2022's Best Cities to Own a Vacation Rental

Woman greeting a couple inside her vacation rental home

Thanks to vacation rental marketplaces like Airbnb and Vrbo, anyone can earn extra cash by renting out their spare room, mother-in-law suite, or entire home to tourists.

In the U.S., short-term rental hosts can rake in an average of over $44,000 per year, according to market analysis firm AllTheRooms. But as with all real estate investments, your income potential depends heavily on where you buy your vacation rental property.

To help you find the right spot for your future BnB, LawnStarter ranked 2022’s Best Cities to Own a Vacation Rental.

We compared nearly 190 of the biggest U.S. cities based on revenue potential, initial investment costs, and average expenses. We also factored in entertainment options for guests, public safety, and climate.

Check out the top cities to own a vacation rental below, followed by key insights from our data analysts and advice from industry experts.

And when your new rental needs landscaping or lawn care, come back to LawnStarter — it’s kind of what we do.

City Rankings
Highlights and Lowlights
Ask the Experts
Methodology
Why This Study Matters

City Rankings

See how each city fared in our ranking:

Overall Rank (1=Best)	City	Overall Score	Revenue Potential Rank	Initial Investment Rank	Overhead Rank	Entertainment Rank	Safety Rank	Climate Rank
1	Miami, FL	67.18	1	138	22	7	146	46
2	New York, NY	66.98	4	154	115	1	68	56
3	New Orleans, LA	60.49	7	99	39	10	109	55
4	Cincinnati, OH	59.20	2	88	51	41	120	96
5	Las Vegas, NV	58.99	26	81	70	4	18	163
6	Dayton, OH	58.53	9	29	12	105	51	102
7	Tampa, FL	57.57	14	63	94	24	15	57
8	Knoxville, TN	57.56	49	25	7	50	78	68
9	Orlando, FL	57.29	53	37	41	8	143	71
10	Augusta, GA	57.18	20	16	15	118	69	119
11	Virginia Beach, VA	56.24	6	66	146	43	19	52
12	Nashville, TN	56.14	8	95	81	19	126	99
13	Hialeah, FL	56.12	51	138	2	178	96	46
14	Winston-Salem, NC	56.04	33	80	37	83	11	80
15	Eugene, OR	56.02	10	120	67	74	48	45
16	Boston, MA	55.73	3	159	133	16	37	69
17	Cleveland, OH	55.41	85	28	8	46	84	104
18	San Antonio, TX	55.35	17	30	98	21	60	150
19	Pittsburgh, PA	54.58	16	97	59	38	117	94
20	Indianapolis, IN	54.47	82	21	33	37	73	111
21	Mobile, AL	54.34	79	26	6	97	183	62
22	Jacksonville, FL	54.21	55	33	53	34	145	67
23	Chicago, IL	54.20	70	111	129	3	81	127
24	Los Angeles, CA	54.15	19	166	110	2	186	12
25	Salem, OR	54.10	36	115	76	104	57	44
26	Syracuse, NY	53.99	32	32	65	112	41	133
27	Montgomery, AL	53.97	106	12	16	107	62	110
28	Milwaukee, WI	53.97	46	71	54	39	55	123
29	San Bernardino, CA	53.97	97	123	4	167	157	13
30	Fresno, CA	53.95	11	102	25	110	179	121
31	St. Louis, MO	53.90	84	59	17	27	148	124
32	Clarksville, TN	53.76	95	19	19	123	61	99
33	Birmingham, AL	53.73	118	31	3	71	172	82
34	Columbus, OH	53.40	60	56	75	42	52	109
35	Albuquerque, NM	53.23	25	61	71	30	109	166
36	Buffalo, NY	53.09	129	83	10	59	27	107
37	Detroit, MI	52.85	76	89	28	52	105	118
38	Fort Wayne, IN	52.83	114	13	27	101	40	126
39	Macon, GA	52.74	117	5	31	141	83	116
40	Tallahassee, FL	52.65	104	50	14	93	135	103
41	Grand Rapids, MI	52.61	91	58	38	77	25	143
42	Lexington, KY	52.56	80	70	77	63	38	83
43	Richmond, VA	52.54	58	86	50	51	146	98
44	Durham, NC	52.46	23	92	95	90	139	85
