It’s a short-term rental frenzy out there! More than ever before, Americans are taking time to vacation around the nation, and rental arbitrage is there to help make more stays happen. This craze of real estate investing without ownership has helped thousands of would-be investors rake in cash flow like never before, but which are the best cities for rental arbitrage? In this article, we’ll touch on the eleven cities you should keep on your list when giving rental arbitrage a shot.
What is Rental Arbitrage?
Rental arbitrage, also called Airbnb arbitrage or real estate arbitrage, is when someone rents out a home and then sublets it through Airbnb, VRBO, Vacasa, or any other short-term rental listing platform. This strategy gives investors the flexibility and high cash flow of short-term/vacation rentals without ever needing to own a property in the first place!
11 Top Cities for Airbnb Rental Arbitrage
Below, we’ll go over the top 11 cities in the United States for rental or Airbnb arbitrage. Some are no-brainers while others are surprisingly profitable. Here’s the full list, with a rundown on important metrics before we get into the nitty gritty of each city.
- Honolulu, HI
- Kihei, HI
- Lake Tahoe, CA
- Charleston, SC
- Savannah, GA
- Kissimmee, FL
- Key West, FL
- Nashville, TN
- Chattanooga, TN
- Portland, MN
- Sarasota, FL
| City | Avg. Daily Rate | Monthly Revenue | Occupancy Rate |
| Honolulu, HI | $214 | $4K | 83% |
| Kihei, HI | $324 | $6.2K | 90% |
| South Lake Tahoe, CA | $424 | $5.6K | 65% |
| Charleston, SC | $301 | $5.4K | 77% |
| Savannah, GA | $263 | $4.5K | 70% |
| Kissimmee, FL | $279 | $4.4K | 73% |
| Key West, FL | $476 | $7.9K | 73% |
| Nashville, TN | $310 | $4.9K | 65% |
| Chattanooga, TN | $168 | $2.9K | 73% |
| Portland, MN | $281 | $5K | 80% |
| Sarasota, FL | $247 | $3.9K | 77% |
1. Honolulu, HI
It should come as no surprise that the ultimate vacation destination tops this list. Honolulu has strong demand, an even stronger stream of tourists, and a mature vacation rental market that allows many investors to make money through short-term rental investing. With over 9.4 million tourists flocking to Hawaii as a whole, the capital city serves as a premier destination for worldwide travelers.
Average Daily Rate
According to AirDNA, the average daily rate in Honolulu, HI is $214. This may seem a bit low, seeing that Hawaii is by far NOT the cheapest vacation destination, but this number includes the large assortment of rent-by-the-room cheaper rental options for tourists.
Monthly Revenue
Monthly revenue for most Airbnbs in Honolulu is around $4,000 a month, which again factors in the smaller, more affordable rentals as well. Even at $4K/month, that still shows relatively strong revenue for a single market!
Occupancy Rate
Occupancy in Honolulu is high. At 83% average occupancy, most hosts are renting out their units for almost 25 full days of the month. Those occupancy numbers are a dream for most short-term rental/vacation rental investing hosts!
Best Neighborhoods in Honolulu
Honolulu as a whole is quite a popular vacation destination, but some neighborhoods stick out more than others. Popular areas for vacation rentals are Waikiki beach (no surprise), downtown Honolulu, and Kaimuki.
2. Kihei, HI
Kihei, another Hawaiin gem, is situated on one of the most popular islands, Maui. Although Honolulu has a bit more prestige as the state’s capital, Kihei boasts impressive rental arbitrage numbers, strong occupancy, and a tourist population of around 3 million per year, 30% of Hawaii’s entire tourist population!
Average Daily Rate
The average daily rate in Kihei is $324, significantly higher than its sister city of Honolulu (at only $214). This means that Kihei may be a better choice if you’re looking for higher revenue, but it may come at an even higher rental price.
Monthly Revenue
Kihei’s monthly revenue sits at an average of around $6.2K per month. This is almost astounding seeing that it’s more than 50% higher than Honolulu but geographically not far away.
