Find The Best Airbnb Markets for Investing (2023)

Knowing how to find an Airbnb host market that consistently produces strong returns is the foundation of every successful short-term rental investment. Pick the wrong city and you're fighting regulations, low demand, and thin margins from day one.

Pick the right one and a single property can generate $40,000–$80,000+ in annual revenue. This guide breaks down the Market Target Formula — a step-by-step process for identifying the best STR markets before spending a dollar.

Watch the full video above or keep reading for the complete breakdown.

Set Up Your Research System First

Before researching a single city, get organized. This process generates a lot of data — regulation links, revenue exports, tax documents, spreadsheet notes — and losing any of it means starting over.

Open a spreadsheet in Google Sheets or Excel. These are the columns worth tracking from the start:

• Town
• Number of active listings
• Home price ranges (by bedroom count)
• Regulation links and snippets
• Applicable taxes
• Town reliance on STR
• Market type (vacation, business, tourist)
• Key draws and attractions
• Seasonality rating
• Fly or drive market
• Worst-case and expected revenue
• Personal notes and verdict

This spreadsheet becomes the single source of truth as you compare markets side by side. If you prefer keeping browser bookmarks instead of pasting links, at minimum build a well-organized bookmark folder system — some regulation documents are genuinely hard to find twice.

Build Your Initial Market List

Start with 3–5 towns or areas you're already curious about. This isn't a final decision — it's a starting point. You don't need a sophisticated reason to include a city here. Maybe you've heard it mentioned in STR investing circles. Maybe it's a market you've visited and enjoy. Maybe it's a two-hour drive from where you live.

Write them down. The subsequent steps will eliminate the bad ones quickly. The goal at this stage is just to have a working list to evaluate, not to commit to anything.

For broader context on different market types worth considering, this overview of the best Airbnb markets for investing is a useful starting reference as you build your list.

Verify Active Listings and Home Prices

Check Active Listing Volume

Visit a short-term rental data provider — AirDNA, AllTheRooms, or Rabbu's free Airbnb calculator — and search each market. Look for a figure labeled something like "Active Supply" or "Active Rentals."

The benchmark to aim for: 250 or more active listings. Markets below this threshold may not have enough demand data to forecast reliably, and they can be more vulnerable to regulation changes wiping out a significant portion of supply overnight.

Don't be scared off by large listing counts. Whether a market has 300 or 3,000 active listings, a well-optimized property with smart pricing and great reviews will outperform the majority of them. Demand generally scales with supply in healthy STR markets.

Verify Home Price Ranges

Check Zillow, Realtor.com, or Redfin for each market. Filter specifically by bedroom count — 1BR, 2BR, 3BR, 4BR, 5BR — and note the rough average for each. Keep it quick. You're not shopping for a property yet.

Two important notes here:

1. Filter for exact bedroom counts, not ranges like "2+." You need apples-to-apples comparisons across markets.
2. Look at recently sold prices, not just asking prices. Sellers can list at any number they want — actual closed sales reflect real market value.

If a market's price point is beyond what you're working with, cross it off now. There's no point deep-researching a market you can't buy into. And resist the urge to click on individual listings at this stage — that's a time trap that leads nowhere productive.

How to Find Airbnb Host Regulations in Any Market

This is where many investors cut corners — and it costs them. Buying into a market only to discover restrictive regulations can turn a promising investment into a cash-draining disaster. Understanding local rules is non-negotiable before going further.

Searching for Regulation Documents

Start with a Google search: "[city name] short term rental regulations". Swap in variations as needed — "vacation rental laws," "tourist home bylaws," "vacation rental rules." Different municipalities use different terminology.

What you're looking for is the actual government website — town, county, or municipality — and the specific legal document spelling out the rules. Do not rely on what a real estate agent tells you. Do not rely on what someone at the permit office says over the phone. Get the document.

For a deeper walkthrough of this research process, this guide on how to analyze a market for Airbnb covers regulations in more detail.