45	Philadelphia, PA	52.38	146	98	23	17	115	74
46	Rochester, NY	52.24	66	62	63	60	92	120
47	Charlotte, NC	52.21	47	78	130	29	92	73
48	Dallas, TX	52.00	34	38	134	23	124	134
49	Akron, OH	51.98	124	24	24	117	73	112
50	Tucson, AZ	51.88	144	84	5	22	71	169
51	Little Rock, AR	51.85	86	6	61	85	148	115
52	Colorado Springs, CO	51.83	40	91	91	40	46	167
53	Baton Rouge, LA	51.77	113	69	11	95	178	84
54	St. Petersburg, FL	51.64	115	63	80	33	100	57
55	Greensboro, NC	51.56	94	35	43	75	159	80
56	Vancouver, WA	51.36	98	136	79	105	27	41
57	Toledo, OH	51.22	136	55	20	102	44	149
58	Chattanooga, TN	51.09	108	48	46	58	148	93
59	Tacoma, WA	51.05	30	151	100	78	148	38
60	Memphis, TN	50.97	153	1	40	54	173	97
61	Des Moines, IA	50.86	59	85	90	87	73	156
62	Tempe, AZ	50.80	48	103	35	91	102	180
63	Fayetteville, NC	50.79	174	4	13	110	140	85
64	Columbus, GA	50.69	164	9	30	134	64	91
65	Providence, RI	50.67	90	122	45	61	86	90
66	Killeen, TX	50.67	145	2	47	174	106	131
67	Oxnard, CA	50.59	13	160	114	154	160	13
68	Sacramento, CA	50.55	62	148	93	48	81	59
69	Norfolk, VA	50.53	162	66	26	99	108	52
70	Raleigh, NC	50.49	75	76	122	44	114	85
71	Louisville, KY	50.47	110	57	119	36	33	92
72	Port St. Lucie, FL	50.42	157	36	101	144	12	43
73	Oceanside, CA	50.31	12	162	135	96	137	8
74	Modesto, CA	50.29	56	121	56	160	158	75
75	Kansas City, KS	50.23	112	51	29	132	161	144
76	Honolulu, HI	50.16	15	183	150	9	176	37
77	Springfield, MO	50.06	189	3	1	80	65	125
78	Spokane, WA	50.00	147	87	32	68	54	148
79	Phoenix, AZ	49.91	72	103	73	26	92	180
80	Glendale, AZ	49.85	74	103	34	125	77	180
81	San Diego, CA	49.77	67	162	154	6	130	8
82	Huntsville, AL	49.71	158	10	64	92	97	89
83	Murfreesboro, TN	49.67	101	95	69	119	116	99
84	Oklahoma City, OK	49.60	119	18	89	55	125	153
85	Brownsville, TX	49.58	169	17	42	155	17	122
86	Fort Worth, TX	49.51	57	38	145	47	107	134
87	Atlanta, GA	49.48	123	65	148	20	99	54
88	St. Paul, MN	49.48	96	93	83	69	35	158
89	McAllen, TX	49.45	137	6	109	163	14	150
90	Lubbock, TX	49.37	93	23	85	115	79	170
91	Baltimore, MD	49.29	130	100	97	28	102	95
92	Riverside, CA	49.26	116	123	108	113	171	13
93	Salt Lake City, UT	49.21	35	119	82	45	182	172
94	Boise, ID	49.20	61	134	106	61	20	160
95	Tulsa, OK	49.15	139	14	72	64	123	155
96	Rockford, IL	49.09	111	15	123	135	29	154
97	Kansas City, MO	49.05	142	51	74	49	104	144
98	Cape Coral, FL	49.05	132	47	125	79	42	72
99	Olathe, KS	48.94	27	51	164	177	10	144
100	Seattle, WA	48.80	39	151	173	11	58	38
101	Mesa, AZ	48.79	87	103	66	86	45	180
102	Minneapolis, MN	48.75	92	93	120	32	58	158
103	Denver, CO	48.72	41	130	126	18	129	175
104	Laredo, TX	48.69	156	22	102	171	2	150
105	Austin, TX	48.53	54	118	160	14	134	131
106	El Paso, TX	48.48	166	11	96	75	3	161
107	Worcester, MA	48.43	131	117	60	120	72	113
108	Springfield, MA	48.29	167	116	18	153	122	69
109	Denton, TX	48.00	121	38	118	136	80	134
110	Houston, TX	47.97	155	74	128	15	154	105
111	Long Beach, CA	47.95	29	166	88	66	187	36
112	Fort Lauderdale, FL	47.87	83	138	147	25	177	46
113	Irving, TX	47.85	109	38	124	149	90	134
114	Madison, WI	47.85	88	72	140	67	69	157
115	Sioux Falls, SD	47.76	125	27	107	97	56	173
116	Pomona, CA	47.69	50	166	49	182	189	13
117	Newark, NJ	47.53	134	154	21	151	34	77
118	Pasadena, TX	47.48	143	74	87	184	138	105
