As we navigate a market with moderating interest rates, the short-term rental landscape continues to evolve in 2025, attracting real estate investors seeking profitable Airbnb opportunities. The appeal is clear: vacation rentals frequently generate double the cash flow of traditional long-term leases, making them an enticing option for yield-focused investors.
Yet, its not as easy as just pulling up listings in your local market, or choosing to invest in your favorite vacation destination. Picking the right market for your short term rental investment is crucial – as there can be wide variations in regulations, potential profits, seasonality and other factors.
However, don’t despair! As the airbnb market continues to grow and involve, 2025 offers more refined and improving tools to evaluate markets, management companies and technology to manage your airbnb remotely and guidance to pick the best airbnb market for investment regardless of your experience level or where you reside! Here are our picks for 2025:
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Flagstaff, AZ
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Charleston, SC
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Joshua Tree, CA
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Gulf Shores, AL
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Nashville, TN
Picking The Best Market for Investing In Short Term Rentals
Selecting your market for investing in short term rentals has never been more important as the market improves in 2025. As the market heats up, and many investors start to re-enter the purchase market with plenty of capital to deploy, competing for the top properties has never been more important!
As America’s top lender for short term rentals, financing hundreds of top airbnb investors across the country, Easy Street Capital is privy to which markets are providing investors with outsized profits and returns. By evaluating lots of airbnb investments every day and through continued lead sponsorships of the top STR industry conferences, we have a uniquely insightful perspective on where the top investors are headed for airbnb investing in 2025!
Check out our list of top cities for investing in short term rentals (including both classic airbnbs or third-party managed vacation rentals) in 2025.
Top 5 Cities for Airbnb Investments in 2025
Number 1: Flagstaff, Arizona
Flagstaff is a charming mountain town nestled at the base of the San Francisco Peaks, offering visitors a perfect blend of outdoor adventure and small-town charm. As a gateway to the Grand Canyon and home to Arizona’s premier ski resort, it attracts a diverse mix of visitors year-round. The city’s limited hotel inventory, particularly during peak seasons, creates strong demand for short-term rental properties.
While Flagstaff does regulate vacation rentals, the requirements remain manageable for investors. Property owners must obtain a business license and comply with the city’s transient occupancy tax requirements, but the process is straightforward and well-documented. Check out our Full Guide to Investing in Short Term Rentals in Flagstaff, Arizona for all the Regulatory Details!
AirDNA, widely considered the top data provider for cutting-edge short term rental analytics and performance projections, projects Flagstaff with a top-of-the-line “overall market score” of 98/100 as of November 2024. This market score considers multiple performance metrics including rental demand, seasonality and projected revenue growth and Flagstaff scores highly across the board.
Revenue numbers, including average annual total revenue and more granular metrics such as Average Daily Rate and RevPAR are solid and increasing. With a nice balance between affordability and returns, investors can achieve solid cash flows without needing overly large down payments, as property prices remain reasonable (for now!).
Perhaps the highest reason that airbnb investors flock to Flagstaff is the low seasonality – meaning occupancy remains high throughout the year, instead of bunching up around certain seasons. Flagstaff has an appealing climate, mild summers and snowy winters, and a plethora of outdoor activities despite the month on the calendar!
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Number 2: Charleston, South Carolina
Charleston is a captivating coastal city steeped in Southern history, offering visitors an enchanting blend of antebellum architecture, world-class dining, and pristine beaches. As one of the most celebrated tourist destinations in the Southeast, it draws an eclectic mix of visitors throughout the year, from history buffs and food enthusiasts to beach lovers and wedding parties. The city’s premium hotel rates, particularly in the historic district, create robust demand for airbnb alternatives.
While most of Charleston’s visitors come during the sunny summer months to take advantage of its coastal location, the seasonal downturn in the winter months is more than made up for by healthy demand during the summer months. And with South Carolina’s warm climate, the warm weather tends to stretch well into November and re-emerge early around March or even late February, so the slower winter months tend to be only a small faction of the calendar.
