for bookings), modern desert aesthetics, and proximity to major attractions like TPC Scottsdale, Old Town, or hiking trailheads.

Orlando, FL achieves the third-highest occupancy on our list at 75% because of consistent theme park tourism, convention business, and year-round family travel. Properties within 20 minutes of Disney achieve $200-$225 ADR during peak seasons with 85%+ occupancy, while properties near Universal Studios or the Convention Center run $175-$200 ADR with similar occupancy. Orlando requires short-term rental permits for non-owner-occupied properties, with relatively straightforward approval processes. Entry costs range from $250K for a 3-bedroom townhome to $400K for a 5-bedroom home in a resort community. The 14-17% cash-on-cash return reflects high occupancy combined with manageable operating expenses. Students should focus on properties in STR-friendly communities (many HOAs prohibit or restrict rentals), prioritize homes with pools and game rooms (family appeal), and ensure proximity to major attractions (guests prefer 15-minute drives or less to theme parks).

Dallas, TX generates $192 ADR with 63% occupancy driven by business travel, convention activity, sports events, and State Fair of Texas (September-October). Properties near downtown, Uptown, or Knox-Henderson achieve $225-$250 ADR while suburban locations near DFW airport cater to extended-stay business travelers at $150-$175 ADR. Dallas has permissive STR regulations requiring only a certificate of occupancy and standard business registration. Entry costs range from $250K for a 1-bedroom condo to $400K for a 2-3 bedroom home in desirable neighborhoods. The 13-16% cash-on-cash return reflects affordable property prices with consistent year-round occupancy. I recommend focusing on properties with parking, modern updates, and proximity to entertainment districts or corporate office clusters (Legacy West, Uptown, Deep Ellum).

New Orleans, LA commands $207 ADR with 60% occupancy driven by Mardi Gras (February-March), Jazz Fest (April-May), convention business, and year-round cultural tourism. Properties in the French Quarter, Garden District, or Marigny achieve premium rates ($275-$350 ADR) with potential for $500-$800 nightly rates during major festivals. The city implemented new STR regulations in 2019 allowing short-term rentals only in owner-occupied properties or commercially zoned areas, significantly limiting supply and creating opportunities for operators with proper licenses. Entry costs range from $200K for a small French Quarter condo to $350K for a 2-3 bedroom home in an approved zone. The 15-18% cash-on-cash return reflects festival-driven rate spikes that can generate 25-30% of annual revenue in just 2-3 months. Students should focus on obtaining proper licenses (increasingly valuable as supply is capped), properties in commercially zoned areas, or partnering with property owners for management agreements.

San Antonio, TX achieves $175 ADR with 65% occupancy through River Walk tourism, convention business, military travel (multiple bases nearby), and year-round warm weather. Properties near the River Walk, Pearl District, or Southtown achieve $200-$225 ADR while properties near military bases cater to extended-stay military families at $125-$150 ADR. San Antonio has permissive STR regulations requiring a Type 2 STR registration with straightforward approval. Entry costs range from $200K for a 2-bedroom condo to $350K for a 3-bedroom home near downtown. The 14-17% cash-on-cash return reflects affordable property prices combined with consistent occupancy year-round. Students should focus on properties within walking distance of the River Walk (major premium for walkability), modern renovations (historic properties often need updates), and parking availability (River Walk area has limited parking, creating challenges for guests).

Cleveland, OH offers the highest cash-on-cash return on our list at 18-22% because of exceptionally low entry costs ($100K-$200K) combined with respectable revenue ($30K-$38K annually). The market generates demand from Cleveland Clinic medical tourism, Rock and Roll Hall of Fame visitors, sports events (Guardians, Browns, Cavaliers), and business travel. Properties in Ohio City, Tremont, or downtown achieve $185-$210 ADR while suburban locations run $125-$150 ADR. Cleveland has permissive STR regulations with simple registration requirements. The low entry costs allow operators to achieve positive cash flow quickly, and rental arbitrage works exceptionally well (typical 2-bedroom apartments rent for $1,200-$1,500/month while generating $2,500-$3,200/month as STRs). I’ve had students start with a single arbitrage unit in Cleveland and scale to 5-6 units within 12 months because of the favorable rent-to-revenue ratios and abundant housing inventory.

Sacramento, CA generates $185 ADR with 68% occupancy driven by state government business travel, university traffic (UC Davis, Sacramento State), and proximity to Northern California tourism (Napa, Tahoe, San Francisco). Properties in Midtown, Downtown, or East Sacramento achieve $210-$240 ADR while suburban locations run $150-$175 ADR. Sacramento allows short-term rentals with a TOT certificate and compliance with zoning regulations, with relatively permissive rules compared to other California cities. Entry costs range from $350K for a 2-bedroom condo to $500K for a 3-bedroom home in desirable neighborhoods. The 11-14% cash-on-cash return reflects California property prices but benefits from consistent year-round occupancy driven by government and university calendars. Students should focus on properties near Capitol Mall or Midtown for business travelers, or properties that can serve as base camps for visitors exploring Napa Valley or Lake Tahoe (60-90 minutes away).

Pensacola, FL commands $210 ADR with 64% occupancy driven by Pensacola Beach tourism, Naval Air Station business, and Blue Angels air shows. Properties on or near Pensacola Beach achieve premium rates ($275-$350 ADR) while mainland properties 10-15 minutes from the beach run $175-$200 ADR. Pensacola has permissive STR regulations requiring business tax receipts with straightforward approval. Entry costs range from $200K for a 2-bedroom mainland condo to $350K for a beachfront property. The 16-19% cash-on-cash return reflects strong summer season performance (May-September achieves 85%+ occupancy) combined with affordable property prices. Students should focus on properties with beach access (major booking factor), modern coastal aesthetics, and parking (beach parking is limited, so private parking is a significant amenity).

Boston, MA achieves the highest occupancy rate on our list at 81% because of consistent demand from universities (Harvard, MIT, BU, Northeastern), medical tourism (world-class hospitals), business travel, and year-round cultural attractions. Properties in Back Bay, Beacon Hill, or South End command $200-$240 ADR while neighborhoods near universities achieve $150-$180 ADR with extremely high occupancy during academic year. Boston implemented STR regulations allowing owner-adjacent properties (owner lives in same building) or properly registered operator-occupied units, significantly limiting supply. Entry costs range from $500K for a 1-bedroom condo to $700K+ for a 2-bedroom property in prime locations. The 8-12% cash-on-cash return is the lowest on our list but reflects the ultra-high occupancy and limited competition due to regulatory barriers. Students should focus on obtaining proper registration (increasingly valuable as supply is capped) or purchasing properties in buildings that allow STRs.

Park City, UT commands the second-highest ADR on our list at $350 because of premium ski resort demand during winter season (December-March) and summer outdoor recreation. Properties with ski-in/ski-out access or mountain views achieve $450-$650 ADR during peak ski season while summer rates drop to $200-$250 ADR. The 55% occupancy rate reflects extreme seasonality—winter achieves 85-95% occupancy while shoulder seasons (April-May, October-November) drop to 20-30%. Park City requires a business license and transient room tax certificate with approval tied to property location and type. Entry costs range from $500K for a 1-bedroom condo to $1M+ for a 3-4 bedroom luxury property near resorts. The 10-14% cash-on-cash return reflects high property prices but exceptional winter season revenue that can generate 60-70% of annual income in just 4 months. Students should focus on properties with resort amenities, ski access, hot tubs (essential for ski rentals), and professional property management (winter conditions require experienced local operators).

Whittier, CA achieves the highest occupancy on our list at 86% as an emerging Los Angeles market offering proximity to downtown LA, Disneyland, and Southern California beaches at more affordable prices than core LA neighborhoods. Properties achieve $140 ADR—modest compared to other markets—but the exceptional occupancy drives solid annual revenue ($35K-$42K). Whittier allows short-term rentals with TOT registration, though some neighborhoods and HOAs have restrictions. Entry costs range from $400K for a 2-bedroom condo to $600K for a 3-bedroom home. The 10-13% cash-on-cash return reflects California property prices but benefits from underpriced rental rates (guests choose Whittier over more expensive LA neighborhoods) and extremely high occupancy from diverse demand drivers (business travel, tourism, extended stays). Students should focus on properties with parking, modern updates, and proximity to major freeways (605, 5) for easy access to Southern California attractions.

Budget Tiers: Markets for Every Investment Level

The right market depends on your available capital, risk tolerance, and investment goals. I’ve structured these tiers based on entry costs for both property purchase and rental arbitrage startup requirements.