119	Santa Ana, CA	47.44	69	166	55	157	164	13
120	Amarillo, TX	47.43	141	34	78	109	89	171
121	Hollywood, FL	47.37	154	138	58	87	144	46
121	Wichita, KS	47.37	171	8	62	82	84	165
123	Moreno Valley, CA	47.34	163	123	99	189	155	13
124	Rancho Cucamonga, CA	47.28	81	123	163	167	111	13
125	Ontario, CA	47.24	181	123	57	167	128	13
126	Glendale, CA	47.07	28	166	121	137	167	13
127	Portland, OR	46.90	178	136	142	13	49	41
128	Lincoln, NE	46.90	133	49	116	87	47	174
129	McKinney, TX	46.49	43	38	175	124	13	134
130	Chula Vista, CA	46.41	73	162	149	165	91	8
131	Gilbert, AZ	46.36	21	103	168	137	4	180
132	North Las Vegas, NV	46.31	184	81	36	152	5	163
133	Jackson, MS	46.21	187	60	9	129	168	117
134	Anchorage, AK	46.14	44	90	159	35	188	188
135	Arlington, TX	45.99	150	38	131	116	119	134
136	Stockton, CA	45.85	165	135	48	163	140	75
137	Fort Collins, CO	45.75	151	101	84	70	86	175
138	Salinas, CA	45.69	135	182	44	171	169	1
139	Garden Grove, CA	45.62	78	166	104	184	162	13
140	Palmdale, CA	45.47	77	166	112	180	163	13
141	Alexandria, VA	45.41	5	144	181	81	118	63
142	Corona, CA	45.40	140	123	158	173	142	13
143	Cary, NC	45.38	65	76	178	129	6	85
144	Paterson, NJ	45.36	128	154	92	186	63	66
145	Omaha, NE	45.34	161	20	137	53	88	162
146	Miramar, FL	45.22	152	138	136	187	76	46
147	Fullerton, CA	45.21	22	166	153	158	164	13
148	Fontana, CA	44.90	183	123	132	187	66	13
149	Plano, TX	44.25	64	38	176	114	50	134
150	Corpus Christi, TX	44.24	185	68	111	73	101	108
151	Washington, DC	44.21	122	144	167	12	175	63
152	Anaheim, CA	44.19	103	166	127	65	174	13
153	Midland, TX	44.09	99	73	169	158	7	168
154	Jersey City, NJ	43.94	63	154	161	128	39	77
155	Lakewood, CO	43.85	105	130	113	147	166	175
156	Grand Prairie, TX	43.71	176	38	141	178	67	134
157	Thornton, CO	43.69	107	130	139	181	53	175
158	Orange, CA	43.36	31	166	166	139	136	13
159	Bakersfield, CA	43.28	179	79	105	142	184	114
160	Pembroke Pines, FL	43.20	177	138	138	155	95	46
161	Pasadena, CA	43.06	42	166	162	99	185	13
162	Yonkers, NY	42.97	127	154	152	170	9	77
163	Reno, NV	42.93	149	147	68	56	169	189
164	Scottsdale, AZ	42.68	37	103	180	31	43	180
165	Santa Rosa, CA	42.60	159	161	143	84	127	13
166	Bridgeport, CT	42.54	182	150	117	176	26	61
167	Arlington, VA	42.22	52	144	182	94	30	63
168	Lancaster, CA	42.21	175	166	52	166	180	13
169	Peoria, AZ	41.84	170	103	144	139	21	180
170	San Francisco, CA	41.64	102	184	184	5	35	1
171	Aurora, CO	41.52	180	130	86	125	97	175
172	Oakland, CA	41.48	89	184	155	72	148	1
173	Chandler, AZ	41.33	160	103	157	107	32	180
174	Aurora, IL	41.22	168	111	165	148	8	127
175	Torrance, CA	41.22	45	166	171	145	180	13
176	Elk Grove, CA	41.02	148	148	170	183	22	59
177	Joliet, IL	40.81	186	111	151	161	22	127
178	Overland Park, KS	40.74	172	51	172	143	24	144
179	Escondido, CA	40.57	188	162	103	125	130	8
180	Frisco, TX	40.20	38	38	185	133	16	134
181	Bellevue, WA	39.96	18	151	186	121	31	38
182	Hayward, CA	39.14	138	184	156	174	133	1
183	Irvine, CA	39.08	68	166	179	121	121	13
184	Huntington Beach, CA	38.80	100	166	174	103	153	13
185	Naperville, IL	36.18	126	111	189	131	1	127
186	Santa Clarita, CA	35.05	173	166	177	146	113	13
187	San Jose, CA	34.82	71	188	183	56	155	1
188	Sunnyvale, CA	32.49	24	188	187	161	130	1
189	Fremont, CA	29.88	120	184	188	150	112	1