Charleston features many things to do to satisfy visitors of all stripes, providing diversified short term rental demand drivers.
History buffs are drawn to this city for high-volume attractions such as the Magnolia Plantation & Gardens, Fort Sumter National Monument and Nathaniel Russell House.
Family-friendly attractions also include the South Carolina Aquarium and of course many nearby beaches.
Charleston is also perfect for romantic getaways for couples, with a romantic and charming downtown area dotted with shops, restaurants and nightlife, perfect for weekend getaways. A short drive from many population centers in the southeast, including Charlotte, Atlanta and Jacksonville, Charleston short term rentals are typically full near-year round with visitors looking for a perfect weekend trip.
AirDNA provides an extremely strong market score of 89/100 as of November 2024, highlighted by strong markets in investability (measuring balance between cost to purchase and financial returns), rental demand and revenue growth. The Average Daily Rate of $463 is tremendous, and taken in context with an overall strong average occupancy rate of 63%, Charleston, South Carolina looks to be a top market for STR investors in 2025 and beyond.
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Number 3: Joshua Tree, California
Perhaps a surprising choice on this list for long-time short term rental investors, Joshua Tree might be a sneaky stupendous market for 2025. The desert oasis, located near its namesake National Park, experienced a massive boom in the 2020 and 2021 Covid era, as visitors of all stripes flocked to this majestic market to experience the landscape and natural wonders as well as the pandemic stricken cities and often overbearing restrictions. California featured some of the harshest and longest-lasting COVID lockdowns and other draconian policies, leading many residents of major Golden State cities to seek not only short term refuge in wide-open areas such as Joshua Tree, but extended stays as well, able to do remote work at Joshua Tree Airbnbs at airbnbs used for “medium term” stays.
Because building in the desert is relatively easy, and with the classic boom and bust nature of real estate, especially prevalent in these sorts of markets, there was a predictable pullback in Joshua Tree as the COVID era receded and the market corrected.
However, according to cutting-edge data watchers such as AirDNA, the numbers have been ticking back up in 2024 and Joshua Tree appears to be a top market for 2025. As of mid-November 2024, AirDNA gives Joshua Tree a perfect “100/100” overall market score – the best in the United States – driven by top of the line “investability” scores (indicating the returns are outsized compared in the context of lowered property prices), revenue growth and lack of seasonality (visitors come year round). With Average Annual Revenue and ReVPAR up double digits year over year, now may be the time for STR investors to check out this market again!
Besides the obvious demand drivers such as the beautiful landscape and number of outdoor activities such as rock climbing and hiking tours, Joshua Tree has some further nice advantages versus other similar STR markets that isn’t as easily discernable.
One is the regulatory environment, the vacation rental regulations in Joshua Tree and the surrounding Morongo Basin area remain relatively accommodating for investors. Property owners must register for a permit and remit transient occupancy tax, with specific requirements varying between unincorporated areas and incorporated cities. A full breakdown of Short Term Rentals rules and regulations for Joshua Tree can be found on the San Bernardino website here!
Additionally, Joshua Tree qualifies as a great “drivable” short term rental market. This means that it is well located within a reasonable driving distance to many major population centers; both providing a robust potential market for renters and positions it well in face of any economic downturn, where tourists may choose to downgrade their vacations from expensive, distant locales requiring expensive flights to cheaper options only requiring a relatively quick drive and tank of gas away.
