Buying a vacation rental can feel like a gamble. Sometimes it pays off quickly with steady guest bookings. Other times, you’re left wondering if you picked the right neighborhood, or even the right city. And that’s the tricky part: location can make or break your returns.
So, if you’re thinking about dipping into short-term rentals, or maybe you’re already a seasoned real estate investor looking for your next property, it helps to know where the numbers actually work in your favor. Median home price, rental yields, property taxes, and local tourism all play a part. Not glamorous research, maybe, but crucial if you want a consistent income.
Let’s look at a few U.S. cities where short-term rental property investment isn’t just hype. These places have strong rental demand, steady tourism, and market trends that give investors a real opportunity.
What Actually Makes a City Worth Investing In?
Everyone’s checklist is different, but here are the main factors that keep coming up when you’re eyeing a short-term rental:
- Home prices vs. rental rates: If the median home price is sky-high, your nightly rates need to keep pace or you’ll struggle with cash flow.
- Gross rental yield: A simple way to measure return compared to purchase price. For vacation rentals, higher occupancy plus peak-season pricing can help boost this.
- Property taxes and insurance costs: Not fun to think about, but they can eat into profits. Coastal markets, for example, might mean higher premiums.
- Tourism and jobs: Cities with a strong job market and steady inflow of visitors tend to have both long-term stability and year-round rental demand.
That’s the clean version. The reality? Some cities just feel like they’re growing. More visitors, new restaurants, fresh energy. And when you’re running a short-term rental, that vibe matters just as much as the spreadsheets.
Top U.S. Cities Worth Considering for Short-Term Rental Investment
1. Austin, Texas
Austin has gone from quirky college town to full-on tech hub, and its festivals (SXSW, ACL) keep tourists flooding in. Yes, home prices are higher than they were a decade ago, but short-term demand hasn’t slowed down.
- Median home price: $450,000–$475,000
- Rental yields: Around 5–6%
- Property taxes: High effective property tax rate (1.6–2%), but no state income tax
For short-term rental owners, the draw is year-round events and a booming visitor scene. Even if margins are tighter, the city’s strong job market and tourism keep homes booked.
2. Atlanta, Georgia
Atlanta is affordable compared to other metros, and it’s busy—film crews, business travelers, and tourists all fuel the short-term market.
- Median sale price: About $370,000
- Rental yields: 6–7%
- Property taxes: Lower than average
It’s not just about numbers. Atlanta has a steady stream of visitors and neighborhoods with character, making it attractive for both guests and investors.
3. Orlando, Florida
Orlando practically defines vacation rentals. Theme parks keep the city full of families on short stays, which means consistent bookings if you buy the right property type.
- Median home price: $390,000
- Rental yields: 5–7%
- Insurance/taxes: No state income tax, but hurricane-related insurance costs can sting
Orlando is a textbook example of a short-term rental market, characterized by high rental demand, strong returns, and a steady tourism base. If you’re looking for a vacation rental that stays booked, this one’s tough to beat.
4. Nashville, Tennessee
Nashville has become one of the hottest short-term rental markets in the U.S., thanks to its music scene, nightlife, and constant stream of events. From bachelorette parties to live concerts, demand for vacation rentals here is steady year-round.
- Median home price: Around $425,000.
- Rental yields: 6–7% depending on location.
- Property taxes: Moderate, about 0.7–0.8%.
The trick is navigating local regulations, which have tightened in recent years. Still, for investors who can secure the right property type in a legal zone, Nashville offers a mix of strong rental income and long-term property appreciation. It’s a city where short-term rentals fit naturally into the lifestyle of both locals and travelers.
5. San Diego, California
San Diego is pricier than most markets on this list, but it earns its spot because of nonstop tourism. Think pristine beaches, perfect weather, and a mix of family-friendly attractions like the San Diego Zoo and SeaWorld. Vacation rentals here are almost always in demand.
- Median sale price: Around $850,000.
- Rental yields: Closer to 4–5%, but offset by significant property appreciation.
- Property taxes: Roughly 1%, though insurance costs can be higher in coastal areas.
For real estate investors, San Diego is less about cheap entry and more about stability. Home values have held strong even during downturns, and rental prices remain high thanks to limited supply.
6. Charlotte, North Carolina
Charlotte mixes business travel with a growing leisure scene. From banking to craft beer, people keep flying in, and that supports both long- and short-term rental demand.
- Median home price: $380,000
- Rental yields: 5–6%
- Effective property tax rate: Lower than average
Charlotte won’t give you the cheapest homes, but steady housing demand and population growth make it a balanced pick.
7. Dallas, Texas
Dallas is huge, meaning you’ll find a mix of property types, from condos near downtown to larger houses in family-friendly suburbs.
- Median sale price: $375,000
- Rental yields: Around 5%
- Property taxes: High, but no state income tax
The market is competitive, but Dallas has year-round rental demand thanks to business travel, sports, and conventions.
8. Cleveland, Ohio
Cleveland might not be flashy, but short-term investors love its cash flow. Between medical centers, events, and tourism around the lake, there’s steady booking potential.
- Median home price: Under $200,000
- Gross rental yield: 9–10%
- Property taxes: Around 1.5%
If you’re chasing appreciation, Cleveland’s not your market. But if you want reliable rental income from a low-cost investment, it’s hard to beat.
Making the Most of Your Short-Term Investment
The best cities for rental property investment aren’t just about spreadsheets, but about what you want out of the house. Some investors are after steady cash flow. Others want significant property appreciation. And for many, it’s about owning a place that doubles as a vacation spot they can enjoy, too.
Once you do buy, the next step is getting it in front of travelers. That’s where Houfy comes in. By listing your vacation rental on Houfy, you can connect directly with guests, skip extra booking fees, and manage your property your way. It’s a straightforward way to turn that new investment into a real income stream.
This article is for informational purposes only and should not be considered financial or legal advice. Real estate investing involves risk, and market conditions can change quickly. Always consult with a licensed real estate professional, financial advisor, or tax specialist before making investment decisions.