What to Look For in the Regulations

Copy any relevant sections into your spreadsheet. Common regulations to watch for include:

• Permit caps — some cities only issue a fixed number of STR permits per year
• Night caps — limits like "maximum 180 rental nights per year"
• Owner-occupancy requirements — the owner must live on the property
• Minimum stay rules — bans on stays under 28, 29, or 30 days effectively kill Airbnb-style hosting
• Zoning restrictions — STRs only allowed in certain zones
• Occupancy limits by bedroom count or total square footage
• Annual inspections (septic, fire safety, etc.)
• Distance requirements from neighboring properties

If you find an outright ban on new short-term rentals, cross the market off immediately. If the rules are workable — permit required, some occupancy limits, maybe a night cap — note everything and move forward.

Understanding the regulatory environment also matters for deciding how to structure your investment. Recent Airbnb crackdowns have shown how quickly regulations can shift, which is why verifying the actual documents matters so much in 2026.

Evaluate Local Taxes and Town Reliance on STR

Local and State STR Taxes

Taxes on short-term rentals vary significantly by location. Some cities charge a local occupancy tax. Some states add their own layer on top. Both can apply simultaneously.

This matters because profitability is about what you take home, not gross revenue. A market with a 15% combined tax rate needs to generate meaningfully higher revenue to net the same return as a lower-tax market.

That said, taxes aren't always a red flag. When a town collects STR taxes, it has a financial incentive to keep STRs operating. The town profits when hosts profit. That alignment between local government and Airbnb hosts is actually a healthy sign for the long-term stability of the market.

How Much Does the Town Rely on STR Traffic?

Look at the local hospitality infrastructure. Are there major hotel chains in this town? If so, hotels are the primary accommodation option and the town may be indifferent — or even hostile — to Airbnb-style hosting.

If there are few or no large hotels, platforms like Airbnb and VRBO may be the primary way visitors stay there. That matters enormously for regulatory outlook.

Local business owners — restaurants, activity operators, shops — who depend on tourist foot traffic have a strong incentive to vote against regulations that would reduce visitor accommodations. That political dynamic protects STR hosts.

Understand Market Type, Draws, and Seasonality

Categorize the Market Type

Every STR market falls into roughly one of three categories:

• Vacation markets — families visiting theme parks, beaches, mountain resorts
• Business markets — areas near corporate headquarters or convention centers
• Tourist markets — destinations people visit for a specific experience or landmark

This determines what kind of property performs best and what amenities matter most. Business travelers in a city market want fast WiFi, a workspace, and easy airport access. A family of six at a lake house wants bunk beds, outdoor space, and a dock. Knowing your guest type before you buy shapes every decision from property selection to furnishing.

For guidance on matching amenities to guest type, this breakdown of finding and using the best Airbnb amenities is worth reviewing.

What Draws People to This Market?

Note every major attraction, event, or draw. Search Google for "things to do in [town]" and check TripAdvisor. Look at the town's official tourism website if one exists.

Focus on substantial draws, not minor ones. Zion National Park, the Indy 500, Disneyland — these are anchors that bring guests regardless of season. A small local festival or a regional antique market? Not worth listing as a core demand driver.

Also ask: what happens if the primary draw disappears? Events like Coachella or a specific music festival can relocate. Landmarks generally don't. If a market's entire demand rests on one movable event, that's a real risk to factor in.

How Seasonal Is the Market?

AirDNA provides a seasonality score — counterintuitively, a higher score means lower seasonality, i.e., more consistent year-round revenue. A score of 85 indicates stable, predictable income. A score of 10 means dramatic swings between peak and off-season.

Neither is automatically better. High seasonality markets can offer outsized peak-season earnings but require careful cash flow management in slow months. Lower seasonality means steadier income but sometimes lower overall revenue ceilings.

For strategies on keeping revenue strong outside peak periods, this guide on staying profitable in the off-season offers practical tactics.

Is It a Fly or Drive Market?

Markets within a two-hour drive of a major metro area have a built-in advantage: they attract staycation guests who don't need to fly anywhere. During COVID, these drive-to markets consistently outperformed fly-to destinations. That dynamic can repeat during economic downturns or any period when travel becomes complicated.

If a market can pull from multiple large cities within driving distance, that's even better — it multiplies the potential guest pool significantly.