Check out the distances from major metros that should make up a steady stream of visitors to Joshua Tree airbnbs in 2025 and for the foreseeable futures:
- Los Angeles, California : 140 miles (about 2.5-3 hours drive)
- San Diego, California : 165 miles (about 3 hours drive)
- Anaheim, California: 130 miles (about a 2.5 hours drive)
- Las Vegas, Nevada: 185 miles (about 3.5 hours drive)
- Phoenix, Arizona : 280 miles (about 4.5 hours drive)
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Number 4: Gulf Shores, Alabama
Gulf Shores, Alabama stands out as a premier beach destination along the Gulf Coast, offering visitors pristine white-sand beaches and emerald waters at more affordable prices than many Florida coastal towns. This family-friendly beach community, along with neighboring Orange Beach, attracts a diverse mix of visitors – from spring break crowds and summer beach families to snowbirds seeking winter warmth and year-round golf enthusiasts.
While Gulf Shores maintains vacation rental regulations, they’re generally investor-friendly compared to many coastal markets. Property owners must obtain a business license and comply with lodging tax requirements, but the framework is well-established given the area’s long history as a vacation destination. The city appreciates the role of vacation rentals in supporting its tourism economy.
For short term rental investors that don’t mind low seasonality scores – i.e. earning the vast majority of rental income during a select few months, in this case the summer months for a beach-based market – Gulf Shores, Alabama is shaping up to be a top market for 2025.
AirDNA as of November 2024 gives a market score of 93/100, driven again by great investability (a common theme, nice cash flow returns with affordable entry points), and sky high rental demand and revenue growth. Year over Year key metrics are booming, with average annual revenues at over $67,000 per year (up 14%), ADRs up to a surprisingly high $380 (up 12%) and RevPAR at $237 (up 14%).
Pro Tip – STR investors looking at Gulf Shores as a top market for airbnb investing in 2025 should take a close look at certain “submarkets” – as experts have some neighborhoods and distinct areas as likely more lucrative as others. Some submarkets that look great for investors appear to be Orange Beach and Dauphin Island while areas such as Elberta or Foley Alabama may be areas to avoid unless you have superior local knowledge and expertise.
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Number 5: Nashville, Tennessee
Nashville continues to cement its position as one of America’s most dynamic cities, drawing visitors with its unique blend of music culture, culinary innovation, and vibrant nightlife. The city attracts a diverse mix of travelers – from bachelor/bachelorette parties and music enthusiasts to business travelers and weekend tourists. This variety of visitor types helps maintain strong demand throughout the year, rather than relying on single seasonal peaks.
The regulatory environment for short-term rentals in Nashville has evolved significantly. The city maintains distinct rules for owner-occupied and non-owner-occupied properties, with specific zone restrictions and permit requirements. While more structured than some markets, the regulations provide a clear framework for compliant operators, particularly in designated short-term rental districts.
Revenue metrics vary significantly by location, with properties in popular areas like Downtown, The Gulch, and East Nashville commanding premium rates. The market sees rate spikes during major events like CMA Fest, NASCAR races, and Vanderbilt University, Nashville Predators and Tennessee Titans home games, while maintaining solid baseline rates throughout the year from regular tourism and business travel.
While the projected rankings and metrics from AirDNA aren’t as strong as the other markets on these list (while still showing a solidly above average 74/100 market score and yearly growth in key financial metrics), Nashville has a distinct advantage in that it is the largest city on the list and has the strongest backdrop for traditional “backup” options, if needing to convert to a long-term or medium term rental, or sell the property quickly. As such, if you are looking for a top market for airbnb investment in 2025 but want to pick a market that also has flexibility as an otherwise strong housing market, Nashville may be the pick for you!
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Ready to Get Started?
Have you determined the best cities for Airbnb investment in 2025 for your investing strategy? Ready to invest in an short term rental (STR) investment property in 2025? Easy Street Capital is America’s best lender for short term rental loans!
Disclaimer: The information provided in this article is not intended as financial or legal advice of any kind. Regulations regarding short-term rentals are subject to change and all investments are subject to risk. Information included in this article may contain information that has not been verified by licensed attorneys and should be subject to independent verification. Readers are advised to consult with qualified legal or financial professionals prior to investing in real estate investment properties.
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