Budget-Friendly Markets (Entry Under $250K)

Cleveland, OH offers the lowest barrier to entry at $100K-$200K for property purchase or $1,200-$1,500/month for arbitrage rent, allowing operators to start with $4,000-$6,000 in total startup capital (first month, last month, security deposit, basic furnishings). The market generates $30,000-$38,000 annual revenue with 62% occupancy at $165 ADR. I’ve had students achieve 18-22% cash-on-cash returns on purchased properties and $1,200-$1,800 monthly profit on arbitrage units. Cleveland works exceptionally well for first-time investors because mistakes are less costly—if your first property underperforms, you’re out $100K instead of $500K. Focus on Ohio City, Tremont, or downtown locations near Cleveland Clinic for the strongest demand. The market attracts medical tourism (Cleveland Clinic brings 10,000+ patients and families annually), sports fans during Guardians/Browns/Cavaliers seasons, and Rock and Roll Hall of Fame visitors.

New Orleans, LA requires $200K-$350K for property purchase with arbitrage opportunities limited by owner-occupancy requirements in most zones. Properties in commercially zoned areas or those grandfathered under old regulations offer entry points for operators. The market generates $35,000-$45,000 annually with massive rate spikes during Mardi Gras (properties can earn $800-$1,200/night for 10-14 days), Jazz Fest ($400-$700/night for 10 days), and major conventions. The 15-18% cash-on-cash return reflects these festival spikes—properties can generate 25-30% of annual revenue in just 2-3 months. New Orleans requires more sophisticated operations than other budget markets (festival pricing optimization, dealing with party guests, higher wear-and-tear) but offers exceptional returns for experienced operators.

San Antonio, TX entry costs range from $200K-$350K with arbitrage rents of $1,400-$1,900/month (startup capital $5,000-$7,500). The market generates $32,000-$40,000 annually through River Walk tourism, military base demand, and year-round warm weather that provides consistent 65% occupancy. San Antonio offers one of the best risk-adjusted returns for budget-conscious investors—permissive regulations, straightforward operations, consistent year-round demand, and affordable entry costs. I recommend properties within walking distance of the River Walk (guests pay significant premiums for walkability) or near military bases (longer average stays, cleaner guests, more predictable booking patterns).

Pensacola, FL requires $200K-$350K for property purchase with arbitrage opportunities at $1,600-$2,200/month rent (startup capital $6,000-$8,500). The market generates $37,000-$45,000 annually with strong summer performance (May-September achieves 85%+ occupancy at $250-$300 ADR). Pensacola offers beach market appeal at significantly lower costs than Destin, 30A, or other Florida Panhandle markets. The 16-19% cash-on-cash return reflects undervalued property prices combined with solid tourism demand. Focus on properties within 15 minutes of Pensacola Beach—mainland properties with easy beach access achieve 90% of the revenue of beachfront properties at 60% of the cost.

Mid-Range Markets ($250K-$500K)

Nashville, TN requires $300K-$450K for property purchase with arbitrage rents of $2,000-$2,800/month (startup capital $8,000-$11,000). The market generates $45,000-$55,000 annually through diverse demand drivers creating 68% occupancy year-round. Nashville represents the sweet spot for most investors—strong cash flow, solid appreciation, diverse revenue streams reducing risk, and enough market depth to scale to multiple properties. I’ve watched students build portfolios of 5-10 Nashville properties generating $200K+ annual profit. The key is securing STR permits (increasingly difficult in some zones) and focusing on neighborhoods within 2-3 miles of Broadway or emerging areas like The Nations, Wedgewood-Houston, or Donelson.

Austin, TX entry costs range from $350K-$500K with arbitrage rents of $2,200-$3,000/month (startup capital $9,000-$12,000). The market generates $40,000-$50,000 annually with 61% occupancy driven by SXSW, Formula 1, UT football, and consistent tech industry business travel. Austin combines strong cash flow with exceptional appreciation—properties purchased in 2020 have appreciated 25-35% while generating solid rental income. The Type 2 STR license cap creates a moat around existing operators as new licenses become increasingly difficult to obtain. Focus on walkable neighborhoods (Austin has terrible traffic, so walkability commands premium rates), properties with outdoor space (Austin culture emphasizes outdoor living), and locations near major employers or entertainment districts.

Kissimmee, FL requires $250K-$400K for property purchase with limited arbitrage opportunities (most communities are purchase-only). The market generates $40,000-$50,000 annually with exceptional 72% occupancy from Disney tourism. Kissimmee offers the most predictable cash flow on this list—Disney brings consistent demand year-round with clear seasonal peaks. Properties in purpose-built STR communities (Windsor at Westside, Solara Resort, Margaritaville) perform strongest because they’re designed for short-term rentals with resort amenities, professional management infrastructure, and no HOA conflicts. I recommend 4-5 bedroom properties with private pools and themed rooms (Star Wars, Marvel, Princess themes command $20-$40/night premiums).

Orlando, FL entry costs range from $250K-$400K with limited arbitrage in STR-approved communities. The market generates $38,000-$48,000 annually with 75% occupancy from theme parks, conventions, and year-round tourism. Orlando offers similar benefits to Kissimmee but with more diverse demand (convention business provides weekday occupancy, theme parks drive weekends and summers). Focus on properties near International Drive (convention district), Universal Studios (shorter drives than Disney for many guests), or emerging neighborhoods like Lake Nona (medical city development creating business travel demand).

Dallas, TX requires $250K-$400K for property purchase with arbitrage rents of $1,800-$2,500/month (startup capital $7,000-$10,000). The market generates $35,000-$42,000 annually through business travel, sports events, and State Fair. Dallas offers the most diversified revenue streams in this tier—no single event or season drives more than 15% of annual revenue, creating stable month-to-month performance. The 13-16% cash-on-cash return reflects affordable Texas property prices with solid occupancy. Focus on properties near Uptown (walkable nightlife), Victory Park (American Airlines Center for sports/concerts), or Deep Ellum (arts district attracting younger travelers).

Gatlinburg, TN entry costs range from $250K-$400K with limited arbitrage (most properties are cabins/homes for sale, not rent). The market generates $55,000-$60,000 annually with 65% occupancy and the highest cash-on-cash return in this tier at 19%+. Gatlinburg offers exceptional returns because affordable property prices (compared to other mountain resort markets) meet strong vacation rental demand (14 million annual Smoky Mountains visitors). Properties with mountain views, hot tubs, and game rooms achieve premiums of $75-$100/night over standard cabins. I recommend focusing on properties within Gatlinburg city limits or Pigeon Forge (10 minutes away with similar demand) rather than more remote mountain locations that achieve lower occupancy.

Savannah, GA requires $250K-$350K for property purchase with arbitrage rents of $1,800-$2,400/month (startup capital $7,000-$9,500). The market generates $45,000-$55,000 annually with 57% base occupancy spiking to 85-90% during festivals. Savannah combines historic charm with festival economics—St. Patrick’s Day (March), Savannah Music Festival (March-April), and SCAD Savannah Film Festival (October) create predictable rate spikes to $450-$600/night. The 19%+ cash-on-cash return reflects undervalued property prices compared to Charleston (similar product but 30-40% cheaper) with solid tourism demand. Focus on Historic District or Victorian District for highest rates, or Starland District and Southside for value plays achieving 80% of the revenue at 60% of the cost.

Denver, CO entry costs range from $350K-$500K with arbitrage rents of $2,000-$2,700/month (startup capital $8,000-$11,000). The market generates $35,000-$45,000 annually through business travel, conventions, and outdoor recreation tourism. Denver provides consistent year-round performance—ski season (December-March) and summer outdoor season (June-September) balance each other, while spring and fall capture convention business. The 12-15% cash-on-cash return reflects moderate property appreciation combined with solid rental income. Focus on properties near downtown or RiNo Arts District (walkable neighborhoods command premiums), properties with parking (essential in Denver), or properties near light rail (airport access without car is valuable for business travelers).

Premium Markets ($500K+)

Charleston, SC requires $350K-$500K+ for property purchase with limited arbitrage opportunities (high rents of $2,800-$3,800/month make arbitrage margins thin). The market generates $55,000-$65,000 annually with $375 ADR and 61% occupancy. Charleston offers the highest ADR in our rankings because of limited inventory in historic areas, strong corporate demand, and consistent leisure tourism to one of America’s top-rated cities. Despite higher entry costs, the 18%+ cash-on-cash return remains exceptional because premium pricing covers operating expenses efficiently. Properties within walking distance of King Street command massive premiums—guests pay $50-$100/night more to walk to restaurants and shops rather than drive and deal with parking. I recommend focusing on properties just outside the downtown peninsula (West Ashley, James Island, Mount Pleasant) where prices are 25-30% lower but properties still achieve $300+ ADR by offering parking, modern updates, and 10-minute drives to downtown.

