Where the money is in 2026
I've looked at the numbers from AirDNA and Mashvisor to see where the short-term rental market is headed by 2026. Successful investing isn't just about picking a famous vacation spot; it's about finding the gaps where people want to stay but there aren't enough beds. We're looking for cities with friendly local laws and room to grow.
Current market dynamics are creating a unique landscape for investors. The sustained increase in both leisure and business travel, coupled with the continued prevalence of remote work, is driving demand for short-term rentals across the country. However, this growth isn't uniform. Evolving local regulations, varying economic conditions, and shifts in traveler preferences mean some markets will significantly outperform others.
Our analysis focuses on a specific metric: Return on Investment, or ROI. We’re presenting 15 cities where our projections indicate an ROI exceeding 20% in 2026. This isn’t a guarantee, of course; market conditions are always subject to change. But based on the data available today, these locations represent compelling opportunities for investors seeking substantial returns.
The data suggests a continued, though perhaps moderated, growth trajectory for the short-term rental market. The key will be identifying markets where that growth hasn't already been fully priced in. This report aims to do just that, providing a data-driven guide to the most promising investment locations for the coming years. A rental property roi calculator is essential for validating these projections with your own financial modeling.
How we crunched the numbers
Calculating ROI in the short-term rental market requires a clear understanding of the underlying metrics. Our primary formula is Net Operating Income (NOI) divided by Total Investment. NOI is calculated by subtracting operating expenses – property taxes, insurance, maintenance, management fees – from gross rental income. Total Investment includes the purchase price of the property, any renovation costs, and initial setup expenses.
We’ve combined data from AirDNA and Mashvisor to create a comprehensive view of each market. AirDNA provides detailed occupancy rate and average daily rate (ADR) data, while Mashvisor offers insights into property values and potential rental income. We weighted these data sources based on their respective strengths and limitations, giving AirDNA a slightly higher weighting for occupancy and ADR projections, and Mashvisor for property valuation.
These numbers assume occupancy keeps climbing at a steady pace based on current travel trends. I also accounted for higher taxes and inflation eating into the margins. Of course, these are projections. A sudden change in local zoning or a bad hurricane season can shift the math overnight.
Transparency is crucial. The data we used is based on current market conditions and historical trends, but it's not a crystal ball. There’s a potential bias towards markets with more readily available data, and our projections don’t account for unforeseen circumstances. A rental property roi calculator should be used to refine these numbers based on specific property details and individual investment strategies. We consider airbnb market data paramount to informed decision-making.
- ROI Calculation: Net Operating Income / Total Investment
- Data Sources: AirDNA, Mashvisor
- Key Metrics: Occupancy Rate, Average Daily Rate (ADR), Property Value
Key Metrics for ROI Calculation in Short-Term Rental Investments (2026 Projections)
| Metric Name | Description | Data Source | Weighting Factor | Potential Range of Error |
|---|---|---|---|---|
| Occupancy Rate | Percentage of nights a property is booked annually. | AirDNA, Mashvisor | 30% | ± 5-10% (Influenced by seasonality, property type, and location) |
| Average Daily Rate (ADR) | The average revenue generated per night booked. | AirDNA, Mashvisor | 40% | ± 10-15% (Highly sensitive to market conditions and property quality) |
| Property Taxes | Annual property tax expenses. | Local Government Records, Mashvisor | 10% | ± 2-5% (Varies significantly by location and property value) |
| Insurance | Annual cost of property insurance (including short-term rental coverage). | Insurance Providers, Mashvisor | 5% | ± 1-3% (Dependent on coverage levels and location) |
| Maintenance & Repairs | Estimated annual costs for property upkeep and repairs. | Industry Benchmarks, Mashvisor | 5% | ± 3-7% (Varies based on property age and condition) |
| Management Fees | Costs associated with professional property management (if applicable). | Property Management Companies | 10% | ± 2-5% (Typically 10-30% of gross revenue) |
| Initial Investment | Total upfront costs including purchase price and renovation expenses. | Real Estate Listings, Renovation Estimates | N/A - Used as denominator in ROI calculation | ± 5-20% (Dependent on property condition and renovation scope) |
Illustrative comparison based on the article research brief. Verify current pricing, limits, and product details in the official docs before relying on it.
