Best Cities for Airbnb Investment 2025

In the past decade, short-term rentals have become a more profitable strategy for most markets worldwide than renting property long term. But not all markets are created equal, so it’s crucial to study the property’s location to ensure it’s optimal for vacation rental investment.

If you plan to buy a short-term rental property in the US to make money from real estate this year, you will want to know where the best cities for Airbnb investment in 2025 are located.

Any effective investment strategy should be based on reliable data to help you make an informed decision, so you need actionable insights from a reliable source.

Mashvisor, a company that helps real estate investors find lucrative investment properties through an online AI analytics platform, has analyzed Airbnb data from the top US markets.

They have selected the best locations for Airbnb investment based on certain criteria using key Airbnb metrics, such as occupancy rate, daily rate, monthly rental income, and cash-on-cash return.

Let’s examine their findings to discover the best places to buy vacation rental property in the US in 2025.

Top 25 Cities by Airbnb Rental Income

Below is a table that provides data about the top 25 vacation rental investment locations in the US based on monthly rental income (as of March 2025).

Note that most cities with the highest monthly Airbnb income included on this list are in California. There are also seven cities in Hawaii and one city in Florida. There is a high demand for short-term rentals in these states.

As you can see, all the cities with the highest monthly Airbnb income have median property prices of a few million dollars. Such prices might be too high for aspiring Airbnb hosts.

That’s why Mashvisor also created a list of the cities based on the Airbnb cash-on-cash return. This metric is used to evaluate an investment property’s current or future profitability. It’s calculated by taking the total rental income generated by a property and dividing it by the initial cash investment made to buy that property.

Best Cities for Airbnb Investment in the US

Here is a list of the top 25 US cities with the highest Airbnb cash-on-cash return rate, according to Mashvisor’s data.  

Table2. Top 25 Cities by Airbnb COC Return

Mashvisor emphasizes that although these cities have a lower rental income range than those included in the previous list, they have low median property prices. That makes vacation rental properties in these cities accessible for beginner investors.

Moreover, the high cash-on-cash returns (or the cash flow divided by the amount of cash initially invested) mean the investors can recoup their investments faster.

The higher the cash-on-cash return, the healthier the property investment. That’s why the top 25 cities by Airbnb COC return can be considered the best cities for Airbnb investment in the US.

Things to Consider When Choosing the Best Markets to Invest in Airbnb Rental Property

Of course, these lists provide only a broad view based on average values. So it’s essential to consider more specific factors when deciding whether you should buy property in any of the top vacation rental investment locations in the US.

Essential factors to consider are supply and demand and competition. Let’s look at this table that showcases the ten states with the highest number of active Airbnb listings.

Table 3. 10 States with the Highest Airbnb Saturation

The interesting thing to note here is that these US states have lower cash-on-cash returns. Mashvisor explains that it’s because their markets are oversaturated. So it’s always important to analyze the market data before making an investment decision instead of just looking at whether an area gets a lot of tourists.

Finding a location that is not too saturated with vacation rentals is crucial. Before you buy a rental property for your STR business, you should study recent Airbnb data and analytics and research the Airbnb regulations regarding licensing and taxing in the city of your choice. Make sure that it’s legal to rent out on Airbnb in this city.

Then you need to perform a neighborhood comparison to determine areas that have the potential to generate high income monthly. You should look for neighborhoods that fit your budget and consider such statistical data as Airbnb rental income, occupancy rate, and cash-on-cash return.

When you find the area where Airbnb is most profitable in the city, you can start searching for an investment property that offers high ROI when rented on a short-term basis.

What’s Next?

Making money on Airbnb starts with buying a property in a market profitable for short-term rentals. If you want to join the millions of successful Airbnb hosts, we hope our article will help you better understand where to look for a top-performing rental property to maximize your ROI.

But no matter which of the best cities for Airbnb investment 2025 you choose for buying your next STR property, it’s critical to prepare it for the rental business. Our free guide will give you hands-on advice and save you from unnecessary operational expenses.

As a host, you’ll have a lot of responsibilities, so you’ll need powerful vacation rental software to automate your processes and increase the efficiency of your business.

Hospitable does everything you would expect from vacation rental management software and can help you automate almost every aspect of your STR business. We’ll protect you from double bookings, keep your pricing in sync between multiple platforms, schedule messages based on triggers and events, streamline team management, and help you create your own direct booking website in minutes.

Still, we have a few unique features to surprise you:

• Automatically upsell late check-outs and extra nights based on the calendar.

• Respond to early check-in and late check-out requests automatically based on the calendar.

• Detect guests’ common questions on 20+ topics and respond automatically on your behalf.

• Use the ChatGPT integration to automatically generate draft responses to guest messages.

• Tailor automated communication to the guests’ personas. For example, send sofa instructions only if three adults visit your one-bedroom property.