San Diego, CA entry costs range from $500K-$800K with arbitrage opportunities limited by regulations (whole-home STRs only allowed in Mission Beach and Pacific Beach). The market generates $50,000-$60,000 annually with $279 ADR and 64% occupancy through year-round coastal tourism and convention business. San Diego’s regulatory restrictions create supply constraints that protect existing operators—obtaining STR permits is increasingly difficult, making permitted properties valuable assets. The 10-14% cash-on-cash return is lower than other markets on our list but competitive with traditional real estate investments, plus properties benefit from California coastal appreciation (historically 4-6% annually). Focus on permitted properties in Pacific Beach or Mission Beach, or properties with existing permits that transfer with sale.

Miami, FL requires $400K-$700K for property purchase with arbitrage rents of $2,500-$3,800/month (startup capital $10,000-$15,000). The market generates $45,000-$55,000 annually through international tourism, cruise business, and South Beach demand. Miami offers premium market exposure with condo entry points—you can enter for $400K-$500K with a 1-2 bedroom condo in Brickell or Miami Beach, achieving solid returns while building equity in a high-appreciation market. The 12-15% cash-on-cash return reflects higher operating expenses (A/C costs, condo fees, insurance) but strong revenue potential. Critical: verify STR allowance with condo associations before purchase—many buildings prohibit or severely restrict short-term rentals, and operating illegally risks fines and legal action.

Scottsdale, AZ entry costs range from $400K-$600K with arbitrage rents of $2,400-$3,200/month (startup capital $9,500-$13,000). The market generates $45,000-$55,000 annually with $275 ADR driven by winter snowbird season and golf tourism. Scottsdale offers seasonal cash flow concentration—January-April generates 60-70% of annual revenue, allowing operators to batch their effort during peak season or offer discounted monthly rates during summer (May-September) for reliable income. The 13-16% cash-on-cash return reflects strong winter performance offsetting slower summer. Focus on properties with private pools (essential for bookings), modern desert aesthetics (clean lines, neutral tones with pops of color), and proximity to Old Town Scottsdale or TPC golf courses.

Boston, MA requires $500K-$700K+ for property purchase with limited arbitrage opportunities (owner-adjacent regulations make traditional arbitrage difficult). The market generates $38,000-$48,000 annually but achieves this with 81% occupancy—the highest on our list. Boston provides the most stable cash flow in the premium tier because demand is consistent year-round from universities, hospitals, and business travel. The 8-12% cash-on-cash return is the lowest on our list but reflects ultra-high occupancy and limited competition due to regulatory barriers that cap supply. Properties with proper registration are increasingly valuable as the city isn’t issuing new permits in most areas. Focus on neighborhoods near universities (Allston, Cambridge, Fenway) for academic year demand or downtown/Back Bay for business travelers.

Park City, UT entry costs range from $500K-$1M+ for ski resort properties with limited arbitrage opportunities. The market generates $50,000-$65,000 annually with $350 ADR but 55% occupancy reflecting extreme seasonality. Park City offers the highest rates in our rankings outside Charleston, with ski season properties achieving $450-$650/night during peak weeks (Christmas-New Years, February-March). The 10-14% cash-on-cash return reflects high property costs but exceptional winter revenue concentration—operators can generate $35,000-$45,000 in just 4 months (December-March). This market requires more sophistication than others—winter property management involves snow removal, heating system maintenance, and quick response to weather-related issues. I recommend partnering with experienced local property managers for your first Park City property rather than self-managing remotely.

Regional Market Trends in 2026

Understanding regional trends helps identify which markets will strengthen and which face headwinds over the next 2-3 years.

Sunbelt Markets (FL, TX, AZ, GA)

The Sunbelt continues showing the strongest fundamentals for short-term rental investing. Florida, Texas, Arizona, and Georgia have gained 3.2 million residents since 2020, creating both tourism demand and local demand for short-term accommodations during relocations. These states offer favorable regulatory environments—Florida and Texas cities generally embrace STRs as economic drivers, while Georgia markets outside Atlanta remain permissive.

Florida markets (Kissimmee, Orlando, Miami, Pensacola) benefit from year-round tourism, domestic and international flight connectivity, and no state income tax attracting retirees and snowbirds. Orlando achieved record tourism in 2025 with 79 million visitors, up 6% year-over-year. Miami’s international visitor percentage (42% of total visitors) provides currency diversification—when the dollar weakens, international visitors increase. Kissimmee and Orlando continue benefiting from Disney expansions and Universal’s Epic Universe opening (2025) which added 15,000 hotel rooms worth of demand to the market.

Texas markets (Austin, Dallas, San Antonio) benefit from corporate relocations (Tesla, Oracle, HP to Austin; multiple Fortune 500s to Dallas), no state income tax, and business-friendly regulations. Texas cities require minimal STR licensing with straightforward approval processes. Austin’s SXSW, Formula 1, and UT Football create predictable annual rate spikes, while Dallas and San Antonio maintain more consistent year-round occupancy from business travel.

Arizona (Scottsdale) benefits from winter snowbird demand driving 85%+ occupancy January-April at premium rates. The market has shown resilience during economic downturns—affluent retirees continue traveling to Arizona even during recessions. Scottsdale’s golf tourism provides a second demand driver complementing seasonal snowbird traffic.

Georgia (Savannah) offers coastal charm at significantly lower price points than other Southern coastal markets. Savannah’s historic district draws comparison to Charleston but at 30-40% lower property costs, creating opportunities for investors priced out of Charleston. The market benefits from drivability from Atlanta (4 hours), Charlotte (4 hours), and Jacksonville (2 hours), reducing dependence on air travel.

Risks: Florida insurance costs have increased 30-40% since 2022 because of hurricane claims, compressing margins. Texas markets show listing growth of 12-15% annually (compared to 5-8% nationally), indicating increasing competition that may pressure rates. Climate concerns (heat, hurricanes) create longer-term questions about sustained population growth.

Mountain & Resort Markets (TN, UT, CO)

Mountain and resort markets benefit from the experiential tourism trend—travelers increasingly prioritize experiences over material goods, driving demand for outdoor recreation destinations. These markets achieve premium ADRs but typically show more seasonality than urban markets.

Tennessee markets (Gatlinburg, Nashville) combine mountain tourism with music culture. Gatlinburg and the Smoky Mountains attracted 14.1 million visitors in 2025, making it the most-visited national park. The market shows resilience across economic cycles—the Smokies attract budget-conscious families (free park entry) and luxury travelers (upscale cabins with mountain views) simultaneously. Nashville has evolved from pure tourism to include significant corporate relocations (Oracle, Amazon, AllianceBernstein), diversifying demand beyond music tourism.

Utah (Park City) benefits from proximity to Salt Lake City (35 minutes), making it accessible for weekend ski trips and positioning it as a year-round destination (not just winter). Park City’s summer demand has grown significantly—the market now achieves 40-45% occupancy during summer (up from 25-30% in 2019) because of mountain biking, hiking, and Sundance Film Festival (January). However, Park City shows the most severe seasonality in our rankings (95% winter occupancy, 25% shoulder season occupancy), creating operational challenges and cash flow concentration.

Colorado (Denver) serves as a base camp for outdoor recreation while maintaining independent demand from business travel and conventions. Denver benefits from diversified demand—ski season drives weekend occupancy, summer hiking season drives leisure travel, and year-round business travel from the tech sector provides weekday occupancy. The market shows moderate seasonality (66% annual occupancy) with no month falling below 50%, creating more predictable cash flow than pure resort markets.

Risks: Climate change impacts snow reliability—Park City and other ski markets face questions about long-term viability as winters warm. Mountain markets require more intensive property management (snow removal, heating systems, weather-related damage) compared to urban markets. Extreme seasonality in some markets (Park City, Aspen, Vail) creates cash flow challenges during shoulder seasons.

Coastal Markets (CA, SC, FL)

Coastal markets benefit from limited supply (can’t build more coastline) meeting strong demand for beach vacations. These markets typically achieve the highest ADRs in their regions but face the most restrictive regulations.