Note: The ranking above assumes that vacation rentals are allowed in at least some capacity, such as short-term accommodations and bed and breakfasts, in each city. Please check with your city and/or state for specific rules.

Infographic showing the Best Cities to Own a Vacation Rental, a ranking based on investment costs, expenses, revenue potential, and more

Highlights and Lowlights

Southern Hospitality

The American South isn’t just welcoming toward visitors — it’s also inviting to real estate investors. Six of our Top 10 Cities to Own a Vacation Rental are located in this warm region.

Three of them are among the most popular U.S. tourist destinations: Miami tops our list, eclipsing New York by a mere 0.2 points, while New Orleans (No. 3) and Orlando, Florida (No. 9), fill the other two prime spots. All three cities ranked in the top 10 of our Entertainment category. Miami and New Orleans promise the highest ROI (return on investment), but Orlando requires significantly lower upfront capital.

Tampa, Florida (No. 7), Knoxville, Tennessee (No. 8), and Augusta, Georgia (No. 10), are the other three top finishers from the South. Although they aren’t your typical vacation hotspots, nightly rates are competitive here. Host expenses in Augusta are particularly low, putting more money back in your pocket, but Tampa and Knoxville are relatively safer for tourists.

California in the Red

The Golden State dominates the bottom 10 of our ranking, claiming seven out of the 10 worst spots. Surprisingly, they’re all suburbs, such as San Francisco’s Fremont in last place, Los Angeles’ Huntington Beach at No. 6, and San Diego’s Hayward in eighth.

Skyscraping property price tags and monthly expenses, combined with generally low average revenue, would leave short-term rental hosts with a poor-looking balance sheet. Sunnyvale (second worst overall) is the lone exception in the Revenue Potential category (No. 24). But that and an ideal climate are all this Bay Area outlier has going for it.

Further dragging down California’s fringe cities are the lack of amusement options — except in San Jose (No. 56 in the Entertainment category). Even if guests were to leave their accommodations for a quick jaunt in the neighborhood, though, they won’t feel very secure. All seven cities rank below average in Safety.

If you really want to host a rental in California, stay in Los Angeles (No. 24).

Coastal Cha-Ching

Our data shows a strong correlation between high revenue potential and a coastal — or, in Honolulu’s case, island — location.

Invest in a property within Miami, Boston, New Orleans, and Los Angeles, and you’d be almost guaranteed to see money roll in. Many tourists imagine staying in a seaside (or near-water) retreat for their holidays, so it’s no surprise that these cities would haul in the biggest returns from their short-term lets. Miami, for example, ranked first in both average nightly rate and annual revenue.