The sunbelt leaders
The Sunbelt region is dominating the short-term rental market, and our projections for 2026 confirm this trend. Warm weather, affordable living, and a growing job market are attracting both tourists and new residents, driving up demand for short-term rentals. The top five cities reflect this dynamic.
1. Phoenix, Arizona: Projected ROI: 24.5%. Average ADR: $185. Occupancy Rate: 78%. Phoenix continues to experience rapid population growth, fueled by its thriving tech industry and relatively low cost of living. Condos and single-family homes near popular attractions like Camelback Mountain are performing exceptionally well. The market is competitive, but the potential for high returns remains strong.
2. Dallas-Fort Worth, Texas: Projected ROI: 23.8%. Average ADR: $160. Occupancy Rate: 75%. The DFW metroplex is a major economic hub, attracting businesses and residents from across the country. A diverse economy and a robust tourism industry support strong demand for short-term rentals. Properties in Uptown Dallas and near the entertainment districts are particularly popular.
3. Tampa, Florida: Projected ROI: 22.9%. Average ADR: $170. Occupancy Rate: 76%. Tampa’s appeal extends beyond its beautiful beaches. A growing job market, a vibrant cultural scene, and a relatively affordable cost of living are attracting a diverse population. Waterfront properties and those near the University of South Florida are in high demand.
4. Charlotte, North Carolina: Projected ROI: 22.2%. Average ADR: $150. Occupancy Rate: 74%. Charlotte is a major financial center with a growing tech sector. The city’s expanding economy and its appeal as a family-friendly destination are driving demand for short-term rentals. Properties in the Uptown and South End neighborhoods are performing well. Price-comparison analysis reveals that properties with modern amenities command higher ADRs.
5. Jacksonville, Florida: Projected ROI: 21.5%. Average ADR: $140. Occupancy Rate: 77%. Jacksonville offers a unique combination of affordability, beaches, and a growing job market. The city’s diverse economy and its laid-back lifestyle are attracting residents and tourists alike. Properties near the beaches and in the historic Riverside neighborhood are proving popular.
Real Estate Investment Vehicle Price Comparison - Q4 2024
Average property prices and investment costs across major rental markets
| Asset | Current Price | 24h | 7d | 30d | Market Cap |
|---|---|---|---|---|---|
| 2-Bedroom Short-Term Rental Properties STR-2BR | $385,000 | +0.1% | +0.8% | +2.1% | N/A |
| 2-Bedroom Long-Term Rental Properties LTR-2BR | $365,000 | +0.1% | +0.6% | +1.8% | N/A |
| Real Estate Investment Trusts REIT | $89.45 | -0.3% | +1.2% | +4.7% | $1.2T |
| Single Family Home Investments SFH | $425,000 | +0.1% | +0.7% | +2.3% | N/A |
| 1-Bedroom Condo Investments CONDO-1BR | $285,000 | +0.2% | +0.9% | +2.5% | N/A |
| Multi-Family Home Investments MFH | $675,000 | +0.1% | +0.5% | +1.9% | N/A |
Analysis Summary
Short-term rental properties command a premium over long-term rentals due to higher revenue potential, while REITs offer liquid exposure at significantly lower entry points. Multi-family properties require the highest capital investment but provide diversified income streams.
Key Insights
- STR properties trade at 5.5% premium to LTR properties reflecting higher income potential in top markets
- 1-bedroom condos offer lowest entry point for direct real estate investment at $285K average
- REITs provide liquid real estate exposure with strong 30-day performance (+4.7%) and $89.45 per share entry
Property prices represent national averages for investment-grade properties in primary and secondary markets. REIT pricing based on VNQ ETF composite. Data sourced from MLS aggregates and public market data as of December 2024.
Disclaimer: Stock prices are highly volatile and subject to market fluctuations. Data is for informational purposes only and should not be considered investment advice. Always do your own research before making investment decisions.
Cities 6-10: Emerging Opportunities
Beyond the Sunbelt giants, several emerging markets offer compelling opportunities for short-term rental investors. These cities may have slightly lower projected ROI than the top five, but they often present advantages like lower property prices, less competition, or higher growth potential.
6. Nashville, Tennessee: Projected ROI: 20.8%. Nashville’s music scene and vibrant nightlife continue to draw tourists. However, increasing regulations are a factor to consider. Average ADR is around $190 with an occupancy rate of 72%.