California markets (San Diego, Whittier, Sacramento) face regulatory challenges—San Diego restricts whole-home STRs to specific neighborhoods, San Francisco imposes 90-day annual caps, and many beach cities have implemented similar restrictions. However, supply restrictions create opportunities for operators with proper permits—limited competition allows pricing power. San Diego permitted properties have increased in value because the permit itself becomes an asset (properties with permits sell for $50K-$100K premiums over comparable non-permitted properties). Whittier represents an emerging opportunity as guests priced out of prime LA beaches discover inland alternatives offering proximity at lower rates.

South Carolina (Charleston) benefits from limited inventory in the historic peninsula combined with no property-level STR caps (unlike many coastal cities). Charleston’s regulations focus on licensing and taxation rather than limiting supply, creating a favorable environment for operators. The market has shown consistent ADR growth (6-8% annually) even as listing counts increased moderately, indicating demand growth matching supply growth.

Florida coastal markets (Miami, Pensacola) offer year-round tourism compared to seasonal Northeast or Northwest beaches. Miami achieves 67% occupancy year-round while Northeast beach markets often run 30-40% occupancy outside summer. Pensacola offers beach access at significantly lower costs than Destin or 30A (1-2 hours west), creating value opportunities for investors.

Risks: Coastal markets face the most restrictive regulations—California cities continue implementing stricter rules, and other coastal areas often follow California’s lead. Climate change and hurricane risk create insurance challenges (Florida coastal properties can have insurance costs 2-3x inland properties). High property costs ($500K-$800K+ entry points) limit investor pool and reduce cash-on-cash returns compared to inland markets.

Urban Markets (TX, MA, LA, OH)

Urban markets provide year-round demand diversification through business travel, conventions, universities, and cultural attractions. These markets typically show less seasonality than resort markets but face more regulatory scrutiny.

Texas urban markets (Dallas, San Antonio, Austin) offer permissive regulations compared to other major cities. Dallas requires only a certificate of occupancy and business registration—no permits, no caps, straightforward approval. This regulatory environment allows easier scaling compared to cities with permit caps or complex approval processes. These markets benefit from corporate relocations (Fortune 500 companies moving to Texas) creating business travel demand, while maintaining tourism appeal (River Walk, SXW, Formula 1).

Massachusetts (Boston) represents the opposite regulatory extreme—owner-adjacent requirements, strict registration, and supply caps. However, these restrictions create a moat for existing operators. Boston achieves 81% occupancy (highest on our list) because university demand (September-May), medical tourism, and business travel create consistent year-round bookings. The market demonstrates that even low cash-on-cash returns (8-12%) can work when combined with ultra-high occupancy and strong appreciation.

Louisiana (New Orleans) implements owner-occupancy requirements limiting supply while protecting operators with proper approvals. The festival-driven model creates cash flow concentration—properties can generate 25-30% of annual revenue during Mardi Gras and Jazz Fest (combined 3-4 weeks). This concentration requires sophisticated revenue management and creates operational challenges (dealing with party guests, higher wear-and-tear) but offers exceptional returns for experienced operators.

Ohio (Cleveland) offers the lowest entry costs in our rankings combined with respectable revenue, creating the highest cash-on-cash returns (18-22%). The market shows permissive regulations and low competition (fewer operators willing to invest in Midwest markets compared to Florida or Texas). Cleveland demonstrates that smaller markets with less glamour can outperform trophy markets on pure financial returns.

Risks: Urban markets face the most regulatory risk—cities implement STR restrictions in response to housing shortage concerns and neighborhood complaints. Business travel remains below 2019 levels in many markets as remote work reduces corporate travel. Urban markets require different guest profiles (business travelers, couples, small groups) compared to resort markets (families, large groups), requiring different property setups and marketing.

How to Evaluate Any Airbnb Market (Step-by-Step)

This seven-step framework allows you to evaluate any market in 60-90 minutes to determine if it’s worth deeper analysis.

Step 1: Check Regulations — Start with regulations because everything else is irrelevant if you can’t operate legally. Visit the city’s official website and search “[city name] short-term rental regulations” or “[city name] vacation rental ordinance.” Look for: Are STRs allowed? Do you need a permit or license? Are there caps on the number of permits? Are there occupancy requirements (owner-occupied vs. non-owner-occupied)? What are the registration or licensing fees? What are the tax requirements (TOT, sales tax, etc.)?

Use these resources: Rabbu.com (comprehensive STR regulation database), VRMA.org (Vacation Rental Management Association has regulatory updates), city/county official websites (search “short-term rental” or “vacation rental” in site search), local STR Facebook groups (search “Airbnb [city name]” or “STR [city name]”).

Red flags: Owner-occupancy requirements (eliminates most investment opportunities), permit caps with waiting lists (can’t obtain approval to operate), 90-day or similar annual caps (insufficient revenue opportunity), prohibitions in residential zones (limits available inventory), active enforcement with significant fines (operating risk).

Green flags: Permissive regulations with straightforward licensing, no artificial supply caps, clear enforcement guidelines (know the rules), established STR market (city has adapted to STRs rather than fighting them).

Step 2: Run AirDNA Rentalizer — AirDNA’s Rentalizer tool (free for 2-3 searches, then paid subscription) provides market-level revenue estimates. Enter a specific address or general area to analyze. The tool returns: estimated monthly/annual revenue, average daily rate, occupancy rate, seasonality charts, comparable listings, market trends (growing/stable/declining).

Focus on these metrics: Annual revenue above $30K (minimum for viable cash flow after expenses), occupancy above 60% (lower occupancy creates unpredictable income), ADR appropriate for the market (compare to hotel rates—STRs should be priced 0.8-1.2x comparable hotels), reasonable seasonality (avoid markets with 3-4 dead months unless targeting seasonal strategies).

Compare property types: 1-bedroom vs. 2-bedroom vs. 3+ bedroom revenue, condos vs. single-family homes, proximity to attractions (downtown vs. suburban), luxury vs. budget (different niches can succeed in same market).

Validate estimates: AirDNA tends to be optimistic by 10-15% (they measure all listings including established ones, but new listings take 3-6 months to rank in Airbnb search). Reduce revenue estimates by 15% for first-year projections, then grow to AirDNA estimates in years 2-3 as your listing establishes reviews and ranking.

Step 3: Calculate RevPAR — Revenue Per Available Room (RevPAR) allows comparison across markets with different ADR and occupancy combinations. RevPAR = ADR × Occupancy Rate × 365 days ÷ 365 = ADR × Occupancy Rate (simplified).

Example: Market A has $300 ADR at 50% occupancy = $150 RevPAR. Market B has $200 ADR at 70% occupancy = $140 RevPAR. Market A appears stronger on raw RevPAR, but Market B may actually be better because higher occupancy means more predictable cash flow and lower vacancy risk.

Target thresholds: RevPAR above $100 for markets outside major metros, RevPAR above $125 for competitive markets, RevPAR above $150 for premium markets. Lower RevPAR can still work in markets with very low operating costs or property prices.

Compare your potential property’s RevPAR to market averages: Properties in the 75th percentile (top 25% of market) typically achieve 120-140% of average RevPAR through better photos, design, amenities, reviews, and pricing. Properties in the 25th percentile (bottom 25%) achieve 60-75% of average RevPAR. Assume you’ll achieve 90-100% of average RevPAR in year one (you’re new, no reviews), growing to 110-120% by year three as you optimize.

Step 4: Estimate Operating Expenses — Operating expenses typically range from 40-60% of gross revenue depending on property type, management approach, and market characteristics. Break down into major categories:

Cleaning (10-15% of revenue): Higher for properties with frequent turnovers (1-2 night average stays) vs. weekly stays. Budget $80-$150 per cleaning depending on property size and market labor rates. Properties with $150 ADR might have $100 cleaning (15% of revenue per stay if 1-night booking, 7.5% if 2-night booking).

Utilities (5-8% of revenue): Electric, gas, water, trash, internet, cable. Higher in extreme climates (Miami A/C, Denver heating). Include high-speed internet ($60-$100/month) as essential amenity.

Supplies (3-5% of revenue): Toiletries, paper products, cleaning supplies, coffee/snacks, batteries, light bulbs. Higher for luxury properties with premium amenities.

Maintenance and repairs (4-7% of revenue): Routine maintenance, repairs, appliance replacements, HVAC service. Budget higher for older properties or properties with amenities (pools, hot tubs) requiring regular service.

Property management (15-25% of revenue if outsourced): Full-service property management (guest communication, pricing, cleaning coordination, maintenance) typically charges 15-25% of revenue. Self-managing eliminates this cost but requires significant time investment.

