The Best Places to Invest in Short-Term Rentals in 2025

In this highly anticipated episode of STR Data Lab, Jamie Lane, Chief Economist at AirDNA, and Scott Sage, Senior Vice President of Marketing & Customer Experience at AirDNA, delve into the 2025 Best Places to Invest (BPTI) report. This annual report identifies the best cities for short-term rentals (STR), providing insights into evolving market trends and guidance for investors considering the best places to invest in STRs.

Using comprehensive data and a refined methodology, this year’s report examines macroeconomic trends, regional demand, and pricing strategies to answer the question: Are vacation rentals profitable in today’s market?

From midsize cities to rural areas, this episode uncovers promising locations that offer growth potential across diverse investment budgets.

What You’ll Learn in This Episode

Key criteria of the 2025 BPTI report: investability, demand, revenue, and regulations
Booking trends and seasonality, with a focus on January and February’s impact
Top 2025 markets: Crescent City, Columbus, Akron, Fairbanks, and Peoria
AirDNA’s tools for personalized strategies using price-tier segmentation

Episode Highlights

Why Timing Matters: Booking Trends for Early 2025

Jamie opens the discussion by highlighting the critical role January and February play in shaping the STR industry's performance for the year. These months, often referred to as “booking season,” mark a period of high activity as travelers secure reservations for vacations, events, and holidays later in the year.

Jamie notes that early 2025 booking data reveals strong momentum, suggesting that this year holds promising opportunities for new and seasoned investors alike.

Unpacking the BPTI Report for 2025

The Best Places to Invest report has become a cornerstone of AirDNA’s offerings. Jamie and Scott explain that the report identifies top markets for STR investments, balancing high returns with long-term stability. The report’s methodology focuses on four key criteria:

Investability: Calculating revenue potential relative to property values to measure profitability
Demand: Assessing occupancy rates and booking momentum in each market
Revenue Growth: Tracking changes in RevPAR (revenue per available rental) over the previous year
Regulations: Filtering markets with restrictive STR rules that hinder new investments

This year, AirDNA introduced a game-changing enhancement: focusing exclusively on homes currently for sale. The report provides investors with actionable insights tailored to real-time market conditions by evaluating data from 250,000 for-sale properties.

Top Five Markets for 2025

The episode unveils the best cities for short-term rentals, with Jamie and Scott diving into the specifics of each market:

Crescent City, CA: A coastal gem in Northern California with a 12% gross yield, affordable home prices, and consistent demand from travelers seeking quiet, scenic escapes.
Columbus, GA: A repeat contender from last year, Columbus offers low property prices around $298,000 and a 20% year-over-year growth in supply without sacrificing occupancy.
Akron, OH: Known for its affordable housing market, Akron boasts a 13% yield, strong RevPAR growth, and increasing popularity among regional travelers.
Fairbanks, AK: This Alaskan city benefits from year-round demand due to its mix of tourism, seasonal workers, and proximity to national parks. Homes in Fairbanks offer a 66.5% occupancy rate and $50,000 in annual revenue on average.
Peoria, IL: Situated near Chicago, Peoria delivers 15% gross yields, strong occupancy, and favorable home prices averaging $200,000, making it accessible for budget-conscious investors.

Personalized Investments: Introducing Price-Tier Segmentation

AirDNA’s price-tier segmentation allows investors to align their budgets with tailored opportunities. Scott explains that investors seeking properties priced between $100,000 and $350,000 often gravitate toward the Midwest and smaller cities. Higher tiers, such as $750,000 to $1 million, include more luxurious markets like Napa Valley or coastal Florida.

This segmentation is particularly valuable for investors deciding whether to pursue cash-flow-focused properties or invest in premium markets with long-term appreciation potential.

Leveraging AirDNA for Smarter Decisions

Scott and Jamie showcase how AirDNA’s tools empower investors to create custom strategies. Features such as the Rentalizer calculator help estimate earnings for individual properties, while market filters allow users to narrow down locations based on price, demand, and potential yield.

For example, an investor exploring the best places to invest in can use the platform to identify the ideal city, property type, and price point tailored to their criteria. Investors can mitigate risk and uncover new opportunities that align with their goals by leveraging AirDNA’s data.