A few inland exceptions stand out among our top 10 in the Revenue Potential category, though: Country music capital Nashville, Tennessee, needs no explanation, while Cincinnati simply has drawn more tourists over the years. Flyover city Dayton, Ohio, is more of a “fly-into” city — aviation nerds flock here every summer to talk and see planes. Plus, Dayton “Daycations” grew popular during the pandemic.

However, look toward smaller cities if you want to maximize bookings. Occupancy rates are highest in cities like Garland, Texas; Vancouver, Washington; Pembroke Pines, Florida; and Overland Park, Kansas. These suburbs border big cities and they generally charge cheaper rates, so they likely catch all the overflow and budget tourists.

Ask The Experts

Venturing into the vacation rental business can be tricky, especially for novices. To help first-time short-term rental owners navigate the process, we turned to a panel of industry experts for advice. Read their thoughts below.

What’s the outlook of the vacation rental industry for the next 1–3 years? What about long-term?
In a market that’s saturated with vacation rentals, how can an owner make theirs stand out from the competition?
What are your top three tips for people looking to invest in a vacation rental?

Gene Brothers

Associate Professor, Department of Parks, Recreation and Tourism Management

Maggie Daniels, PhD

Professor of Tourism and Events Management

Robert Alex Robertson, Ph.D.

Associate Professor and Liaison Inter-College Travel & Tourism Initiatives

Gene Brothers

Associate Professor, Department of Parks, Recreation and Tourism Management

North Carolina State University

Gene Brothers

Associate Professor, Department of Parks, Recreation and Tourism Management

North Carolina State University

What’s the outlook of the vacation rental industry for the next 1–3 years? What about the long term?

Destinations are becoming more aware that more accommodations, and thus more visitors, are not necessarily a good thing. Destinations such as Virginia Beach, Myrtle Beach, and Panama City Beach that didn’t figure this out until it was too late are regretting their development decisions.

So, My prediction is that destinations like Outer Banks, NC and Boulder, CO will steadily grow, but with limits set and moratoriums on new construction. The growth of new properties will be in new destinations, but also in VRBO and Airbnb to take advantage of existing opportunities without creating new accommodations.

In a market that’s saturated with vacation rentals, how can an owner make theirs stand out from the competition?

Destination marketing gets the eyeballs to a website for booking, but visitors are looking for both value and convenience to make their choice. P1p fills one of the convenience gaps.

Vacation renters don’t want to spend their afternoons stocking the fridge with fresh necessities from the crowded Walmart. They also want to be responsible and purchase local produce, which is farm fresh. Other such conveniences, coupled with the booking, could tip the balance.

What are your top three tips for people looking to invest in a vacation rental?

Location, location, location.

First, the investment needs to fit a personal lifestyle rather than cash flow. So, pick a location that is attractive for the investor (activities, landscape, close to family).
A location that isn’t saturated with VR. Values will appreciate, but where demand is high in saturated locations, older properties will be replaced with newer and higher-priced development. Eventually, investments will become replaced at a depreciated value.
Finally, the location should have the destination stewardship mentality, which is that a destination should be a wonderful place to live with a sustainable plan to manage the vacation economy. More than one-third of the economy is dependent upon tourism, and the residents become resentful.

Some cities and states impose strict regulations on short-term rentals. How can hosts ensure they’re following all applicable local and state regulations before advertising their space?

There are two obvious sources of this information. The first is the online marketing platform(s) they intend to use to advertise their property. In recent years, destinations have sued these online platforms for not collecting the required occupancy taxes, and the destinations have won.

These lawsuits have put the marketing and sales platforms on notice that they need to pay attention to local and state regulations. A homeowner can read the conditions for listing a short-term rental, which most likely will include regulations that must be followed.

Second, there is usually someone within the local government who handles the dissemination of local and state regulations and restrictions on short-term rentals. A homeowner who is considering a short-term rental offering should do their research, find this person or government division, and get to know the ins and outs of the regulations. Many of these regulations are in place to protect the homeowner.

What hidden costs, if any, should short-term rental owners watch out for?