Occupancy Rate
The occupancy of Kihei truly shines as the highest on our rental arbitrage list. With 90% occupancy, there’s a good chance that many short-term rentals within the city limits are fully booked through the entire year. And with such high occupancy, there could be a supply problem, meaning more of a reason for you to start your first rental arbitrage unit in Kihei!
Best Neighborhoods in Kihei
The two best neighborhoods to look at in Kihei are Wailea and Makena, both offering some of the best beaches in the entire United States!
3. South Lake Tahoe, CA
Lake Tahoe is well known in the Golden State, around the nation, and abroad for having world-class winter sports when it’s snowing and breathtakingly beautiful summers when it’s warm. About 15 million visitors head to the Lake Tahoe area every year! But, as a very high-priced short-term rental area, most investors can’t afford to buy, making rental arbitrage a perfect in-between strategy.
Average Daily Rate
The average daily rate in South Lake Tahoe is $424 per night, one of the most expensive nightly prices on our list. This means that if you can find an under-market rental, your profit potential will skyrocket!
Monthly Revenue
The average monthly revenue for a vacation rental in South Lake Tahoe is $5.6K per month. Why so much less than Kihei when daily rates are higher? Head over to the next section on this list…
Occupancy Rate
At only 65% occupancy, it’s no wonder why prices stay so high during peak season. Thanks to ongoing California fires and a short-lasting snow period, South Lake Tahoe faces a pretty unattractive occupancy rate. This should be made up for in higher rents by you, the arbitrageur!
Best Neighborhoods in South Lake Tahoe
There aren’t many “bad” neighborhoods to choose from in the South Lake Tahoe area. By the water is always better, but a preferred neighborhood in South Lake Tahoe would be Elk Point.
4. Charleston, SC
Charleston, South Carolina offers rich history, great food, and one of the best beaches on the east coast. This southern vacation destination has a steady inflow of local Carolinian tourists, as well as business travelers coming from multiple different areas of the US. The Charleston area alone estimates around 7.3 million people visit their beautiful city every year.
Average Daily Rate
Smack in the middle, Charleston has a $301 per night rate on average which makes it relatively affordable for the average east coast vacationer.
Monthly Revenue
The average monthly revenue for Charleston is $5.4K, which is just slightly lower than far pricier South Lake Tahoe. You’ll be able to find rental arbitrage units for MUCH less than $5.4K in Charleston, allowing you to bank in a pretty profit.
Occupancy Rate
Occupancy in Charleston is around 77%, meaning that there is a strong stream of guests ready to rent a place, but prepare for three or so months to be vacant when calculating your numbers.
Best Neighborhoods in Charleston
Some of the best neighborhoods around Charleston include Mount Pleasant, a very quaint town right outside of Charleston, as well as the French Quarter, and James Island.
5. Savannah, GA
Savannah, Georgia is a breathtaking coastal city situated in the Southeast of the United States. Spanish Moss and arts are aplenty around this neck of the woods. Around 14.3 million visitors come to Savannah per year. But, beware as 6 million of those visitors are day visitors coming from nearby cities and states.
Average Daily Rate
Savannah stays reasonable with an average daily rate of $263 per night and with it being situated so close to Charleston, the same types of visitors may be visiting each city.
Monthly Revenue
Even though the daily rate is only slightly less than Charleston, Savannah suffers from monthly revenue of around $4.5K. That being said, the prices of renting units in Savannah are quite reasonable, so this is still a sweet profit.
Occupancy Rate
Occupancy stays at around 70% for most hosts, so bake in a 30% buffer in your numbers when calculating a vacancy cost.
Best Neighborhoods in Savannah
Savannah is beautiful, but neighborhoods like the Victorian District, the Historic District, and Tybee Island, really take the cake on where most people want to be.
6. Kissimmee, FL
Kissimmee is an optimally situated city located just south of Orlando and within driving distance to the world-famous Walt Disney World parks. That’s right, it’s time to paint a Cinderella mural on the wall of your next Airbnb arbitrage property! Just make sure you ask your landlord for permission first…
Average Daily Rate
At $279 per night, this is in the middle of our list, and not much of a surprise. Kissimmee is reserved mainly for those visiting Disney World, not those wanting to sightsee central Florida.