Insurance (2-4% of revenue): STR insurance costs more than traditional landlord insurance. Expect $1,200-$2,400 annually for a $300K property. Some markets (Florida coastal) can run $3,000-$5,000 annually.

Software and subscriptions (1-2% of revenue): PMS (Property Management System) like Hospitable or Guesty ($20-$50/month per property), dynamic pricing tools ($20-$40/month), noise monitoring, smart locks, security cameras.

Example calculation for $45K annual revenue property: Cleaning 12% ($5,400), Utilities 7% ($3,150), Supplies 4% ($1,800), Maintenance 6% ($2,700), Property Management (self-managed) 0%, Insurance 3% ($1,350), Software 1.5% ($675). Total: 33.5% ($15,075). Net Operating Income: $29,925.

Add mortgage if purchasing: $300K purchase, $60K down (20%), $240K mortgage at 7% = $1,598/month = $19,176 annually. Cash flow: $29,925 NOI – $19,176 mortgage = $10,749 annual cash flow. Cash-on-cash return: $10,749 ÷ $70,000 invested (down payment + $10K closing/startup) = 15.4%.

Step 5: Compare STR Premium vs. LTR Rate — The STR premium measures how much more you can earn with short-term rentals versus long-term leasing. This is critical for rental arbitrage operators but also informs purchase decisions.

Find long-term rent comparables: Search Zillow, Apartments.com, or local rental sites for similar properties in the same area. Note the monthly rent for comparable 1BR, 2BR, 3BR properties.

Calculate monthly STR revenue: Use AirDNA Rentalizer or sum (ADR × Occupancy × 30.4 days average per month).

Calculate STR Premium: (Monthly STR Revenue – Monthly LTR Rent) ÷ Monthly LTR Rent × 100.

Example: Property rents for $2,000/month long-term. STR revenue is $4,500/month. STR Premium = ($4,500 – $2,000) ÷ $2,000 × 100 = 125% premium.

Interpretation thresholds: Below 100% premium (STR revenue < 2x rent): Difficult for arbitrage after operating expenses, only works for property owners with no rent expense. 100-130% premium: Marginal for arbitrage, works better for property owners. 130-160% premium: Good arbitrage opportunity, strong for property owners. Above 160% premium: Excellent arbitrage opportunity, exceptional returns.

National average is currently 124%, down from 170% in 2021 as more operators entered the market. Markets above 150% represent strong opportunities—these include Gatlinburg (180%+), Charleston (160%+), Kissimmee (155%+), Savannah (150%+).

Step 6: Assess Competition — Competition levels indicate market saturation and future trajectory. Growing competition with flat or declining ADR indicates oversaturation.

Check listing growth: Use AirDNA Market Dashboard (paid tool) or manually count listings over time. Healthy: 5-15% annual listing growth with stable or growing ADR. Warning signs: 15-25% annual listing growth with flat ADR. Oversaturated: 25%+ annual listing growth with declining ADR.

Analyze competitor listings: Search Airbnb for 20-30 listings comparable to your target property. Review their: calendars (how far booked out?), reviews (how many per month indicating booking velocity?), pricing (what’s the range for comparable properties?), photos and design (what’s the standard you need to meet?), amenities (what’s expected vs. what creates differentiation?).

Identify gaps: Look for opportunities competitors miss—underserved property types (large groups if market has mostly 1-2 bedroom properties), underpriced listings (good properties with bad photos/pricing you can outcompete), unmet amenities (pools in markets where they’re rare, pet-friendly in markets with few options).

Check review velocity: Listings with 1+ reviews per month are booking frequently. Listings with reviews every 2-3 months are struggling. If most comps show strong review velocity (1-2 reviews/month), demand is healthy. If many comps show minimal reviews (less than 1 review/month), market is oversaturated or poorly marketed.

Step 7: Visit the Market — Never invest in a market you haven’t visited. Book Airbnbs and experience the market as a guest before investing.

What to assess during visit: Drive times to major attractions (are AirDNA estimates accurate?). Neighborhood safety and appeal (would you feel comfortable staying here?). Parking availability (guests hate paying for parking or struggling to find it). Noise levels (near highways, airports, nightlife districts?). Nearby amenities (restaurants, groceries, gas stations within 5-10 minutes?). Competitor properties (book 1-2 competitor Airbnbs to see their setups).

Talk to locals: Visit during your stay and chat with: other Airbnb hosts (join local Facebook groups, attend meetups), property managers (gauge their interest in taking on new properties), real estate agents (get pulse on market dynamics, inventory availability), city permit offices (clarify regulations, gauge enforcement approach).

Assess demand firsthand: Visit during shoulder season to gauge off-peak demand. Visit during peak season to see if it lives up to the hype. Check hotel occupancy (if hotels are 90%+ booked, STR demand is likely strong). Observe tourism infrastructure (tour buses, visitor centers, attraction crowds).

Trust your gut: If the market feels right—you see tourists, properties look well-maintained, amenities match your target, neighborhoods feel safe—that’s a positive signal. If the market feels off—vacant properties, sketchy neighborhoods, no visible tourism activity—trust that instinct even if data looks good.

Emerging Markets to Watch in 2026

These markets show early-stage growth indicators—increasing tourism, developing infrastructure, or underpriced real estate relative to revenue potential. Early operators in emerging markets can establish dominant positions before competition intensifies.

Whittier, CA achieves 86% occupancy (highest in our rankings) as guests discover Los Angeles alternatives. The market offers proximity to downtown LA (20 minutes), Disneyland (30 minutes), and Southern California beaches (30-40 minutes) at significantly lower nightly rates than core LA neighborhoods. Properties achieve $140 ADR with exceptional occupancy because guests priced out of Santa Monica ($350+ ADR), Venice Beach ($300+ ADR), or Beverly Hills ($400+ ADR) choose Whittier for value. The market serves diverse demand: business travelers visiting LA, families visiting Disneyland, extended-stay medical patients (multiple hospitals nearby), and tourists exploring Southern California. Entry costs range from $400K-$600K. The opportunity is arbitraging location—guests accept a 20-30 minute drive to save $150-$200 per night, and operators benefit from the volume (86% occupancy generates more revenue than 60% occupancy at higher ADR).

Westminster, CA mirrors the Whittier opportunity, also achieving 86% occupancy at $135-$145 ADR. Located in Orange County between Disneyland (15 minutes) and Huntington Beach (15 minutes), Westminster offers value positioning for families visiting theme parks and beaches. The market benefits from Little Saigon (largest Vietnamese community outside Vietnam), creating niche demand for visitors connecting with Vietnamese culture and cuisine. Entry costs range from $450K-$650K. Focus on properties with multiple bedrooms (families and groups), proximity to I-405 and I-22 freeways (easy access to attractions), and modern updates (compete with higher-priced Anaheim or Huntington Beach properties on interior quality).

Fort Collins, CO is emerging as Colorado’s next major STR market beyond Denver and mountain resort towns. The city combines Colorado State University (33,000 students creating housing demand), New Belgium Brewery and craft beer tourism, outdoor recreation (Rocky Mountain National Park 60 minutes away), and growing tech sector (HP, Intel, AMD have operations). The market currently shows 58% occupancy at $175 ADR with room for growth as tourism infrastructure develops. Entry costs range from $350K-$500K. Early operators can establish dominant positions before competition intensifies—the market has only 800 active STR listings compared to Denver’s 5,000+. Focus on properties in Old Town Fort Collins (walkable downtown with breweries and restaurants), properties near CSU (university demand), or properties positioned as base camps for Rocky Mountain National Park visits.

Chattanooga, TN is growing as a secondary Tennessee market beyond Nashville and Gatlinburg. The city offers Rock City, Ruby Falls, Tennessee Aquarium, and outdoor recreation (climbing, hiking, whitewater rafting). Chattanooga invested heavily in downtown revitalization and gigabit fiber internet infrastructure, attracting remote workers and digital nomads. The market shows 62% occupancy at $165 ADR with strong growth trajectory—tourism increased 35% from 2019 to 2025. Entry costs range from $200K-$350K, offering budget-friendly entry for first-time investors. Focus on properties in the Southside (arts district near waterfront), North Shore (renovated neighborhood with restaurants and breweries), or properties with river views. The market benefits from drivability from Atlanta (2 hours), Nashville (2 hours), and Knoxville (2 hours), creating weekend trip appeal.

