In the ever-evolving landscape of short-term vacation rentals, the latest insights are in. LawnStarter, a company in landscaping and home services, has unveiled its highly anticipated list of the Best Cities to Own a Vacation Rental for 2023. These rankings shed light on crucial factors that can significantly impact the success of your vacation rental investment on platforms like Airbnb and Vrbo.
This comprehensive analysis took into account over 180 prominent cities across the United States, dissecting them across six key categories. The evaluation encompassed legal restrictions surrounding short-term rentals, occupancy rates, revenue potential, and operational costs, incorporating a total of 18 essential metrics.
Whether you’re a seasoned vacation rental property owner or a prospective investor, these insights offer invaluable guidance for selecting the ideal location for your short-term rental venture.
The Top 10: Cities Leading the Vacation Rental Charge
- Durham, NC
- Birmingham, AL
- Milwaukee, WI
- Mobile, AL
- Anchorage, AK
- Winston-Salem, NC
- Indianapolis, IN
- Rochester, NY
- Mesa, AZ
- Charlotte, NC
Navigating the Bottom 10: Cities with Vacation Rental Challenges
- Huntington Beach, CA
- Sunnyvale, CA
- Pasadena, CA
- Des Moines, IA
- San Francisco, CA
- Springfield, MA
- Long Beach, CA
- Palmdale, CA
- Santa Rosa, CA
- Los Angeles, CA
Disrupting the Top 10
This year’s rankings brought significant changes with the introduction of the Legality category, penalizing cities with legal limitations on rental durations, guest numbers, and property types. This shift had a notable impact, causing former top-ranking cities such as Miami, New York, and Las Vegas to plummet in the standings.
Tightening the Vacation Rental Reins
Across the nation, cities, both big and small, are adopting more stringent regulations on short-term rentals. A striking eleven cities, including Boston and New York, found themselves at the bottom of the Legality category.
Solid Returns Amidst Challenges
Surprisingly, Boston emerged as the leader in Revenue Potential, averaging an impressive $61,445. This put it nearly $13,000 ahead of Charleston, South Carolina, which claimed the second spot at $48,713. Both cities face regulatory hurdles, with South Carolina currently considering legislation to curtail local government oversight of short-term rentals.
Despite confronting strict regulations and lower occupancy rates, Los Angeles managed to offer lucrative opportunities for hosts, ranking 11th in average daily rates at $216. New York, previously an Airbnb stronghold, experienced a dramatic transformation with a crackdown leading to the removal of nearly 15,000 local listings between August and September 2023.
Risk and Rewards
Vacation rentals in Nashville, Tennessee topped the charts with the highest average daily rate at $260, followed closely by Austin and Washington. However, all three cities grapple with substantial initial investments, legal constraints, and occupancy rates below the 42% city average.
Suburban Appeal
Hialeah, Florida, and Roseville, California shared the crown for the highest occupancy rate at 79% over the past year. However, hosts in these cities often charged lower daily rates, possibly due to a lack of entertainment options. In stark contrast, Corpus Christi, Texas, claimed the lowest occupancy rate in the ranking, standing at just 10%.