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10 Best Vacation Rental Markets in the U.S. in 2026
Looking to invest smarter in short-term rentals? We break down the 10 best U.S. vacation rental markets for 2026, based on yield, demand, and entry prices, so you can avoid oversaturated cities and focus on real profit potential.
Key Takeaways
- Check out the best opportunities in the top 11 U.S. markets based on factors such as high gross yield and high demand.
- Demand growth is expected to reaccelerate in coastal, mountain, and suburban areas, while small cities and rural areas are expected to see a decline in 2026.
- All of the cities on this list offer lower entry points for investors, with median property prices on the lower end.
- Each of these markets is growing, so you steer clear of oversaturation and the intense competition.
You want to find out the best short-term rental markets in the U.S. to invest in. You know that not all markets are created equal.
Some cities are overcrowded with listings, and hosts compete for the limited demand. Others enjoy steady bookings and predictable, healthy returns.
If you're going to invest your hard-earned money, don't invest it in an average listing. Create a reliable income-generating asset instead.
In this guide, we break down the best U.S. markets for real estate investing in STR based on data from multiple market analysis tools.
Why Vacation Rentals Remain a Strong Investment Opportunity
Short-term rentals remain a strong investment opportunity because the market is moving into a more balanced phase. We could say that STRs have become more of a mature asset class.
The vacation rental space still offers plenty of upside for investors. We underline that the global STR market size is calculated at USD 97.85 billion in 2025 and is predicted to increase from USD 101.37 billion in 2026 to approximately USD 138.74 billion by 2035.
After years of rising home prices, things are expected to soften a bit, with prices easing and mortgage rates leveling out. That makes it easier for investors to get in on the market.
Rental demand is expected to strengthen as economic conditions, income growth, and employment recover into 2027, according to AirDNA's latest outlook. The stronger economy fuels domestic tourism.
And the U.S is famous for its strong domestic tourism. A stable economy is an important factor for having higher STR occupancy.
Key Market Trends You Should Know About
Before your next short-term rental investment, it helps to understand the trends shaping market dynamics. Family vacations, remote work stays, and experience-seeking travel continue to drive market growth.
But the short-term rental market is becoming more competitive, so you need to understand what type of guest experience is a critical factor for success.
Differentiation and branding drive ROI
On the demand side, travellers have become more selective. Guests are value-conscious. They’re still booking, but they'd better reward properties that feel intentional: good locations, clear positioning (your listing is different from average), thoughtful amenities.
Well-managed, unique and stand-out rentals continue to deliver stronger returns.
Vacation rental for family and group stays
Big groups mean big savings. When families or friends split the cost, vacation rentals seem more affordable. Plus, these rentals are spacious enough to keep everyone comfortable.
Guests get that cozy, homey feel, with perks like kitchens to cook in, optional meal prep, pick-up and drop-off services, laundry, and more.
Demand expected to rise in coastal, mountain, and suburban areas
Demand growth is expected to reaccelerate in coastal, mountain, and suburban areas, while small cities and rural areas are expected to see a decline.
According to AirDNA’s investor survey, both first-time buyers and experienced hosts identified beach markets as the most attractive investment targets. Urban markets ranked second overall and were especially appealing to first-time investors.
Fitness and wellness tourism
Sports and wellness are driving vacation trends. Travelers are seeking active trips like hiking, biking, and outdoor adventure.
Over the past few years, urban travelers, especially, have been looking for getaways that combine fitness with relaxation. Think of wellness retreats or a hot tub to unwind after a day outdoors.
Experience seekers
If you see yourself only as an accommodation provider, maybe it’s time to rethink that.
Millennials and especially Gen Z care a lot about experiences. Companies like Airbnb are already tapping into that. Consider how you can guide guests to get what they want while creating a win-win.
How to Evaluate Vacation Rental Markets for Profitability?
Seasoned and first-time investors should not dive into the real estate market blindly. Knowledge of the local economy and local demand dynamics helps new investors pinpoint properties with high income potential.
Look at key metrics
Occupancy rates
Consistent occupancy means consistent demand, which means a consistent stream of visitors. The safest option is to find STR markets that tend to maintain the highest average occupancy rates throughout the year.
ADR or Average Daily Rate
A high ADR is generally a positive signal, but it must be interpreted alongside other metrics like occupancy and seasonality swings to understand the full picture.
Gross yield
Gross yield is a metric that measures the annual revenue potential. It's the total annual income generated by an investment property relative to its purchase price or current market value—before any expenses or taxes are deducted.
Cap rate
If you think of gross yield as the "top-line" view and cap rate (capitalization rate) as the "bottom-line" view. To calculate the cap rate, you divide the net operating income (after expenses are extracted) by the property's current market value. Know that a higher cap rate generally indicates a stronger potential return but may also signal higher risk.