Asheville, NC continues showing strong fundamentals (68% occupancy, $220 ADR) but requires regulatory monitoring. The city implemented STR restrictions in 2022 limiting new permits, but existing permits transfer with property sales. Properties with transferable permits sell for $50K-$100K premiums over comparable non-permitted properties. Asheville benefits from Blue Ridge Parkway tourism, craft brewery scene (more breweries per capita than any US city), Biltmore Estate, and outdoor recreation. Entry costs range from $350K-$500K. The opportunity is purchasing properties with existing permits before permit scarcity drives prices higher—similar to San Diego where supply restrictions have created significant premium for permitted properties. Focus on properties in West Asheville (emerging neighborhood), downtown areas (walkability premium), or properties with mountain views.

Duluth, MN offers a contrarian opportunity as an underestimated summer tourism market. Lake Superior tourism drives 65% occupancy from May-September at $180 ADR, while winter months drop to 35% occupancy. The market attracts Chicago, Milwaukee, and Minneapolis visitors seeking summer escapes with cooler temperatures (high 70s vs. 90s+ in Midwest cities). Duluth features canal park, lighthouse, waterfront trails, and proximity to North Shore scenic drives. Entry costs range from $200K-$350K, creating strong cash-on-cash returns if you can manage seasonality. Focus on properties near Canal Park (waterfront with shops and restaurants), properties with lake views (premium amenity), or properties that can capture shoulder season demand (September-October fall colors). Consider offering discounted monthly rates during winter (November-March) to capture extended-stay guests and offset low tourist demand.

Bentonville, AR is emerging through combination of corporate travel (Walmart headquarters), outdoor recreation (mountain biking trails), and Crystal Bridges Museum of American Art (world-class free museum attracting 800K annual visitors). The market shows 61% occupancy at $155 ADR with consistent year-round demand from Walmart vendor visits and visitor traffic. Entry costs range from $200K-$350K. This market offers stable, predictable cash flow from corporate travel (weekday bookings) supplemented by weekend tourism. Focus on properties near downtown Bentonville square (walkable restaurants and square), properties near mountain biking trailheads (niche outdoor recreation demand), or properties positioned for extended stays (Walmart vendors often stay 1-2 weeks).

Markets to Avoid (Oversaturated or Over-Regulated)

These markets show warning signs that should give investors pause—restrictive regulations, declining performance metrics, or oversaturation indicators.

New York City implements some of the most restrictive STR regulations in the country. Local Law 18 (effective September 2023) requires hosts to register with the city, prohibits rentals under 30 days unless the host is present during the stay, and limits occupancy to two guests. Enforcement is aggressive with fines up to $5,000 per violation. The market effectively killed the traditional Airbnb model—active listings dropped from 22,000 in 2022 to under 2,000 by late 2023. Hotel prices increased 7-10% immediately after enforcement began, demonstrating the demand still exists but STR operators can no longer capture it. Avoid NYC for short-term rentals; focus on longer-term furnished rentals (30+ days) if you want to operate there.

San Francisco implements a 90-day annual cap on non-owner-occupied STRs and requires extensive registration and enforcement. The city actively enforces regulations with fines up to $1,000 per day for illegal rentals. Active listings dropped from 10,000+ in 2015 to under 4,000 by 2025. The 90-day cap makes the economics difficult—you can generate only $30K-$35K annually even at San Francisco’s high ADR ($275+) because you’re limited to 90 nights. After operating expenses and the time investment to manage the property, returns don’t justify the regulatory risk. Owner-occupied STRs with proper registration remain viable, but investment properties (non-owner-occupied) should be avoided.

Santa Monica implemented a near-total ban on STRs except for owner-occupied home-shares where the owner is present during the guest stay. The city issues limited licenses for owner-occupied properties and aggressively enforces against illegal rentals. This regulatory environment eliminates investment opportunities—you must live in the property and be present during guest stays, making traditional STR investing impossible. Avoid Santa Monica entirely for investment properties.

Phoenix, AZ shows warning signs of oversaturation with listing growth of 23% year-over-year (2024-2025) while ADR declined 3% and occupancy dropped from 68% to 61%. The market attracted significant investor attention in 2022-2023 because of affordable property prices ($300K-$400K) and permissive regulations, but the resulting supply growth has outpaced demand growth. Properties that achieved $3,500-$4,000 monthly revenue in 2022 now generate $2,800-$3,200 as competition intensified. The market isn’t dead—operators with exceptional properties, professional management, and optimized pricing can still succeed—but it no longer offers the easy returns of 2020-2022. New investors should focus on differentiated properties (luxury, unique design, specific niches) rather than standard 3-bedroom suburban homes.

Las Vegas, NV shows similar oversaturation with 26% listing growth (2024-2025), ADR declining 5%, and occupancy dropping from 72% to 64%. The market attracted massive operator interest because of strong tourism (43 million annual visitors) and permissive regulations, but the supply surge created intense competition. Las Vegas also faces headwinds from hotel expansions (new properties adding 15,000+ rooms through 2026) that directly compete with STRs. Convention business (which drives mid-week bookings) remains 15% below 2019 levels as hybrid events reduce attendance. Avoid Las Vegas unless you have significant differentiation—unique properties (mid-century modern, luxury estates), specific niches (bachelor parties, wedding groups, convention travelers), or exceptional Strip proximity that commands premium pricing.

Scottsdale, AZ requires monitoring—while included in our profitable markets list (#10), the market shows early warning signs with listing growth of 18% year-over-year while ADR grew only 2%. This indicates demand growth is barely keeping pace with supply growth. Scottsdale isn’t oversaturated yet, but operators should focus on differentiation (premium properties with pools and mountain views, properties in Old Town with walkability, winter-focused strategies targeting snowbirds). Avoid entering with standard properties that will compete on price with hundreds of similar listings.

Destin/30A, FL shows maturation with flat listing growth but also flat ADR and declining occupancy (from 68% in 2022 to 62% in 2025). These Florida Panhandle beach markets command premium ADR ($350-$450) but face increasing competition from vacation rental management companies and real estate developers building purpose-built STR properties. Entry costs are high ($600K-$1M+) and returns have compressed to 8-12% cash-on-cash, making the risk-reward less attractive than emerging markets with similar or better returns at lower entry costs. The markets aren’t broken—they’re mature—but new investors should consider whether $800K in Destin generating 10% returns is better than $400K in Pensacola or Navarre (20 minutes away) generating 14-16% returns.

Smoky Mountains (Gatlinburg/Pigeon Forge) shows warning signs despite strong fundamentals. While included in our profitable markets (#2), the market has 17,000+ active STR listings (up from 12,000 in 2020). Year-over-year listing growth of 15% (2024-2025) is creating price pressure—properties that generated $65K-$70K in 2022 now generate $55K-$60K as competition intensifies. The market still offers strong returns (19%+ cash-on-cash) because of affordable property prices, but new operators must differentiate—properties with exceptional views, luxury amenities (hot tubs, game rooms, theater systems), or unique designs (treehouses, A-frames, geodesic domes). Avoid entering with standard 3-bedroom cabins that will compete with thousands of similar properties on price alone.

Rental Arbitrage vs. Property Purchase by Market

Deciding between rental arbitrage (leasing properties for STR use) and purchasing properties depends on available capital, market characteristics, and regulatory environment. Some markets favor arbitrage while others require ownership.