There are many costs to a short-term rental that are not hidden but just left out of the cash flow equation. The cost of a rental turnover is a recurring expense that homeowners will incorporate into each rental.

However, an owner must also consider maintenance, repairs, and wear and tear on the property over a longer period. It is good to have a depreciation schedule for all these assets separately –– the property, appliances, furnishings, etc. –– so that the life of the assets can be included in a rental pricing structure. Each rental should be paying the fair share of the costs the property owner must bear.

What are the top three amenities that will attract the most guests?

Beyond providing a clean and safe accommodation experience, a homeowner should consider the following.

The top asset would be a surprisingly amazing view. These are difficult to come by and so are highly valued. A homeowner must be extremely aware, however, of the community and what effects the location of the great view has on the off-property views.
In North Carolina, the Ridge Law restricts structures to be no higher than the tree line due to the Sugarloaf condominiums in Western NC. Great views can create unsightly intrusions from offsite locations.
The second would be unique and creative activities and experiences available within a reasonable radius of the property. After all, the destination location is a strong reason that motivates visitation. These “attractions” would not include go-cart tracks, hyped tourist gift shopping, etc.; instead, they would be local experiences that are unique to the destination.
Finally, a variety of local food experiences. Are there options to provide vacationers with local farm products? Can visitors schedule farm visits and experience pick-your-own options for produce needed for their stay? Are there award-winning chefs in the destination?

Maggie Daniels, PhD

Professor of Tourism and Events Management

George Mason University, College of Education and Human Development, School of Sport, Recreation and Tourism Management

Maggie Daniels, PhD

Professor of Tourism and Events Management

George Mason University, College of Education and Human Development, School of Sport, Recreation and Tourism Management

What’s the outlook of the vacation rental industry for the next 1–3 years? What about the long term?

The past year showcased an explosion in the vacation rental demand, with increased pricing to match. The short-term and long-term trajectory remains the same, where demand will exceed supply in hotspot areas during the high season.

With the average daily rate (ADR) for vacation rentals climbing, hotel chains and property management companies have stepped into the mix by expanding their portfolios to include private home vacation rentals.

In a market that’s saturated with vacation rentals, how can an owner make theirs stand out from the competition?

The saturation level varies geographically, seasonally, and psychologically. Motivated travelers will optimize their searches by working a year or more in advance of the travel dates.

The budget-conscious tourist may wait until the last minute to catch a deal but will need to be flexible. Vacation rental owners can stand out through staging, competitive pricing, and service, all of which should have the end goal of getting outstanding reviews of the property.

First, when creating a listing profile for potential guests, owners should stage the property as if they were going to sell it. The images should convey that the property is immaculate, homey, and move-in ready.

Modest investments in décor, such as modern comforters with pintuck pleats or jacquard stripes, will photograph beautifully and give an upscale appearance. Fresh paint in a soothing tone is a must, and one or two large pieces of art, such as wrapped canvases of photographed local sites, will offer focal points.

Ditch the knickknacks and strive for an open, fresh appearance. Importantly, do not mislead. A sure way to get a poor review is to showcase a beautifully appointed home that has, in actuality, suffered from overuse.

Second, price the rental competitively. When preparing to list, look at similar properties, compare the amenities, and list slightly under those with more reviews. Be transparent about what is and is not included in the rental cost.

If amenities such as linen service and parking are included, be certain to detail these benefits. If there are restrictions, such as a single parking pass included with the rental, make sure that any restrictions or extra fees are clearly stated. Renters do not want to be surprised by hidden charges and inconveniences at the last minute.

Third, ensure that you can provide excellent service. In almost all cases, it will make sense to outsource cleaning, linen service, maintenance, and pest management. Guests should have ready access to a number to call in case of emergency, whether small or large.

If they walk into the property, and the refrigerator is full of the previous renter’s food, the air conditioner is a wall unit that doesn’t function, there is no Wi-Fi, or ants are crawling all over the countertops, the tone of their stay will be negatively impacted from the onset, and it will be difficult to recover.

What are your top three tips for people looking to invest in a vacation rental?