Actionable Takeaways

Evaluate opportunities in midsize cities and rural areas, which continue to demonstrate strong supply absorption and revenue growth.
Use AirDNA’s tools to tailor investment strategies based on personal budgets and preferences.
Prioritize markets with healthy year-over-year revenue growth, as they indicate long-term profitability.
Stay mindful of regulations and work within zones that allow short-term rentals to avoid potential disruptions.
Take advantage of early booking trends in January and February to capitalize on growing demand.

Conclusion

The 2025 Best Places to Invest report provides a roadmap for navigating the rapidly evolving STR industry. Whether you’re drawn to the affordability of Midwest markets or the luxury appeal of Napa Valley, this episode highlights the importance of aligning investment strategies with data-backed insights.

With tools like AirDNA and a deeper understanding of trends in the best cities for short-term rentals, investors can make informed choices that maximize profitability and minimize risk.

Visit AirDNA’s platform and see where your next investment journey can take you by exploring the full list of top markets or create your personalized plan.

~~~~

Signup for AirDNA for FREE👇

https://app.airdna.co/data

~~~~

Connect with Jamie on LinkedIn and Twitter:

LinkedIn: https://www.linkedin.com/in/jamiehlane/

Twitter: https://twitter.com/Jamie_Lane

~~~~

Connect with Scott on LinkedIn:

LinkedIn: https://www.linkedin.com/in/sagescott

~~~~

Connect with AirDNA on LinkedIn, Twitter, TikTok, and Instagram:

LinkedIn: https://www.linkedin.com/company/airdna/

Twitter: https://twitter.com/airdna

TikTok: https://www.tiktok.com/@airdna.co

Instagram: https://instagram.com/airdna.co

Listen On:

Up Next:

Affordability, Mortgage Rates, and Housing Dynamics: What Investors Need to Know

In this episode of STR Data Lab, Jamie Lane, Chief Economist at AirDNA, welcomes Dave Meyer, Head of Real Estate Investing at BiggerPockets. Together, they explore real estate investment strategies, the state of the rental property market, and trends shaping the multifamily housing market in 2025.

Dave shares insights from BiggerPockets’ latest report on real estate investing, offering a deep dive into affordability, mortgage rates, and how investors can position themselves for success in today’s dynamic market. Whether you’re a seasoned investor or just getting started, this episode provides valuable guidance on navigating changing economic conditions and identifying profitable opportunities.

What You’ll Learn in This Episode

How affordability and mortgage rates are shaping the 2025 rental property market
Trends in multifamily housing market investments and where rents are headed
How institutional and small-scale investors are shifting their strategies
The rise of Build-to-Rent communities and how they impact the STR industry
Smart real estate investment strategies to identify value in today’s market

Episode Highlights

Affordability, Mortgage Rates, and Housing Market Trends

Jamie and Dave start the discussion with an overview of the housing market’s volatility over the past year. Interest rates, home values, and affordability have fluctuated, creating uncertainty for investors.

Dave explains that while mortgage rates have come down from their 2023 peak, affordability remains a significant challenge. More Americans are spending a larger portion of their income on housing, making it essential for investors to factor affordability into their decision-making.

One of the biggest questions for the real estate market in 2025 is whether housing costs will continue rising or if they will stabilize. Dave shares insights into how other economies, like those in Canada and Australia, have adapted to higher housing costs and what lessons can be applied to the U.S. market.

Rental Property Market: Where Are Rents Headed?

The conversation shifts to the rental property market, focusing on rent growth trends. Over the past few years, single-family rental prices have remained stable, while multifamily housing market rents have seen declines due to an influx of new supply.

Dave highlights key trends shaping rental investments:

Multifamily Rents: Increased supply of apartment units has led to rent stagnation, with landlords offering concessions to attract tenants.
Single-Family Rents: Despite affordability challenges, single-family rentals have remained steady, with moderate rental price increases.
2026 Outlook: Dave predicts that rent growth could accelerate again by 2026 as supply normalizes and demand catches up.

For investors, understanding these shifts is essential to determining whether single-family homes or multifamily units offer better long-term returns.