- 4–6% lower risk, slower return
- 7–10% higher return, higher risk
Cash on cash return
Cash-on-cash return is a percentage that shows the annual yield on your investment, meaning the return relative to the total cash you invested for the down payment, fixing, and furnishing your rental.
Aim for a cash return of at least 8%, and all above 12% are high performers.
What the gross yield tells you
For an investor, gross yield is the "survival test" for a property. While the cap rate tells you about profit, the gross yield tells you about revenue potential.
STR management is known for higher operating costs, which often consume a big portion of your revenue. Gross yield is used as a high-level filter to decide if a property is even worth your time.
If the top-line revenue isn't high enough, the property could turn out to be cash-flow negative.
Gross yield of 7% – 12% is the solid performer range that promises steady returns, while 13%-15% promises a high cash flow property.
Use market data tools for validation
The best way to identify emerging vacation rental markets with growth potential is to research them using tools like AirDNA, Mashvisor or Airbtics.
Not only do they calculate revenue potential for each local market (or the neighborhood), but they also present for-sale properties and their current prices on the market.
How to compare vacation rental markets and pick the right one?
- You absolutely need to research local short-term rental regulations before entering the game. Stringent rules are often not worth your while, even if numbers may look extraordinary on paper. Markets like New York City have strict short-term rental laws, while others are more lenient. Local regulations must be researched before purchase.
- Certain amenities, like proximity to water, private pools, and unique property features, often support higher nightly rates.
- Align the property type and amenities with a clearly defined target guest profile and target market. Define whether you want to attract couples, families, pet owners, or high-end travellers before everybody else.
- Invest in high-demand locations that will bring not only STR profit, but long-term property value appreciation.
Best Cities for Vacation Rental Income Potential in the U.S.
The best place to buy a vacation rental property depends on your budget. The markets we listed have median property prices under $350,000, making them a more accessible entry point for investors.
This list is based on AirDNA’s top markets combined with Mashvisor’s rankings, since proprietary data from different tools tends to vary slightly. Median home price is based on Redfin data. The focus is on markets with strong gross yield, high occupancy, year-round demand, more affordable market prices, and less restrictive regulations for Airbnb operators.
1. Columbus, Georgia
Why Selected: Columbus, GA, is a consistent high performer, and a great market for outdoor activities and adventure tourism; riverside setting, outdoor recreation, and cultural attractions drive high demand.
Median Property Price: $218,000
Gross Yield: 13.4%
Annual Revenue Potential: $44,496
Occupancy Rate: 59%
Average Daily Rate: $187
Investing in short-term rentals in Columbus, Georgia, offers strong returns driven by its affordable entry costs and steady demand from tourism and military visitors. Key metrics like a 13.4% gross yield and $44,496 annual revenue potential make it a high performer relative to many U.S. markets.
Riverside attractions like RushSouth Whitewater Park, RiverWalk, and the National Infantry Museum draw adventure tourists, boosting peak-season occupancy to 59% and higher.
2. Wichita, Kansas
Why Selected: Ideal for weekend getaways; affordable entry, relatively low number of active STR listings, and steady short-stay demand.
Median Property Price: $215,000
Gross Yield: 13.2%
Annual Revenue Potential: $38,929
Occupancy Rate: 56.3%
Average Daily Rate: $173
Wichita, Kansas, looks attractive because it combines low purchase prices with solid, weekend-heavy demand and relatively high gross yields for a stable Midwestern market.
Wichita attracts about 6.9 million visitors a year, paired with a median property price of around $215,000 and an annual revenue potential of $38,929, and strong occupancy.
It's a steady, drive‑to, event‑and‑business market where limited inventory, affordable acquisition, and solid tourism fundamentals support a 13%+ gross yield profile.
3. Fort Wayne, Indiana
Why Selected: Strong family-friendly demand tied to affordability and local attractions makes this an attractive option for those considering investing in Airbnb and vacation rental properties.
Median Property Price: $225,000
Gross Yield: 11%. For those managing vacation rental properties, vacation rental management software like iGMS can help automate operations and maximize returns.
Annual Revenue Potential: $30,603
Occupancy Rate: 53%
Average Daily Rate: $144
Metrics like $30,603 annual revenue potential at 53% occupancy and $144 ADR position Fort Wayne as a steady, low-risk play for Midwest investors seeking cash flow.
Family-friendly attractions like the Fort Wayne Children's Zoo, Science Central, and Foellinger-Freimann Botanical Conservatory draw regional visitors for weekend trips, sustaining year-round demand with strong occupancy.
4. Montgomery, Alabama
Why Selected: Cultural and historical tourism anchored by Civil Rights landmarks.
Median Property Price: $180,000
Gross Yield: 11.3%
Annual Revenue Potential: $32,998
Occupancy Rate: 52%
Average Daily Rate: $120
Montgomery, Alabama, capitalizes on steady cultural tourism demand around Civil Rights sites, delivering reliable 11.3% gross yields at accessible price points.
