Which cities are best for running a short-term rental property on sites like Airbnb and Vrbo?

LawnStarter ranked 2023’s Best Cities to Own a Vacation Rental, with major changes in this year’s ranking due to the widespread “Airbnbust.”

We compared over 180 of the biggest U.S. cities based on six categories. We considered legal restrictions on short-term rentals, occupancy rates, and revenue potential. We also looked at operating expenses like housekeeping services and utilities, among 18 total metrics.

See the 10 best (and 10 worst) cities to own a vacation rental below, followed by key stats from our report.

Key Insights:

• Top 10 Takedown: This year, we added a Legality category, penalizing cities with legal restrictions on rental period, number of guests, and property type. This caused several of 2022’s top 10 cities — such as Miami (No. 27), New York (No. 118), and Las Vegas (No. 67) — to tumble in this year’s ranking. 

• Rental Restrictions: Cities big and small are reining in short-term rentals (STRs). 11 cities — such as Boston (No. 125), New York (No. 118), and Sunnyvale, California (No. 181) — tied at the bottom of the Legalitycategory.

• Firm But Fruitful: Boston (No. 125) boasts the highest Revenue Potential, an average of $61,445. That’s nearly $13,000 ahead of Charleston, South Carolina (No. 48), in 2nd place, at $48,713. Both Boston and Charleston enforce red tape, but South Carolina is considering a bill to prohibit local governments from regulating STRs.

• Order and Inflation: Despite strict regulations and low occupancy rates, hosts can rake in the dough in Los Angeles (No. 173). LA has busted thousands of illegally operating STRs, and active hosts are taking advantage by hiking up rates. The City of Angels had the 11th-highest average daily rate over the past year at $216. 

• New York Nightmare: Until early September 2023, New York (No. 118) was an Airbnb empire, claiming the 3rd-highest average annual revenue — $46,406 — and the most attractions. However, a recent clampdown caused the removal of nearly 15,000 local listings from Airbnb between August and September 2023. 

• Risky Results: Vacation rentals in Nashville, Tennessee (No. 68), lead with the highest average daily rate, $260, followed by Austin (No. 77) and Washington (No. 163). However, all three cities struggle with costly Initial Investments, legal limitations, and occupancy rates below 42%, the average across the cities we ranked.

• Safer Stakes in the Suburbs: Hialeah, Florida (No. 84), and Roseville, California (No. 104), tied for the highest occupancy rate, 79%, over the past 12 months. However, hosts in these cities charged lower daily rates on average, likely due to lack of Entertainment Options. Corpus Christi, Texas (No. 169), had the lowest occupancy rate in our ranking at 10%.