These Are the Best Cities to Own A Vacation Rental, According to One Study

published Aug 21, 2022
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Credit: HomeAway

Thanks to vacation rental marketplaces like Airbnb and Vrbo, renting out your spare room or even your entire home to tourists has never been easier. It often pays well, too — according to market analysis firm AllTheRooms, short-term rental hosts can make an average of over $44,000 a year. But as with any real estate investment, where you buy your vacation rental plays an important role in your success.

LawnStarter analyzed the 189 biggest U.S. cities to find the top cities to own a vacation rental. They took several metrics into consideration, including revenue potential, initial investment costs, average expenses, entertainment for guests, public safety, and climate.

Miami, Florida came out on top as the best city to own a vacation rental. The popular tourist destination offers the highest ROI (return on investment), also placing first in both average nightly rate and annual revenue. According to the research, the American South represents a real opportunity for real estate investors — six of the top 10 cities to own a vacation rental are located in the region.

In second place is New York, New York. From Broadway attractions to world-class art museums, it’s no wonder the Big Apple topped LawnStarter’s entertainment category. The research also showed a strong correlation between high revenue potential and coastal location, so it’s no wonder that the East Coast’s most iconic vacation spot scored highly.

Also shaping up to be a vacation rental hotspot, third place went to New Orleans, Louisiana.  Also a coastal tourism destination, the Big Easy placed just behind Miami when it comes to high ROI. Ranking 10th in the entertainment category, the birthplace of jazz is sure to be in high demand when Mardi Gras rolls around.
Taking fourth place is Cincinnati, Ohio, which ranked second in revenue potential. The Midwestern city might not have the same cultural cachet as its coastal peers, but don’t count it out. Cincinnati has drawn more and more tourists over the years, attracting foodies and craft-brew lovers alike.