RentalsTechnology

Where should you invest in an Airbnb to see greatest ROI?

Some cities are better for 1-bedroom rentals, while others provide great returns on single-family investment property

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Takeaways:

  • New York City, Washington, D.C., and Los Angeles showed high Airbnb occupancy rates — between 75 and 80 percent.
  • Las Vegas and New Orleans had high occupancy rates and high returns based on average rental prices and Airbnb revenue.
  • A single-family rental investment may be best in cities like Nashville, Chicago, Atlanta and Palm Springs, California.

Not long after Airbnb took over as one of the most popular ways to travel and make some extra cash, data gatherers followed suit. Now that property owners are entrenched in the highly lucrative short-term rental industry, analytics show the best areas of the country to invest in an Airbnb property, list a home as a part-time short-term rental and more.

Data analytics company Airdna recently released a report outlining the most lucrative cities and type of units listed on Airbnb. Using its own data against Zillow home values and Rentometer.com data for long-term rental costs, Airdna found the best cities to have a full-time Airbnb rental.

Dashboard 1

Airdna considers a full-time Airbnb rental to be one that is listed for at least 75 percent of the year and having at least 20 bookings in the past 12 months (between July 2014 and June 2015).

The typical culprits like New York City, Washington, D.C., and Los Angeles showed a high rate of occupancy, between 75 and 80 percent. These cities all had a strong Airbnb return revenue for a one-bedroom apartment between $2,500 and $3,000.

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Cities with lower rent costs, like Jersey City, had a strong return for Airbnb investors. The average rental price was reported at $1,533 with an average Airbnb revenue of $2,505.

Although Airdna reported a low supply of full-time homes in Jersey City, with just 25 on the market, those homes saw an average occupancy rate of 82.74 percent and a total of 1,917 days of reservations.

Miami, Breckenridge (Colorado), Palm Springs (California), Las Vegas and New Orleans all had a surprisingly low occupancy rate during the 12-month time period studied.

However, Las Vegas and New Orleans showed a high return for an Airbnb rental investment. The average rental cost was $759 in Las Vegas and $1,009 in New Orleans with a respective Airbnb revenue of $2,412 and $2,249.

Airdna found that the most attractive cities for single-family home investment were those with lower home costs, between $200,000 and $300,000, and above-average costs for short-term rentals.

Nashville, Chicago, Atlanta and Palm Springs were all reported to be some of the best places to invest in a home for Airbnb.

The least lucrative, yet most commonly legal, option of leasing out a room in an apartment is most commonly done by actual tenants in an apartment.

The average costs for each cities are intended to be a jumping off point for property managers, as prices range greatly from ZIP code to ZIP code.

Email Kimberly Manning.