Institutional vs. Small Investors: Who’s Buying?

Jamie and Dave explore how institutional investors—such as hedge funds and Wall Street firms—are reacting to market conditions. Large-scale investors have significantly reduced their buying activity, opening up new opportunities for small investors.

During the peak of the housing boom, institutional investors were buying large volumes of homes, often outbidding smaller investors. However, with current market conditions, hedge funds are focusing on different assets, creating less competition in certain areas.

Dave notes that small, diligent investors now have an advantage in today’s market. Independent investors can negotiate better deals and achieve strong returns over time by being selective and focusing on undervalued properties.

Build-to-Rent: A Growing Investment Trend

One of the most significant trends in the rental property market is the rise of Build-to-Rent communities. Instead of selling homes, developers are constructing entire neighborhoods specifically for long-term rentals.

Dave explains that this trend is reshaping the housing market in several ways:

Increased Supply: More rental options mean greater competition for traditional landlords.
Higher-Quality Rentals: Build-to-Rent properties often feature modern designs, appealing to tenants looking for long-term leases.
Investment Potential: While large firms dominate this space, small investors can still capitalize on nearby opportunities.

For short-term rental operators, understanding the Build-to-Rent movement can help anticipate changes in supply and demand, particularly in suburban markets.

Short-Term Rentals vs. Long-Term Rentals

The discussion turns to how short-term rentals (STRs) compare to long-term rentals in today’s market. STRs offer unique advantages, including:

Higher Earning Potential: STRs often generate more revenue than traditional long-term rentals when occupancy is high.
Flexibility: Owners can adjust pricing and availability based on seasonal demand.
Value-Added Features: Unlike long-term rentals, STRs can benefit from small investments like hot tubs, game rooms, or unique amenities that significantly boost nightly rates.

Dave and Jamie highlight the importance of analyzing market conditions to determine whether STRs or long-term rentals are a better fit for an investor’s goals.

Smart Real Estate Investment Strategies for 2025

To navigate the evolving market, Dave outlines real estate investment strategies that investors should consider:

Patience and Long-Term Thinking: Unlike previous years, today’s best deals require a long-term perspective. Investors should focus on properties that will appreciate over time rather than expecting immediate gains.
Hidden Value and Property Improvements: Identifying homes with unrealized potential—such as unfinished basements, zoning flexibility, or renovation opportunities—can unlock significant value.
Understanding Local Market Trends: Investors should research infrastructure developments, public transit expansion, and new business hubs to anticipate high-growth areas.
Zoning Opportunities: Many cities are updating zoning laws to encourage more housing. Investors should look for properties that may allow for additional units or accessory dwelling units (ADUs).
Balancing Cash Flow and Appreciation: Some markets offer strong cash flow but limited long-term appreciation, while others present opportunities for value growth. Investors should tailor their strategy to their financial goals.

Actionable Takeaways

Monitor mortgage rate trends and affordability factors when evaluating investments.
Stay updated on multifamily housing market developments, particularly in high-growth cities.
Explore the rental property market for underpriced assets with long-term potential.
Consider Build-to-Rent trends and how they may impact nearby STR demand.
Use data-driven real estate investment strategies to identify high-performing markets.

Conclusion

The 2025 real estate market presents both challenges and opportunities for investors. Investors can make informed decisions that align with their long-term goals by understanding trends in affordability, rental property market dynamics, and shifts in the multifamily housing market.

Dave Meyer’s insights provide a roadmap for navigating today’s conditions, emphasizing patience, market research, and strategic investments. Whether focusing on STRs or long-term rentals, the key to success lies in adapting to economic shifts and leveraging data to make smarter investment choices.

Check out BiggerPockets’ latest report or tune in to Dave’s podcast, On the Market, to dive deeper into these insights.

~~~~

Signup for AirDNA for FREE👇

https://app.airdna.co/data

~~~~

Connect with Jamie on LinkedIn and Twitter:

LinkedIn: https://www.linkedin.com/in/jamiehlane/

Twitter: https://twitter.com/Jamie_Lane

~~~~

Connect with Scott on LinkedIn:

LinkedIn: https://www.linkedin.com/in/sagescott

~~~~