Run the Revenue Numbers: Worst Case to Best Case

If a market has survived every filter above, it's time to get into the actual numbers. This is where most investors either get it right or get burned.

Worst-Case Revenue (50th Percentile)

Pull data from AirDNA or AllTheRooms — pick one and stick to it for consistency across all markets you're comparing. Export total revenue data (not just ADR or occupancy in isolation — those numbers alone don't tell the full story).

Filter for the specific bedroom count and occupancy you're targeting. If you're evaluating 3-bedroom properties that sleep 6–8 guests, apply that filter uniformly across every market. Mixing filter settings produces meaningless comparisons.

The 50th percentile is the median performer — half of comparable listings earn more, half earn less. Use this as your floor. If this number doesn't cover carrying costs at realistic purchase prices, the market doesn't work.

Expected Revenue (75th Percentile)

The 75th percentile — top 25% of performers — is typically the target for serious investors. A well-managed, well-optimized Airbnb host running a thoughtfully furnished property with a strong pricing strategy can realistically hit this tier. Many properties managed with BNB Mastery strategies actually outperform it.

One important note on COVID-era data: if the revenue data shows a spike during 2020–2021 followed by a sharp pullback, treat that elevated period with skepticism. Properties that were priced for COVID demand and then purchased at inflated valuations are exactly what drove the #airbnbust narrative in 2022–2023. Use the pre-COVID trend and post-normalization figures as your baseline.

The Simple Math: Revenue to Purchase Price

A useful rule of thumb adapted for STRs: because short-term rental hosts cover all carrying costs including utilities, aim for a maximum purchase price of roughly 5.6x annual revenue (a 1.5% monthly revenue-to-price ratio). Investors targeting only top-tier properties might use 4.2x (a 2% ratio).

Also consider absolute dollar amounts, not just percentages. A 20% cash-on-cash return on a property generating $25,000 in annual revenue leaves very little in actual dollars after expenses. For all the time and capital invested, the net income may not justify the effort. Set a minimum absolute revenue floor that makes sense for your goals.

For a framework on analyzing full STR investment deals, the BNB Investing Blueprint walks through the exact calculations BNB Mastery uses to evaluate properties before committing capital.

And for new investors getting oriented, these three foundational things every Airbnb investor needs to understand are worth reading before running your first numbers.

How to Choose Between Competing Markets

After running every market through these filters, one of three scenarios plays out:

1. One market survives. Go with it. The process did its job.
2. Multiple markets survive. Now weigh them against your personal criteria — budget, ROI targets, personal affinity for the area, seasonality tolerance.
3. No markets survive. Go back to step two and build a new list. This is actually a win — you avoided buying into bad markets.

Some variables are hard dealbreakers. If 3-bedroom homes in a market average $700,000 and you're pre-approved for $400,000, the math doesn't work regardless of how attractive the revenue looks. Other variables — like seasonality — are informational context, not automatic disqualifiers.

Your goals also shape the decision. A pure cash-flow investor might weight ROI above everything else. Someone making a lifestyle investment might prioritize a market they genuinely want to visit. Someone risk-averse might weight multiple demand draws and proximity to major cities more heavily.

For a fuller picture of common mistakes that derail STR investors at this stage, these five big Airbnb investing mistakes cover the pitfalls BNB Mastery sees most often.

Connecting with other investors who are actively running this process is also invaluable. The BNB Tribe community gives hosts and investors a place to share market research, compare notes, and get feedback from people who've already evaluated the markets you're considering.

The Bottom Line on Finding the Right Airbnb Market

Learning how to find an Airbnb host market worth investing in isn't guesswork — it's a repeatable research process. The Market Target Formula covers regulations, affordability, demand drivers, seasonality, and revenue projections in a logical sequence that eliminates bad markets before they waste your time or money.

Most investors who end up underwater in an STR skipped one or more of these steps.

The Airbnb hosting service landscape in 2026 is more competitive and more regulated than it was five years ago. That means doing this research thoroughly is more important than ever — not less. The investors who will thrive are the ones who understand their market before they sign anything.

If you want to complement great market selection with a solid operating strategy, part two of the Airbnb market analysis series goes further into evaluating specific properties once you've locked in on a location.

"