Mashvisor Shares the Top 10 Cities for Short-Term Rental Investing in the 2nd Half of 2023

Avalon, California Aug 4, 2023 (Issuewire.com) – Amid the increase in Airbnb-style activities locally, as well as globally, Mashvisor, a US-based real estate data analytics company, has ranked the top 10 US cities for investing in short-term rentals in the second half of 2023.

Using July 2023 data from the MLS database and the Airbnb platform, the Mashvisor Airbnb calculator computed the most important city-average metrics to determine the most profitable locations for vacation rental property investors.

In its analysis, the company focused on cities with median property prices below $1 million to provide affordability for investors considering the short-term rental strategy in 2023.

The ranking is done on the basis of the average cash-on-cash return as the most comprehensive measure of return on investment in real estate.

Here are the 10 US cities with the highest cash-on-cash return for short-term rental properties in July 2023:

1. Marrero, LA

  • Median Property Price: $314,733
  • Average Price per Square Foot: $169
  • Days on Market: 47
  • Number of Short-Term Rental Listings: 1,898
  • Monthly Short-Term Rental Income: $3,607
  • Short Term Rental Cash on Cash Return: 8.42%
  • Short Term Rental Cap Rate: 8.58%
  • Short Term Rental Daily Rate: $213
  • Short Term Rental Occupancy Rate: 53%
  • Walk Score: 66

Marrero, a small census-designated place on the south side of the Mississippi River, emerged as the top location to own a vacation rental investment property in the summer of 2023. The place offers an average cash-on-cash return of 8.42%, resulting from a strong rental income of $3,607 per month and affordable property prices with a median value of $314,733.

Despite its small size and population, Marrero, LA offers plenty of opportunities for outdoor activities. Thus, it comes as no surprise that it is the No.1 place for short-term rentals in the US, considering the increased interest in remote locations with access to natural attractions and outdoor sports.

2. Rileyville, VA

  • Median Property Price: $357,598
  • Average Price per Square Foot: $241
  • Days on Market: 34
  • Number of Short-Term Rental Listings: 111
  • Monthly Short-Term Rental Income: $4,272
  • Short Term Rental Cash on Cash Return: 8.37%
  • Short Term Rental Cap Rate: 8.50%
  • Short Term Rental Daily Rate: $219
  • Short Term Rental Occupancy Rate: 60%
  • Walk Score: 10

Rileyville, another small unincorporated community, ranks as the second-best US market for investing in a vacation rental. The village benefits from its proximity to Shenandoah River State Park. The park hosts several trails that are ideal for hiking and mountain biking, attracting both nature lovers and outdoor enthusiasts.

3. Broadview, IL

  • Median Property Price: $265,250
  • Average Price per Square Foot: $213
  • Days on Market: 74
  • Number of Short-Term Rental Listings: 311
  • Monthly Short-Term Rental Income: $3,574
  • Short Term Rental Cash on Cash Return: 8.07%
  • Short Term Rental Cap Rate: 8.23%
  • Short Term Rental Daily Rate: $174
  • Short Term Rental Occupancy Rate: 61%
  • Walk Score: 77

Third among the top places for short-term rental investing this year is Broadview, an Illinois village close to Chicago. The small-city charm, accompanied by several attractions and the proximity to Chicago, secures a high Airbnb occupancy rate of 61%. Another positive factor leading to good ROI is the below-average property prices.

Historical data provided by Mashvisor shows that the cash-on-cash return for short-term rentals went up from 6.59% in July 2022 to 8.07% in July 2023 amid an increase in the number of active listings on Airbnb from 221 to 311. The attractive real estate metrics are a strong indicator of the growth in the local vacation rental market.

4. East Lansdowne, PA

  • Median Property Price: $205,507
  • Average Price per Square Foot: $141
  • Days on Market: 97
  • Number of Short-Term Rental Listings: 733
  • Monthly Short-Term Rental Income: $2,371
  • Short Term Rental Cash on Cash Return: 7.69%
  • Short Term Rental Cap Rate: 7.94%
  • Short Term Rental Daily Rate: $132
  • Short Term Rental Occupancy Rate: 53%
  • Walk Score: 65

Number four on Mashvisor’s list of the best locations for Airbnb rental investments is East Lansdowne, a borough in Delaware County in Pennsylvania. East Lansdowne offers the lowest median property price on this list, which is equivalent to only 59% of the average US home value of $348,853 at the moment. It makes the borough a specifically good market for beginner investors and others with limited financial resources.

In terms of return on investment, the place’s cash-on-cash return grew from 7.13% in the summer of last year to 7.69% at the moment, indicating a positive trend.

5. Florida City, FL

  • Median Property Price: $396,061
  • Average Price per Square Foot: $268
  • Days on Market: 104
  • Number of Short-Term Rental Listings: 111
  • Monthly Short-Term Rental Income: $4,579
  • Short Term Rental Cash on Cash Return: 7.52%
  • Short Term Rental Cap Rate: 7.62%
  • Short Term Rental Daily Rate: $170
  • Short Term Rental Occupancy Rate: 56%
  • Walk Score: 68

The fifth most profitable location is Florida City, a small-scale city in the Sunshine State that acts as a Miami suburb. The calmness of the small town, combined with the endless attractions of Miami, suffices to explain why Florida City is such a great place to invest in a vacation rental.