Montgomery's Civil Rights Trail, including the Rosa Parks Museum, Dexter Avenue Parsonage, and Legacy Museum, attracts over 1 million visitors yearly for educational tours and events.
It's a market with growing tourism spend and a stable $32,998 annual average revenue potential.
5. Spartanburg, South Carolina
Why Selected: Sustained demand driven by arts, education, and regional economic activity.
Median Property Price: $229,000
Gross Yield: 10%
Annual Revenue Potential: $32,576
Occupancy Rate: 58.1%
Average Daily Rate: $164
Spartanburg's median property price of $229,000 supports an 10% gross yield. Arts hubs like the Chapman Cultural Center and Hub City events draw weekend cultural tourists, while local College andUniversity sustain student and family visits year-round.
Corporate and longer-stay guests of 30+ days are strong in Spartaburg. High occupancy at 58.1% reflects strong booking rates, with the $164 ADR enabling solid monthly revenues around $3,000 for optimized listings.
6. Peoria, Illinois
Why Selected: Cultural and historical touristic appeal paired with exceptional yield.
Median Property Price: $145,500
Gross Yield: 15.3%
Annual Revenue Potential: $31,131
Occupancy Rate: 59%
Average Daily Rate: $180
The low median property price of $145,500 is ideal for aggressive cash flow in a beginner-friendly market. It means that investors who look for lower upfront investment and solid and stable returns backed by growing RevPAR in the last few years.
High occupancy in Peoria, IL, reflects broad appeal, especially during the summer months. On top of that, there's no heavy seasonality drop in bookings.
7. Rockford, Illinois
Why Selected: Romantic and leisure travel driven by gardens, museums, and high ADRs.
Median Property Price: $180,000
Gross Yield: 14% – See how you can make money on a vacation rental property.
Annual Revenue Potential: $35,862
Occupancy Rate: 57%
Average Daily Rate: $282
Rockford's $180,000 median property price enables a 14% gross yield, driven by the standout $282 ADR.
Rockford's gardens, museums like the Rockford Art Museum, and romantic venues draw couples and families for weekend escapes, sustaining high ADRs via scenic experiences.
It's also a budget-friendly option for investors with a median price under $300,000.
8. Fairbanks, Alaska
Why Selected: Year-round adventure tourism and northern lights attraction.
Median Property Price: $341,000
Gross Yield: 15.1%
Annual Revenue Potential: $49,459
Occupancy Rate: 66.5%
Average Daily Rate: $224
Fairbanks, Alaska, thrives on year-round adventure tourism and northern lights viewing, offering a compelling 15.1% gross yield backed by high occupancy and revenue.
The $49,459 annual revenue potential at 66.5% occupancy and $224 ADR positions it as a top performer.
Alaska's remote appeal limits the number of STRs, enhances pricing power, and occupancy stability despite harsh winters.
9. Hazel Park, Michigan
Why Selected: Walkable, affordable urban stays near Detroit attract short-trip travelers.
Median Property Price: $172,674
Gross Yield: 14.67%
Annual Revenue Potential: $30,684
Occupancy Rate: 53%
Average Daily Rate: $170
Walkable streets, local diners, and easy access to Detroit's sports, music, and cultural scenes draw short-stay visitors for 1-3 night urban escapes.
Hazel Park's $172,674 median property price is pretty low if compared to the strong occupancy you can expect.
Mashvisor listed this city as number one among $2,000 to $3,000 monthly income based on their proprietary data.
10. Akron, Ohio
Why Selected: Outdoor and cultural tourism anchored by national park access.
Median Property Price: $130,000
Gross Yield: 11.7%
Annual Revenue Potential: $31,207
Occupancy Rate: 55.2%
Average Daily Rate: $245
Akron, Ohio, benefits from its proximity to Cuyahoga Valley National Park and cultural draws, supporting a solid 11.7% gross yield on reasonably priced properties. Akron's low $130,000 median property price enables competitive 11.7% gross returns.
Ohio's permissive regulations ease entry. Neighborhoods near the park or downtown offer premium upside for scalable, family-focused investments.
Before Making a Final Investment Decision
Choosing your investment strategy must be an informed decision. Take into account:
- Revenue projections based on market data
- Your budget and financing options
- Location proximity so you could stay on top of property management
- Local regulations should be more lenient with short-term rentals
iGMS can definitely simplify vacation rental management. We help property managers and Airbnb hosts stay in the game long term. Daily operations like cleaning, managing multiple calendars, and guest communication are handled with maximum efficiency.
About the Author
Zorica Milinkovic is a B2B SaaS writer who is passionate about psychology, marketing, and, when inspiration strikes, cooking. You can find her on LinkedIn.