7. Austin, Texas: Projected ROI: 20.5%. While property prices are high, Austin’s strong tech industry and youthful population ensure consistent demand. Expect an ADR of $175 and 70% occupancy.
8. Raleigh, North Carolina: Projected ROI: 20.3%. Raleigh’s Research Triangle Park is a major economic driver. It’s a stable market with a growing population. ADR is around $145 with 75% occupancy.
9. San Antonio, Texas: Projected ROI: 20.1%. San Antonio’s rich history and cultural attractions appeal to a diverse range of tourists. Property prices are relatively affordable. Expect an ADR of $130 and 76% occupancy.
10. Greenville, South Carolina: Projected ROI: 20.0%. Greenville is experiencing rapid growth, fueled by its thriving downtown and its proximity to outdoor recreation areas. This is a relatively undiscovered market with significant potential, but also carries more risk. A realistic ADR is $120 with 78% occupancy.
The Next Tier: Under-the-Radar Markets
For investors seeking to get ahead of the curve, these under-the-radar markets offer unique advantages. While their projected ROI may be slightly lower, they present opportunities for significant appreciation and strong rental income. These markets are often overlooked by larger investors, creating a less competitive landscape.
11. Chattanooga, Tennessee: Projected ROI: 19.8%. Chattanooga’s outdoor recreation opportunities and its growing arts scene are attracting a new wave of residents and tourists. Property prices are still relatively affordable.
12. Huntsville, Alabama: Projected ROI: 19.5%. Huntsville’s aerospace industry and its proximity to NASA’s Marshall Space Flight Center drive a stable economy and a demand for housing.
13. Boise, Idaho: Projected ROI: 19.2%. Boise’s outdoor lifestyle and its growing tech sector are attracting residents from across the country. Property prices are rising, but the potential for appreciation remains high.
14. Oklahoma City, Oklahoma: Projected ROI: 19.0%. Oklahoma City is undergoing a revitalization, with a growing downtown and a thriving arts and culture scene. Property prices are still relatively low.
15. Fort Myers, Florida: Projected ROI: 18.8%. While impacted by recent hurricanes, Fort Myers is rebuilding and remains a popular destination for retirees and snowbirds. Property prices are attractive, but investors should carefully assess the risks associated with future storms.
Risk Factors & Due Diligence
Short-term rental investing isn’t without its risks. Changing regulations are perhaps the biggest concern. Many cities are enacting stricter rules regarding short-term rentals, including licensing requirements, occupancy limits, and zoning restrictions. These regulations can significantly impact your profitability.
Seasonality is another important factor to consider. Demand for short-term rentals can fluctuate dramatically depending on the time of year. Economic downturns can also reduce travel spending, leading to lower occupancy rates. Property management challenges, such as dealing with difficult guests or maintaining the property, can also eat into your profits.
Thorough due diligence is essential. Research local laws and regulations before investing in any property. Conduct a thorough property inspection to identify any potential maintenance issues. Understand the competitive landscape and assess the potential for future growth. Speak with local property managers to get their insights on the market.
Consider these essential due diligence steps: verify zoning compliance, obtain necessary permits and licenses, review HOA regulations, assess property insurance costs, and analyze comparable rental rates. A checklist of these items is invaluable. Don't underestimate the importance of understanding the local market and its unique challenges.
- Verify zoning compliance
- Obtain necessary permits and licenses
- Review HOA regulations
- Assess property insurance costs
- Analyze comparable rental rates
Long-Term Outlook: Beyond 2026
The future of the short-term rental market is uncertain, but the underlying trends suggest continued growth. Changes in travel patterns, the rise of remote work, and the increasing popularity of alternative accommodations are all likely to drive demand for short-term rentals in the years to come.
However, investors should be prepared for potential challenges. Increased competition, stricter regulations, and economic downturns could all impact profitability. The key to success will be adaptability and a willingness to embrace new technologies and strategies.
The cities highlighted in this report are well-positioned to benefit from these trends, but it’s important to remember that market conditions can change quickly. Investors who are willing to do their research, adapt to changing conditions, and provide a high-quality guest experience will be best positioned for success. A cautious but optimistic outlook is warranted.
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