In the course of a year, the number of Airbnb listings almost doubled (from 68 to 111), while ROI went up from 6.19% to 7.52%, demonstrating the potential of the local short-term rental market.

6. Parma Heights, OH

  • Median Property Price: $209,192
  • Average Price per Square Foot: $137
  • Days on Market: 50
  • Number of Short-Term Rental Listings: 132
  • Monthly Short-Term Rental Income: $2,552
  • Short Term Rental Cash on Cash Return: 7.15%
  • Short Term Rental Cap Rate: 7.35%
  • Short Term Rental Daily Rate: $135
  • Short Term Rental Occupancy Rate: 56%
  • Walk Score: 66

Next on the list is Parma Heights, a city in Ohio and a western suburb of Cleveland, which is a major Airbnb destination itself. The Rock and Roll Hall of Fame, the Greater Cleveland Aquarium, and the Cleveland Museum of Art are some attractions that bring in Airbnb guests year-round.

Aspiring investors should consider that the local short-term rental market is growing. The number of Airbnb listings in Parma Heights went up from 6 to 132 year-on-year, with equally impressive growth in cash on cash return, from 3.76% to 7.15%.

7. Westover, WV

  • Median Property Price: $233,360
  • Average Price per Square Foot: $150
  • Days on Market: 28
  • Number of Short-Term Rental Listings: 101
  • Monthly Short-Term Rental Income: $2,567
  • Short Term Rental Cash on Cash Return: 7.13%
  • Short Term Rental Cap Rate: 7.29%
  • Short Term Rental Daily Rate: $154
  • Short Term Rental Occupancy Rate: 50%
  • Walk Score: 24

Number 7 among the top 10 cities for short-term rentals at the moment is Westover, a small city situated along the Monongahela River. The place offers attractions typical for a small town, which is more than enough to make it one of the most profitable Airbnb markets. Westover’s allure is driven by good daily rates, excellent monthly income, and affordable home prices.

8. Brook Park, OH

  • Median Property Price: $234,225
  • Average Price per Square Foot: $138
  • Days on Market: 47
  • Number of Short-Term Rental Listings: 132
  • Monthly Short-Term Rental Income: $2,839
  • Short Term Rental Cash on Cash Return: 7.10%
  • Short Term Rental Cap Rate: 7.25%
  • Short Term Rental Daily Rate: $130
  • Short Term Rental Occupancy Rate: 61%
  • Walk Score: 56

Another profitable place to invest in a short-term rental is also located in the State of Ohio, namely Brook Park, a suburb of Cleveland. Vacation rental activities are growing exponentially in this small Ohio town. It now boasts 132 listings on Airbnb, compared to only five at the same time last year.

While property values are still within the budget of an average investor, they might quickly change, considering the hot Airbnb market. Home values already went up by 30% over the course of a single year, from $179,918 in the summer of 2022 to $234,225 now.

9. Lyons, IL

  • Median Property Price: $294,730
  • Average Price per Square Foot: $213
  • Days on Market: 47
  • Number of Short-Term Rental Listings: 184
  • Monthly Short-Term Rental Income: $3,225
  • Short Term Rental Cash on Cash Return: 7.04%
  • Short Term Rental Cap Rate: 7.20%
  • Short Term Rental Daily Rate: $166
  • Short Term Rental Occupancy Rate: 58%
  • Walk Score: 65

Mashvisor ranked Lyons as ninth among the best Airbnb rental markets in the second half of the year. The Cook County village offers a cash-on-cash return of 7.04%, which is very promising for a city average. The historic community benefits from multiple attractions, making it a preferred place among travelers.

Profitability increased from 4.72% to 7.04%, year-on-year, despite the 61% growth in the number of listings.

10. Temple Hills, MD

  • Median Property Price: $374,934
  • Average Price per Square Foot: $254
  • Days on Market: 90
  • Number of Short-Term Rental Listings: 161
  • Monthly Short-Term Rental Income: $4,165
  • Short Term Rental Cash on Cash Return: 7.03%
  • Short Term Rental Cap Rate: 7.13%
  • Short-Term Rental Daily Rate: $211
  • Short Term Rental Occupancy Rate: 60%
  • Walk Score: 17

Lastly, Temple Hills is another top location for vacation rental investments, as ranked by Mashvisor. The census-designated place is a suburb of Washington, DC, which makes it a popular destination for various types of travelers.

Historic Mashvisor data shows that Temple Hills is another short-term rental market that is now under development. Over 12 months, the number of listings in the area increased from 18 to 161, accompanied by a growth in ROI from 6.51% to 7.03%.

What This Means for Investors?

There is an interesting trend that can be noticed in Mashvisor’s list of the top 10 cities for short-term rental investments. Namely, they are all small towns and boroughs, away from the noise and busyness of major cities, offering affordable opportunities for investors.

The trend started a few years ago when places like Joshua Tree emerged as the top destinations for Airbnb-style investments. The pandemic further accelerated the shift when travelers searched for safe havens that are close to nature.

While such locations offer above-average returns on investment, simply buying a property to rent out on a short-term basis in any of them does not guarantee success and profit. Real estate investing is a numbers business, so investors need to conduct diligent research and extensive analysis based on solid, reliable data before investing.

Source :Mashvisor

This article was originally published by IssueWire. Read the original article here.


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