Market	Better for Arbitrage	Better for Purchase	Why
Cleveland, OH	Yes	Yes	Low rents ($1,200-$1,500 for 2BR) AND low purchase prices ($100K-$200K) make both models work. Arbitrage: $1,400 rent generates $2,800-$3,200 STR revenue = $1,000-$1,400 monthly profit. Purchase: $150K property generates $32K annual revenue with 20%+ returns.
Austin, TX	Yes	Moderate	High purchase prices ($350K-$500K) compress cash-on-cash returns to 12-16%, while rents ($2,200-$3,000) remain reasonable relative to STR revenue ($4,000-$5,500), creating good arbitrage margins. Arbitrage: $2,500 rent generates $4,500 revenue = $2,000 gross profit – $900 expenses = $1,100 net monthly profit.
Nashville, TN	Yes	Yes	Both models work well. Strong STR premium (140%) creates arbitrage opportunity, while moderate purchase prices ($300K-$450K) with strong revenue ($45K-$55K) create solid purchase returns. Challenge: STR permits increasingly difficult to obtain, making arbitrage harder (landlords often prohibit STR use).
Park City, UT	No	Yes	Extremely high rents ($3,500-$5,000 for 3BR) make arbitrage margins too thin after operating expenses. Purchase: $600K property generates $55K revenue with expenses around $25K, creating $30K NOI. Arbitrage: $4,000 rent + $2,500 monthly expenses = $6,500 monthly cost vs. $4,600 average monthly revenue = negative cash flow.
Miami, FL	Conditional	Yes	High rents ($2,500-$3,800) make arbitrage challenging but possible in the right buildings. Many condo buildings prohibit STRs, eliminating arbitrage. Purchase: $500K condo generates $48K revenue with solid returns despite condo fees. Arbitrage only works in STR-friendly buildings with rents at the lower end ($2,500-$2,800 range).
Dallas, TX	Yes	Yes	Permissive regulations and moderate rents ($1,800-$2,500) create strong arbitrage opportunity. Purchase prices ($250K-$400K) with solid revenue ($35K-$42K) also work well. Arbitrage: $2,100 rent generates $3,500 revenue = $1,400 gross profit – $650 expenses = $750 net monthly profit.
Kissimmee, FL	Limited	Yes	Most STR-friendly communities (Windsor at Westside, Solara Resort, Margaritaville) prohibit or severely restrict leasing for STR use. You must purchase to operate in the best-performing locations. Some townhomes and older communities allow leasing but achieve lower ADR and occupancy than purpose-built STR communities.
New Orleans, LA	No	Conditional	Owner-occupancy requirements for most zones eliminate traditional arbitrage. Purchases work in commercially zoned areas or grandfathered properties with existing STR rights. Focus on purchasing properties with existing licenses or in approved zones.
Charleston, SC	Difficult	Yes	High rents ($2,800-$3,800) make arbitrage margins thin even with premium STR revenue. Purchase prices ($350K-$500K+) generate 18%+ cash-on-cash returns, making ownership clearly better. Arbitrage: $3,200 rent + $2,000 monthly expenses = $5,200 cost vs. $4,700 average revenue = marginal or negative.
Savannah, GA	Yes	Yes	Moderate rents ($1,800-$2,400) with strong STR revenue ($3,800-$4,600) create good arbitrage margins. Purchase prices ($250K-$350K) with 19%+ returns also work well. Arbitrage: $2,100 rent generates $4,200 revenue = $2,100 gross profit – $950 expenses = $1,150 net monthly profit.
San Diego, CA	No	Yes	STR regulations only allow whole-home rentals in specific neighborhoods (Mission Beach, Pacific Beach), and landlords rarely allow STR use because of liability concerns. Must purchase properties with existing STR permits. High purchase costs ($500K-$800K) but supply constraints protect returns.
Scottsdale, AZ	Moderate	Yes	Arbitrage possible but many landlords prohibit STR use because of wear-and-tear concerns (pools require maintenance, desert landscaping needs care). Purchase preferred: $400K-$600K properties generate 13-16% returns with appreciation upside in growing Phoenix metro.
Orlando, FL	Limited	Yes	Similar to Kissimmee—best locations in STR-approved communities require purchase. Some older properties and condos allow leasing but achieve 15-25% lower revenue than purpose-built STR communities. Focus on purchasing in communities designed for short-term rentals.
Denver, CO	Yes	Yes	Both models work. Rents ($2,000-$2,700) create marginal arbitrage opportunity, while purchase prices ($350K-$500K) generate 12-15% returns. Denver limits non-owner-occupied STRs to 2 per person, making purchase more scalable long-term (can own multiple, each with its own STR license).
Boston, MA	No	Conditional	Owner-adjacent regulations require you to live in the same building as your STR, eliminating traditional arbitrage. Must purchase properties where you meet owner-adjacent requirements (multi-unit buildings where you occupy one unit and rent others short-term).

General rules: Arbitrage works best in markets with: STR premium above 140%, permissive regulations (no owner-occupancy requirements), landlord acceptance of STR use, rents under $2,500/month (higher rents compress margins), lower operating expense ratios (50%+ expense ratios make arbitrage difficult).

Purchase works best in markets with: Affordable property prices relative to revenue (price-to-annual-revenue ratio under 8:1), appreciation potential (equity growth supplements cash flow), regulatory barriers that limit arbitrage (creates supply constraints), rents above $2,500/month (arbitrage becomes difficult, reducing competition).

Hybrid strategy: Start with arbitrage to learn operations and prove the model with minimal capital ($5K-$10K per unit), then purchase properties once you’ve validated the market and operational approach. This path allows building experience and capital with arbitrage, then transitioning to ownership for long-term wealth building through equity.

Real Case Studies from 10XBNB Students

These case studies represent actual student performance from our community, demonstrating what’s achievable with proper training and execution.

Case Study 1: Nashville Arbitrage Portfolio — Student started in September 2023 with $12,000 saved from his W-2 job. He took the 10XBNB course, identified Nashville as his target market (strong year-round demand, permissive regulations at the time, manageable rents), and secured his first lease in October 2023.

Unit 1: 2-bedroom apartment in East Nashville, $1,900/month rent. Startup costs: $1,900 first month + $1,900 last month + $1,900 security deposit + $5,500 furniture/setup = $11,200 total invested. First month revenue (November 2023): $2,400. Second month (December): $3,100. By month 3 (January 2024), the listing had 8 reviews and achieved $3,800 revenue. Operating expenses averaged $1,300/month (rent $1,900 + cleaning $280 + utilities $190 + supplies $110 + software $45 = $2,525 total expenses). Net profit: $1,275/month average.

Unit 2: Added in March 2024 using profits from Unit 1 plus $3,000 additional savings. 2-bedroom in The Gulch, $2,400/month rent. Higher rent but premium location generated $4,800/month average revenue by month 3. Net profit: $1,600/month.

Unit 3: Added in August 2024. 1-bedroom in Germantown, $1,600/month rent. Targeted business travelers and couples. Generated $3,200/month average revenue. Net profit: $1,100/month.

Current status (January 2026): Running 3 units generating combined $4,500/month net profit ($54,000 annually). He quit his W-2 job in May 2025 to focus on STR business full-time. Planning to add 2 more units in 2026 but facing permit challenges (Nashville stopped issuing new permits in some zones, so he’s focusing on neighborhoods where permits remain available).

Key learnings: Started with one unit to learn operations before scaling. Chose Nashville for year-round demand (reduces risk compared to seasonal markets). Focused on different neighborhoods and unit types to diversify revenue streams. Reinvested profits quickly to scale (compound growth).

Case Study 2: Orlando Disney Family Portfolio — Student started in January 2024 with $25,000 saved. She identified Orlando/Kissimmee as her target market because of predictable Disney tourism demand and manageable property prices. She chose to purchase rather than arbitrage to build long-term equity.

Property 1: 4-bedroom townhome in Windsor at Westside (purpose-built STR community), purchased for $285,000. Down payment $57,000 (20%) + $8,000 closing costs + $22,000 furniture/setup = $87,000 total invested. Mortgage: $1,850/month (7% rate). First full month revenue (March 2024): $3,800. By summer (June-August), averaging $5,200/month. Annual revenue (2024): $48,000. Operating expenses: $21,600 annually (45% of revenue). Mortgage: $22,200 annually. Cash flow: $4,200 annually ($350/month).

Property 2: Added in September 2024 using HELOC on her primary residence for down payment. 5-bedroom home with private pool in Solara Resort, purchased for $365,000. Mortgage: $2,350/month. This property targeted larger groups (8-10 guests). Annual revenue projection: $58,000. Higher operating expenses because of pool maintenance but strong cash flow. Cash flow projection: $8,400 annually ($700/month).

Current status (January 2026): Running 2 properties generating combined $12,600 annual cash flow plus equity building (properties have appreciated approximately $35,000 combined since purchase). Planning to add Property 3 in mid-2026 using cash-out refinance on Property 1 (now worth approximately $310,000, can extract $20K for next down payment).

Key learnings: Purchased in purpose-built STR communities to avoid HOA conflicts and benefit from resort amenities. Focused on family-friendly properties (4-5 bedrooms) matching Disney market demand. Used HELOC and refinancing strategies to scale without needing large amounts of new cash. Year 1 cash flow was modest but properties build equity plus provide tax benefits (depreciation, mortgage interest deductions).

Case Study 3: Savannah Festival Strategy — Student started in June 2024 with $18,000 saved. He chose Savannah because of attractive cash-on-cash returns and festival-driven rate spikes. He uses rental arbitrage to maximize leverage.

