Since its inception, Airbnb has flipped the real estate industry and on its head, while turning ordinary people into part-time investors. Nonetheless, the platform presents a great opportunity for investors of all skill levels. In fact, it is said that if you pick the right location for your property, it has the potential to offer great returns than a typical rental property. Of course, this isn’t always the case – but we’ve seen it happen. With that said, let’s get into the best US cities to own your very own Airbnb listing.
What factors lead to a promising Airbnb property?
Let’s recall some of the factors that make for a promising Airbnb property. But let’s be sure to focus on those attributes that will allow you to warrant higher rental prices. After all, we’re focusing on the best cities for your Airbnb listing. Here are some factors to get us started.
Proximity to central attractions. If your Airbnb is in a central area of your city, you are likely able to charge more than those who are further away.
Not an oversaturated market. If you’re looking to list your property in an Airbnb market that’s already oversaturated, you likely won’t generate the returns you are looking for. This is simply because that when there is so many options for consumers, it can easily turn into a search for the lowest price. When this happens, it cuts away from your profits.
Global and local market state. The overall state of the market can have an effect on the rental prices you are able to charge.
Condition of property. The property itself must also be up to par if you’d like to charge higher rates. One of the quickest ways to receive a poor review is by renting a property that isn’t well maintained.
Length of average rental. Depending on your particular local market, you should consider the length of the average stay. Typically, you can charge higher rates when it’s on a shorter term basis. Also, you will collect additional administrative and cleaning fees with each new guest that comes in.
So what are the best US cities to own an Airbnb listing?
Now that we understand what makes for a promising Airbnb listing, let’s get into the specifics. Here we present to you the top US cities to own an Airbnb listing. The list has been generated by Mashvisor and is based on the average Cash on Cash (CoC) return of Airbnb listings in a city. The CoC of a property is the return based on the money you’ve actually invested. This differs from a typical capitalization rate which considers the purchase price of the property, rather than just the money you personally invest. So here are the top US cities to own an Airbnb listing:
Oklahoma City, Oklahoma – First on our list is Oklahoma City. This location offers great returns, mostly due to the low property prices on average. Though, it should be mentioned that a public hearing and $2,700 permit is required in the city for short-term rentals. However, now could be a good time to take advantage of this. This is based on the fact that Airbnb is still relatively new and regulations aren’t strongly enforced yet supposedly.
Memphis, Tennessee – Coming in at second place, we have the city of Memphis. As one of the growing markets in 2016, it offers the potential for great returns. Property prices are slightly higher than Oklahoma City, but not enough to eliminate profit potential.
Nashville, Tennessee – At third, we have Nashville. Supposedly it is one of the most progressive cities when it comes to Airbnb listings. Specifically, it has establish parameters regarding the number of Airbnb’s in a location, as well as developing the infrastructure to support these rental units.
Las Vegas, Nevada – As one of the top tourist destinations in the US, we have Las Vegas at number four. With reasonable property prices, it offers a glimpse of promising returns. In fact, it’s a profitable market despite requiring special permits and paying additional taxes for short-term rental income.
Indianapolis, Indiana – Not very far behind Las Vegas, we have Indianapolis at number five. It’s very similar to Vegas in terms of prices and returns, except that it has a higher occupancy rate. However, it is one of the few cities with no regulations surrounding Airbnb properties.
Columbus, Ohio – Concluding our list at number six is Columbus. It turns out that Columbus is very similar to Indianapolis and also doesn’t have any regulations regarding Airbnb.
On a final note, it should be mentioned that this only considered cities that have a population of over 500,000 people. Either way, you now have the six best spots in the US to find yourself an Airbnb listing. Remember, you don’t necessarily have to live in the state to operate the property. We encourage you to get creative with it and explore your options.
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