Monthly Revenue
With average monthly revenues sitting around $4.4K, Kissimmee rentals bring in a fair amount of money compared to the price of buying or renting a home in the area.
Occupancy Rate
Surprisingly, Disney World isn’t attended every week of the year. Kissimmee sports a 73% occupancy rate, meaning that some off-times (like right before and after summer break), won’t be money-making months.
Best Neighborhoods in Kissimmee
The top neighborhoods in Kissimmee are Poinciana, Celebration, and Reunion. Some of these neighborhoods are in high-HOA communities, which offer amenities many visitors would like to have, but also may have strict short-term rental restrictions.
7. Key West, FL
If you’ve ever wanted to be around Cuba, without actually going to Cuba, then Key West is the place to go. Located only a hundred miles or so from Cuba, Key West serves as the tropical hotspot for the United States and Florida. 5.1 million visitors head to the keys every year—many of them hoping to try the famous pie.
Average Daily Rate
Key West has the highest daily rate on this list at about $476 per night. This cost is obviously extremely high, but usually, those willing to make the trip can afford it.
Monthly Revenue
Monthly revenue in Key West is also a chart-topper at $7.9K per month! Apartment rentals are quite expensive, and there aren’t many of them, but if you can find them, you’ll make a killer profit.
Occupancy Rate
Occupancy floats around 73%, but the high daily rate and monthly revenue should make up for it.
Best Neighborhoods in Key West
Key west is pretty small, so renting almost anywhere on the island could make sense for short-term rentals. Some other islands worth checking out? Sunset Key, Marathon Key, and Key Largo.
8. Nashville, TN
Nashville, the city where it’s legally obligated to be musically gifted (not really, but everyone there is!). Nashville sees 14.4 million visitors annually, some of those coming for fun, some coming for business. But all of them could be coming to stay at your new renal arbitrage unit!
Average Daily Rate
The average daily rate in Nashville is around $310 per night, which isn’t surprising since so many visitors frequent the area from both neighboring states and around the country.
Monthly Revenue
Monthly revenue in Nashville is a respectable $4.9K. This is especially great when you factor in their not-so-terrible rent prices.
Occupancy Rate
At 65% occupancy, they join South Lake Tahoe in their eerily similar sometimes hot, sometimes not level of tourism throughout the year.
Best Neighborhoods in Nashville
Some of the best neighborhoods in the music city are Waverly Place, Burchwood Gardens, and Music Row.
9. Chattanooga, TN
Want an affordable short-term rental market? You got it! Chattanooga checks all the boxes for an easily startup-able rental arbitrage business. Although they only have around 3 million visitors per year, the city makes up for it in business-related travelers coming for work.
Average Daily Rate
The average daily rate in Chattanooga is $168 per night. This makes it quite affordable for nearby tourists, but more importantly affordable for you to find rentals as a host.
Monthly Revenue
Monthly revenue, as no surprise, is around $2.9K per month. This isn’t all that bad when you factor in the average apartment rental of only $1,300 per month!
Occupancy Rate
Chattanooga has a surprisingly steady stream of visitors, nurses, and corporate travelers coming in and out of the city limits. With a 73% occupancy rate, they’re doing quite well for a non-touristy city.
Best Neighborhoods in Chattanooga
Some popular parts of Chattanooga include Downtown (you’re kidding!), The Southside, and Lookout Mountain.
10. Portland, MN
Portland, Maine is a quintessentially cute city situated in a unique position between touristy and relatively affordable. With an estimated 5.4 million visitors, there’s a significant amount to be made with rental arbitrage in this Atlantic-side city.
Average Daily Rate
Daily rates average around $281, making this a relatively affordable city for tourists to visit and an equally affordable city for you to try your hand at Airbnb arbitrage.
Monthly Revenue
Monthly revenue is also solid, sitting at $5K per month, better than both Savannah and Kissimme, which had around the same nightly rates.
Occupancy Rate
Occupancy is high, at 80% on average throughout the year. The only other two cities on the list with above-80% occupancy rates are in Hawaii!