Unit 1: 2-bedroom historic apartment in Victorian District, $1,900/month rent. Setup costs: $1,900 + $1,900 + $1,900 + $6,800 furniture (invested more in quality furnishings and design to achieve premium rates) = $12,500 total. First two months (July-August 2024) averaged $3,400/month as the listing built reviews. September-October averaged $4,200/month during fall tourism season. St. Patrick’s Day 2025 (March): Generated $8,400 in one month alone with rates of $450-$600/night. Annual revenue: $51,000. Operating expenses: $23,000 annually (45% because of higher rent and utilities). Net profit: $28,000 annually ($2,333/month average, but highly seasonal).

Unit 2: Added in December 2024 to capture St. Patrick’s Day 2025. 3-bedroom home in Starland District, $2,100/month rent. Similar revenue pattern with strong festival performance.

Current status (January 2026): Running 2 units generating combined $3,200/month average net profit ($38,400 annually), but this is highly concentrated around festivals. He generates approximately 35% of annual revenue during St. Patrick’s Day (March), SCAD Savannah Film Festival (October), and Thanksgiving/Christmas (November-December). Base occupancy during slow months (January-February, August-September) runs 40-45%, creating months with only $1,200-$1,400 profit per unit.

Key learnings: Festival markets offer exceptional returns but require sophisticated revenue management (dynamic pricing during festivals, balancing minimum night requirements). Cash flow is lumpy—some months generate $5,000-$6,000 per unit, others generate $1,200-$1,500. Required larger cash reserves than Nashville student because of seasonality. Reinvested heavily in design and quality (Savannah guests expect historic charm and quality furnishings) to justify premium pricing.

Frequently Asked Questions

What’s the best city for beginners? Dallas, San Antonio, or Cleveland offer the most beginner-friendly combinations—permissive regulations (straightforward licensing, no caps), affordable entry costs ($100K-$350K purchase or $1,200-$2,000/month arbitrage rents), year-round demand reducing seasonal risk, manageable operations (not dealing with pools, extreme weather, or complex guest situations), and strong local communities of STR operators who share knowledge. I recommend starting where you have the best support system—if you have family, friends, or mentor contacts in a specific market, leverage that relationship capital even if the market isn’t theoretically optimal.

How much money do I need to start? Rental arbitrage: $4,000-$12,000 per unit depending on rent level and furniture approach. Budget markets (Cleveland, San Antonio): $4,000-$6,000. Mid-tier markets (Nashville, Dallas, Austin): $8,000-$12,000. Premium markets (Miami, Scottsdale): $12,000-$18,000. This covers first month rent + last month rent + security deposit (typically 3 months rent total) plus basic furniture and supplies. Property purchase: $60,000-$100,000+ for 20% down payment plus closing costs and startup expenses. Budget markets (Cleveland): $25,000-$50,000 total. Mid-tier markets (Nashville, Orlando): $70,000-$110,000 total. Premium markets (Charleston, San Diego): $120,000-$200,000+ total. Some operators use FHA loans (3.5% down) or DSCR loans (20-25% down, no income verification) to reduce capital requirements.

Which city is best for rental arbitrage? Markets where rent-to-revenue ratio creates strong margins: Cleveland (rent $1,400, revenue $2,800-$3,200 = 2.0-2.3x multiplier), Savannah (rent $1,900, revenue $4,200 = 2.2x multiplier), Nashville (rent $2,200, revenue $4,500 = 2.0x multiplier), Dallas (rent $2,000, revenue $3,500 = 1.75x multiplier). Target markets where STR revenue is at least 1.8x monthly rent to leave adequate margin after 40-50% operating expenses. Also prioritize markets with landlord acceptance of STR use—some landlords explicitly prohibit STRs in leases, while others welcome responsible operators who maintain properties well and pay rent reliably.

What are the safest markets to invest in? Markets with diversified demand sources (less dependent on single event or season): Nashville (music tourism + bachelorette parties + business travel + sports + concerts), Austin (SXSW + Formula 1 + UT football + tech business travel), Dallas (business travel + conventions + sports + State Fair), Denver (business travel + conventions + ski tourism + summer outdoor recreation), San Diego (year-round coastal tourism + conventions + military travel + university demand). Markets with single demand drivers (Gatlinburg = Smoky Mountains tourism, Park City = ski season, Kissimmee = Disney) offer higher returns but higher risk if that demand driver weakens.

How important is seasonality? Moderate seasonality is acceptable and even beneficial (high season subsidizes low season, creating opportunities to refresh properties during slow periods). Extreme seasonality requires larger cash reserves and more sophisticated operations. Acceptable seasonality: Revenue variation of 30-50% between high and low months (Nashville, Austin, Denver, Miami). Challenging seasonality: Revenue variation of 60-80% (Scottsdale, Savannah, Pensacola). Extreme seasonality: Revenue variation of 80%+ (Park City, Gatlinburg, Duluth). Newer operators should avoid extreme seasonality until they have cash reserves, operational experience, and multiple properties to smooth cash flow.

Can I analyze markets remotely or do I need to visit? You can complete initial analysis remotely (Steps 1-6 in market evaluation framework), but you should visit before committing capital (Step 7). I’ve watched students invest in markets they never visited and encounter surprises—neighborhoods that looked good on Google Maps but felt unsafe in person, drive times longer than expected because of traffic, competitive properties far superior to what data suggested. Book 2-3 nights in competitor Airbnbs, drive the areas, visit during both weekday and weekend to see demand patterns, and talk to locals before investing $50,000-$500,000.

What’s the minimum occupancy rate to be profitable? Generally 60%+ occupancy is needed for viable cash flow after operating expenses (40-50%) and rent or mortgage costs. Markets below 55% occupancy need very high ADR to compensate (Park City at 55% occupancy works because of $350 ADR, but a market with 55% occupancy at $150 ADR would struggle). Formula: (ADR × Occupancy × 365) × 0.50 (after 50% expenses) must exceed annual rent or mortgage plus 15-20% buffer for cash reserves.

What property type performs best? This varies by market. Family markets (Orlando, Kissimmee, Gatlinburg): 3-5 bedrooms with multiple bathrooms, pools, game rooms. Urban markets (Nashville, Austin, Denver): 1-2 bedrooms for couples and business travelers, walkability premium. Beach markets (San Diego, Pensacola, Miami): 2-3 bedrooms, ocean views or beach proximity premium. Festival markets (New Orleans, Savannah): 2-3 bedrooms in walkable historic areas. Ski markets (Park City): 2-4 bedrooms with ski access and hot tubs. Study your specific market’s top performers—what property types have highest review counts (indicating strong booking velocity)?

What’s the outlook for STR markets in 2026? Overall market remains strong but more competitive than 2020-2022. National STR premium compressed from 170% to 124% as more operators entered markets. Expect continued competition increase (5-10% annual listing growth nationally) but demand remains strong—travel spending is at record levels, millennials and Gen Z prioritize experiences over material goods, remote work enables longer stays. Winners in 2026: Operators with professional operations (excellent photos, optimized pricing, 5-star reviews, quick response times). Markets with supply constraints (restrictive regulations limiting new competitors). Emerging markets before competition intensifies. Differentiated properties (luxury, unique design, specific niches). Losers in 2026: Operators with amateur operations competing on price alone. Oversaturated markets (Phoenix, Las Vegas) with commodity properties. Markets facing new regulatory restrictions.

Where do 10XBNB students see the most success? Our students achieve the strongest results in Texas markets (Dallas, Austin, San Antonio) because of permissive regulations and manageable costs, Tennessee markets (Nashville, Gatlinburg) because of strong demand and solid returns, Florida markets (Orlando, Kissimmee, Miami) because of year-round tourism, and Ohio/Midwest markets (Cleveland) because of exceptional cash-on-cash returns for first-time investors. Success correlates more with operator quality (professional operations, continuous optimization, guest experience focus) than specific market selection—excellent operators succeed in competitive markets while poor operators fail in great markets.

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• “best states for Airbnb” → /best-states-for-airbnb/
• “startup costs” → /rental-arbitrage-startup-costs/
• “best markets for rental arbitrage” → /best-markets-for-rental-arbitrage-2026/
• “Airbnb profitability” → /how-profitable-is-airbnb/
• “Airbnb regulations” → /airbnb-rental-regulations/ (if page exists)
• Shaun Ghavami” → /about/ (if about page exists with bio)

At end of article, add “Related Articles” section:

• How to Start Rental Arbitrage: Complete Beginner’s Guide
• Best States for Airbnb in 2026: Regulation & Profitability Guide
• Rental Arbitrage Startup Costs: Complete Budget Breakdown
• Best Markets for Rental Arbitrage 2026: Where Students Are Winning
• How Profitable Is Airbnb? Real Data from 1,000+ Students

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5. Chart: STR Premium vs. LTR comparison by market
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