First, select a destination you personally love and are committed to visiting on a regular basis. Even with a property management company on board, the owner’s personal touch is essential to ensure the upkeep of the property.
Second, choose a destination that has a four-season appeal; otherwise, the income potential will be minimized. With this in mind, factor recurring costs into the purchase decision and rental rate. If you opt to invest in a property with massive, vaulted ceilings, the HVAC costs associated with this aesthetic may devour your profits.
Third, select the best neighborhood you can afford. Safety and security are paramount to many renters, especially those with young children. Highlight safety features and the benefits of the selected neighborhood. Showcase both indoor and outdoor views of the property, as well as amenities located within a 10-mile radius.

Some cities and states impose strict regulations on short-term rentals. How can hosts ensure they’re following all applicable local and state regulations before advertising their space?

City and state governments have legitimate concerns regarding the negative impacts of neighborhoods being overrun with illegal short-term rentals.

The character, safety, and long-term appeal of a neighborhood will shift dramatically when confronted with a revolving door of visitors who are not invested in the community on a personal level.

Potential investors in rental properties must do their homework prior to purchase by reviewing dwelling laws, administrative codes, zoning resolutions, and legal consequences.

What hidden costs, if any, should short-term rental owners watch out for?

On the owners’ side, they must be aware of the income tax laws and liability insurance fees associated with renting out property. For renters, beware of the hidden costs of “resort fees,” a general misnomer that can apply to just about anything and is often tagged on at the last minute.

Be certain you are comparing apples to apples when conducting your search, as some companies estimate the total cost in their initial listing, and others wait until your booking process is almost finalized, when all of a sudden, the cost doubles.

What are the top three amenities that will attract the most guests?

Location, location, location.

With all things being equal, potential guests will compare properties within the same general vicinity. They will then move on to the layout of the property, with the number of bedrooms being a priority, as well as the presence or absence of key features, such as air conditioning.

Air conditioning has emerged as an important consideration as global warming has resulted in unbearably warm settings in destinations that are generally not reliant on this amenity, with owners who have not made the investment receiving critical online feedback.

Robert Alex Robertson, Ph.D.

Associate Professor and Liaison Inter-College Travel & Tourism Initiatives

University of New Hampshire, College of Life Sciences and Agriculture, Department of Natural Resources and the Environment

Robert Alex Robertson, Ph.D.

Associate Professor and Liaison Inter-College Travel & Tourism Initiatives

University of New Hampshire, College of Life Sciences and Agriculture, Department of Natural Resources and the Environment

What’s the outlook of the vacation rental industry for the next 1–3 years? What about the long term?

I am of the opinion that the vacation rental industry will face some significant challenges in the next 1-3 years, as the demand is exceeding the supply.

People that used to rent their houses are now selling them and moving into smaller homes that they don’t plan to rent. The problem is exacerbated by the supply chain issues and increased costs of housing, so there are fewer houses and rentals available.

I don’t have a crystal ball, but I expect that long term, the housing market and supply chain issues will correct themselves, thus enabling more houses on the market available to rent.

In a market that’s saturated with vacation rentals, how can an owner make theirs stand out from the competition?

Price and flexibility. Attention to detail. Owners can make their vacation rentals stand out by ensuring the rental is very clean and attractively furnished and providing several pictures to demonstrate that. In addition, aptly describing the property and all the amenities offered is key.

Vacationers want all of their needs taken care of and a home that is “well stocked.” Of course, waterfront property, a pool, or a hot tub would definitely make one’s property stand out amongst others that don’t offer that.

The rental home should be a reflection of its natural surroundings. If you are making a beach house, then the house should have the feel of a beach house. If it is located in a remote wooded setting, it should have rustic décor. If you are near a theme park, have at least one room that is devoted to that theme.

In general, your home should cater to the people that will rent it most frequently. Repeat business is the name of the game. You also want the home to feel comfortable; it is a good idea to create a house amenities checklist to make sure you’ve stocked up on everything a renter could need during their stay.

What are your top three tips for people looking to invest in a vacation rental?