Best Neighborhoods in Portland
Portland, Maine, much like Portland Oregon, has quite cute names for its neighborhoods. Some of the most popular are Oakdale, West End, and Cape Elizabeth.
11. Sarasota, FL
Sarasota can be thought of as the sleepy sister of Tampa. Located thirty minutes south of St. Petersburg and an hour and a half north of Naples, Sarasota flourishes as a high-value vacation market for those that want to take a dip in the consistently warm water of the Gulf of Mexico. Sarasota County has about 3 million visitors annually, many of those being snowbirds coming from New York, Massachusetts, and Connecticut.
Average Daily Rate
The average daily rate of a stay in Sarasota is $247, putting it close to its northern brothers, Charleston and Savannah.
Monthly Revenue
The average monthly revenue is $3.9K per month, much of this being affected by strong seasonality in a high-traffic winter and slow summer.
Occupancy Rate
The occupancy rate of Sarasota stays stable at around 77%, again with a drag-down coming from far more tourism in the winter than in the warmer months.
Best Neighborhoods in Sarasota
Some of the most worthwhile neighborhoods to try Airbnb arbitrage in Sarasota are Gulf Gate, North Sarasota (the Ringling), and Siesta or Lido Key (if you can find a long-term rental on them!)
How to Find the Best Rental Arbitrage Markets to Invest In
There are a few factors that can help you determine the best cities for rental arbitrage. Stick to some of these trends to ensure your property is located in the best place possible.
Seasonality
You want to make sure the area has year-round demand and is less susceptible to seasonal swings. This is especially important if you’re looking for a long-term investment property. For example, if you’re renting in a beautiful lake town in Michigan, prepare for the snowy months to offset a lot of your profit.
Proximity to Attractions
Does the area have appealing attractions and amenities that will draw people in all year long? This can include things like beaches, ski resorts, or local attractions like amusement parks or professional sports teams.
Short-Term Rental Occupancy Rate
How often is the property being rented for short-term rentals? Ideally, you want to find an area that has high occupancy rates year-round. This will help ensure your investment property will always have someone staying in it and generating revenue for you. You can find this type of data on AirDNA!
Average Daily Price
How much does a typical short-term rental in this area cost? You’ll want to make sure the area has an average daily rate that is high enough to cover your expenses and provide you with some profit. Again, find this data on AirDNA!
Local Laws
Are there any laws in place that restrict short-term rentals? You don’t want to invest in an area where the local government is actively trying to shut down short-term rentals and has enacted laws that make it difficult or illegal for hosts to operate. You can find out if local laws are a factor by searching online, calling the city’s planning department, or asking other hosts in the area.
Cash-on-Cash Return
You want to make sure that you are making a good return on your investment by calculating the cash-on-cash return. This is simply:
(Annual Cash Flow – Tax Cash Flow) / Total Cash Invested.
A quick example: You pay a $2,000 deposit on a new rental arbitrage unit. Then you pay $3,000 to furnish it. So $5,000 is your total investment in this property. Every month it makes you $1,200 in pure profit. $1,200 x 12 = $14,400 per year.
So, your calculations would look like:
$14,400/$5,000 = 288% cash on cash return.
Needless to say, that’s quite good!
The Best Cities for Rental or Airbnb Arbitrage FAQs
You’ve now got a dozen or so good choices for markets where rental arbitrage would work. But, maybe you’re still a bit spooked to start. These commonly asked questions may quell your investing fears!
Yes, rental arbitrage absolutely works. As long as you follow the rules of investing, it’s a great way to make money. It’s also easy to understand and implement once you get started. Even if you have no prior experience with real estate, this strategy can work for you!
Any state that allows Airbnb hosts to rent out their property is a good place for rental arbitrage. Make sure you research local laws before you post your short-term rental and always get written permission from the landlord! If you’re looking to go the long-term rental route check out our guide on buying a rental property out of state to get started today!
There are a variety of ways to find rental arbitrage opportunities or apartments that allow Airbnb arbitrage. One way is to monitor Craigslist and other classified sites for new rentals in your area. You can also use an online service such as Zillow or HotPads to search for homes that are listed for rent.