Location, Location, Location – you can’t go wrong with ocean or lakefront views, and a short drive to restaurants, bars, and stores is a plus. People like to walk, and having a safe and scenic place to walk is becoming a necessity.
Property attraction inside and out, e.g., nicely landscaped, room for vacationers to play yard games, or proximity to open space, such as the beach, recreation trails, parks, etc., clean, well maintained, nicely painted, open floor concept, number of bathrooms commensurate with the number of bedrooms.
Low maintenance property – After all, it’s a vacation home for the owners too, so when you’re there, you don’t want to have to be “fixing the house.”

Some cities and states impose strict regulations on short-term rentals. How can hosts ensure they’re following all applicable local and state regulations before advertising their space?

Talk to the planning board, chat with a local property management firm (as a tentative customer), and consult your local town website for information on the rules that govern short-term rentals. Typically, closing documents will also stipulate the “dos and don’ts” of rental regulations.

What hidden costs, if any, should short-term rental owners watch out for?

They aren’t really “hidden” costs, but there are variable costs. Specifically, the cost of energy is increasing at record rates, so rental owners need to be aware that guests may not be as considerate or “energy conscious” while renting, so the utilities are absolutely something they should watch out for.

What are the top three amenities that will attract the most guests?

Water views
Walking distance to shops, restaurants, live music, etc.
Space, i.e., deck with nice outdoor furniture, a fireplace and/or hot tub

Methodology

For each of the 200 biggest U.S. cities, we gathered publicly available data on the factors listed in the table below.

We then grouped those factors into six categories: Revenue Potential, Initial Investment, Overhead, Entertainment, Safety, and Climate.

We eliminated all cities — 11 total — lacking critical data, which resulted in a final sample of 189 cities.

Next, we calculated weighted scores for each remaining city in each category.

Finally, we averaged the scores for each metro across all categories.

The city that earned the highest average score was ranked “Best” (No. 1), while the city with the lowest was ranked “Worst” (No. 189).

Metric	Weighting	Min. Value	Max. Value	Best
Revenue Potential
Occupancy Rate in Past 12 Months	3	6%	97%	Max. Value
Average Daily Short-Term Rental Rate in Past 12 Months*	3	$34	$427	Max. Value
Revenue in Past 12 Months	3	$3,324	$69,256	Max. Value
Initial Investment
Median Listing Price per Square Foot	4	$100	$871	Min. Value
1-Year Change in Median Listing Price per Square Foot	1	-1.2%	33.5%	Max. Value
Overhead
Median Annual Property Taxes	2	0.29%	3.30%	Min. Value
Average Per-Household Spending on Housekeeping Services	2	$77.15	$450.58	Min. Value
Average Per-Household Spending on Lawn and Garden Services	2	$213.11	$888.97	Min. Value
Average Per-Household Spending on Home Improvements	1	$1,507.86	$7,298.28	Min. Value
Average Per-Household Spending on Utilities, Fuel, and Public Services	2	$2,799.17	$8,977.34	Min. Value
Entertainment
Number of Attractions	5	13	5,618	Max. Value
Safety
Crime Index	1	0	86	Max. Value
Natural Hazards Index	1	9	20	Min. Value
Climate
Historical Average Annual Number of Extremely Hot Days	2	2	169	Min. Value
Historical Average Annual Number of Extremely Cold Days	2	0	192	Min. Value

*Because of various local and state regulations restricting the amount of space and/or time that a property can be operated as a vacation rental, we used a one-bedroom, one-bathroom space for two guests as our base case for average daily rate data.

Sources: AllTheRooms, Federal Reserve Bank of St. Louis, National Oceanic and Atmospheric Administration, National Center for Disaster Preparedness, NeighborhoodScout, TripAdvisor, and U.S. Census Bureau

Why This Study Matters

Purchasing a vacation property to rent to tourists starts with choosing the right location, but amenities are another draw with short-term lodging. Add a fire pit in cold climates or maybe a hot tub, pool, and privacy fence around the yard in a warmer climate to make your home comfortable and relaxing for all who enter.

The more value you can add to your space, the more your guests will appreciate their stay — the extra cash you’ll earn doesn’t hurt, either.

The whole point of a vacation rental is to offer a relaxing space near enough to popular attractions (or the beach or a lake) so that your guests can get away from it all in comfort and style.

Main Photo Credit: Shutterstock